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02 Good day and thank you for standing by. Welcome to the Faurecia Third Quarter Sales Twenty Twenty One sales. At this time all participants are in a listen-only mode. [Operator Instructions]. I’d now like to hand the conference to our speaker today, Michel Favre, Group CFO. Please go ahead.

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28 Thank you. Good morning, ladies and gentlemen. Thank you for attending this conference call. I am with our flex ship investor relation team Mark Maillet and Matthieu Fernandez and of course I will present our fiscal year for the third quarter. The [Indiscernible] was posted this morning at seven a.m. EST time in our website, just such shows but then now going to comment is also available on our website. 0

55 Slide two, similar highlights of the third quarter. The quarter that continued to be severely impacted by semiconductor shortage and there is consequent Stop-and-Gos imposed by our customers. In these very changing conditions, which won't wider automotive production only at fifteen point eight million [Indiscernible] quarter, down nineteen point two percent year-on-year, we posted sales of three billion and four twenty six billion euros. Currently outperforming worldwide automotive production by seven eighty basis points. 01

35 We have performed in every of our business group and in every region. As regards with the group, it is worth mentioning that Faurecia Clarion Electronics posted an organic growth of seven point three percent and started its robust momentum. As [Indiscernible], it is also worth assuming that Asia posted an organic growth of six point five percent which says above twenty nineteen Q3 pre-COVID level. 02

07 In addition, we confirm our full-year guidance as recently updated on September twenty third [Indiscernible] shared market of its forecast for world production in twenty twenty one. Lastly, we are making significant progress in the Hella acquisition process since we announced its last August. Everything is on track. We takeover offer was launched on September twenty seven and with end on November eleven, with final is that to be at least on November sixteen. 02

42 The antitrust clearances are underway, and there is not change to our initial expected schedule of closing deal early twenty twenty two. Faurecia and Hella have launched the initial steps to be prepared for action that day One after closing and this is the so called project One that we are leading together. 03

06 Let's now move to slide four to detail the year-on-year sales evolution. The currency effect was positive and limited at thirty nineteen million euros or plus one percent of sales mainly attributable to the Chinese yuan versus the euro. There was no scope effect value. So, at constant equipment currencies, sales were down eleven point four percent, which compares to the nineteen point two percent top in production, reflecting a strong performance of seven eighty basis point as I already mentioned. 03

48 All business groups and regions posted stronger performance as regards business group [Indiscernible] colleagues posted an organic growth of seven point three percent, but all business group was strong outperformance close or exceeding five hundred basis points. As regards regions, on the Asia posted organic growth of six point five percent with China up five percent, but all regions posted total performance between seven ninety and over two thousand basis points. On the reported basis, sales down ten point four percent year-on-year. 04

25 Let's now enter into the detail Faurecia business group [Indiscernible] let’s start with the business group on slide five. Seating, we represented twenty eight percent of consecutive Q3, but sales of one billion [Indiscernible] five million euros. Sales were down fourteen point three percent an organic basis and an outperformance of four hundred and ninety basis points. Organic sales were down by double-digit in Europe and North America, said two regions that were the most of it by semiconductor shortage. They were up sixteen point three percent in Asia, driven by sales with Chinese and international OEMs including new entrants in Chinese market. 05

13 As expected set of the new SOPs were also impacted. This SOPs contributed to sales for fifty seven million dollars is a quarter after forty five million euros at the end of June and the should contribute to sector, one hundred forty million euros in the rest of quarter. Overall, the contribution estimated at two hundred forty million euros in twenty twenty one. 05

37 In addition to this lower contribution from SOPs, we also phase a significant operational challenge is a launching phase on greenfield operation in the Michigan. This operational difficulties mainly due to account stability and difficulty to recruit qualified [Indiscernible] will have an impact on seating profitability in H2, which is now expected to below that H1. This operational difficulties must be fixed by the end of the year. 06

12 Interiors, which represented twenty nine percent of group sales in Q3, profit sales are expecting less than one billion euros precisely nine ninety seven million euros. Sales were down eleven point three percent on an organic basis, a strong outperformance of seven ninety basis points. After seating, it was a same reason, organic sales were down by double digit in Europe and North America. Sales were up ten point two percent in Asia, driven sales to Ford, a major American EV carmaker, I think you recognized it, a new entrants in the Chinese market. 06

53 Let's continue on slide six, with clean mobility and clarion electronics. Clean mobility which represented twenty seven percent of group sales in Q3 versus sales of nine hundred twenty eight billion euros. Sales were down ten point five percent in an organic basis, a stronger performance of eight seventy basis points. They were down by high-single-digits in Europe and Asia and by double-digits in North America. [Indiscernible] in all three regions sales outperformed regional automotive production by at least five hundred basis points, which means over two thousand basis points in Europe boosted by the [Indiscernible] over a one thousand basis points in North America and five hundred basis points in Asia. 07

46 Clarion electronics, which represented six percent of group sales in Q3, but the sales of one hundred and ninety five million euros. Sales were up seven point three percent on an organic basis, a total performance of two thousand six fifty basis points. Despite the semiconductor shortage that impacted significant Clarion Electronics versus initial expectations. Organic growth reflected sales momentum of Clarion Electronics. All regions posted organic growth in particular, Asia, thanks to sales growth with Chinese OEMs. It is worth mentioning the Clarion Electronics succeeded in avoiding any stoppage of production at its customers’ plants during the period. 08

34 Let's stands on slide seven the review by vision. Europe, which represented thirty nine percent on group sales in Q3 a low presentation, but it says one billion three hundred thirty nine euros. Sales were down nineteen point nine percent on an organic basis, a strong outperformance of nine seventy basis points versus European automotive production that dropped by roughly thirty percent. This reflected the strong impact of semiconductor shortage on almost all OEMs with the exception of Daimler and commercial vehicles that both grew year-on-year. 09

15 North America was represented twenty six percent on group sales in Q3. But the sales of nine hundred three million euros, sales were down seventeen point three percent in an organic basis, as total performance of seven hundred ninety basis points versus North America automotive production, which topped by twenty five percent. I think Europe, this reflecting the strong impact of semiconductor shortage on almost all OEMs with exception of a major EV carmaker, the second name and the commercial vehicles [Indiscernible] year-on-year. 09

53 Europe and North America representing to further for our safest quarter, was the most impacted by shortage. This was reflecting as a combined reduction by four hundred thousand units of IHS Markit production estimate for Q3 twenty twenty one between September and October. IHS Markit production estimate for Q4 there is two regions, was also reduced by three hundred and eighty basis points between September and October. 10

23 Let's continue on slide eight with Asia and rest of the world. Asia represented twenty nine percent of group sales in Q3 with the set of one billion euros. Sales were up six point five percent on an organic basis, a very strong outperformance of two thousand basis points versus Asian automotive production that [Indiscernible] fourteen percent. This was driven by Seating, Interiors and Clarion Electronics and by most OEMs Chinese intentional except VW and GM groups. 11

01 Most specifically in China, sales were up five percent in organic basis, also very strong outperformance of roughly two thousand basis points versus Chinese automotive production set up by fourteen percent. Both in Asia and China sales significantly exceeded pre-COVID sales of Q3 twenty nineteen. 11

26 Rest of the world including South America represented six percent of group sales in Q3 and one hundred eighty four million euros of sales. The South America, which represented more or less to further the total, sales were up twenty eight percent in our organic basis, a very strong performance of three thousand nine hundred basis points south America Automotive Production mainly driven by the Stellantis Group. 11

54 Now we are reviewed our [Indiscernible] region. Let's see on slide ten, it might full year guidance as September twenty third after the cost set of forecasts that released IHS Markit. [Indiscernible] by six point two percent of five million units of the forecasted worldwide automotive production in twenty twenty one from seventy seven million units to Circa seventy two billion units. More or less the figure of the last year twenty twenty. 12

33 Based on this forecast, we announced twenty twenty one financial targets for the year, sales of circa fifteen point five billion euros, which is total performance of at least six hundred basis points. Operating margin between sixty percent and six point two percent of sales, net cash flow of circa five hundred million euros and net-debt-to-EBITDA ratio of maximum one point five times. We confirmed these targets even if market conditions premiums very changed in Q4. 13

06 Semiconductor shortage will indeed continue to Q4 even if manage disruption that most impacted Q3 is easing. And twenty twenty two, exactly to continue to be impacted with positive return to normal figures starting only probably in H2. We continue to track manage dig to the evolution and short performance. Our priority to continue to pass efficient and mainly home pricing in efficient to our customers. 13

40 Our volatility leverage will continue to improve strong inefficient, some resilient sections implemented to adapt to the volatile environment. As from twenty twenty three, when superior chambers index, we have disappeared prediction virtual return to close our Alberta nineteen million units supported by pent demand in [Indiscernible] historical very low level. 14

13 Let me now conclude the slide twelve with [Indiscernible] data and I will hand up for the question of Hella. As indicated at the beginning with this quarter, we are fully on track with the acquisition process. Let’s take over to shareholders Hella was launched as planned of September twenty seventh. It will end November eleven, and I repeat finally it does – would be released on November sixteen. 14

39 As you know, we have already chose the acquisition of sixty percent of [Indiscernible] and we are now big dependent on the penalties of the pickup, to start implementation of synergies from Day 1. Clarion Electronics [Indiscernible] from the relevant facilities underway. The U.S. had already been announced [Indiscernible] should be announced. We are confident that the closing should happen early twenty twenty two as anticipated in August. 15

12 In September, the two companies Faurecia and Hella, launched common project, named project One, to be ready for Day 1 post-closing. There is too many objectives are just to ensure that the combined group will be ready to period efficiency from Day 1 to achieve this objective governance and organization post-closing a prepared in detail and agreed to ensure a quick start. [Indiscernible] standard processes. 15

42 Similarly, to prepare synergy plan in detail to be ready to kick off implementation from Day 1. To achieve targeted synergies, objectives covered into very specification plans to ensure swift execution from the Day 1 and quick P&L impact. And you can be sure that the CFO is very much involved in this process. 16

07 Thank you very much for your attention, [Indiscernible] now we can go answer the question [Indiscernible].

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18 Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Tom Narayan of RBC. Please ask your question.

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43 Hi, Yes, I'm Tom Narayan. Thanks for taking my questions. My first one on raw materials. You took I think was eighty million euros in H1 and there was a net impact of twenty five million euros, and I think in the H1 call, you said to expect H2 to be similar, do you still that feel that way given recent moves? And still and then the second question on the OEM disclosures you provided. First of all, thanks for providing all that. In Asia, you said there was strengths there except for VW and GM. Is it safe to say that the strength came from domestic OEMs in China? And then in North America, it's curious that this EV maker you cannot name was not as impacted as other OEMs. Could you perhaps tell us what specific product you make for that OEM that weren't as negatively impacted or was it just that that OEM wasn't as negatively impacted? Thank you.

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52 Thank you Tom for your tricky questions. Do you understand that the American that they can attention because they don't want time to be mentioned [Indiscernible]? As you understand, sorry for that. So, for home materials is a question because we have past full path. We continue to negotiate these customers as the last as we said two months and one week, we'd be still active. So anyway, as you know, it is contracted which is the practice on this sector and has been at least the situation of supply is very different from for chemicals. We are still sorry to say that from semiconductor volumes. 18

37 We are suffering from starting growth. Imagine today the life and my electricity people they have changed of volumes at any moment. And very good level. So, their life is complicated, mainly in adjusting kinda activity. In has [Indiscernible] So to be cost to continue to I would say manage day to day performance is key. So, we are to today negotiating with customers as a pass knowing that of course, when the raw material price will be reduction which was the case, if you I remember in nineteen, if I am not mistaken of course, we give as we did in the past, it’s the packaging. So, it is very important to continue to have this investors I would say way to manage. So today, I am confident that we pass for eighty percent of the impact of the material. There will be a small first impact because we have smooth impact in twenty twenty one, but I will be confident as well as in twenty two, if you do tricky on the salary inflation because we have in some cases, it gives salary inflation, and I was mentioning I would actually not which is right world in the deployed plant. We are today first and to overpay as the people, so it sign inflation due to the market conditions. So, some of they are states for instance up it says the workforce market is very competitive. 20

16 Now we're going to your point of OEMs. Very difficult to comment our OEMs get semiconductors. But you can tell you the can tell is that you have which is a social market that means semiconductor supplies are delivering, less seventy percent of the weaker or less because demand could be much higher on disciplined prediction just that your spot market. And how much capital we'd accept to pay off the spot market. So difficult to comment each capital market. But I can tell you is that and I think it was a picture, second made some arbitration between provisions, which is why probably with the deep commercial success in China, they cannot publicly maintain our volumes [Indiscernible] because as you know, we have a lower view. So, for Clarion, we were able to maintain, which says delivery to our suppliers and as well it is a very tight which is as well as the fact that when we are, we get some products on the before market, immediately to the negotiate, transfer information to customers. So, we are back by customers. But what I can tell you is that, according to my knowledge, [Indiscernible] And I think this is a very big performance in the current context. And I think if I go back to, we said beginning this year, we are still if I look at, an extra hours so a very low figure is a difficult context.

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02 Okay, perfect. Thank you so much.

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06 Thank you. Your next question comes from the line [Indiscernible]. Please ask your question.

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16 Morning Michel. So, the first question on the guidance, I guess we are expecting this one you said that your guidance is based on the IHS in the mid of September. But we are not the IHS revised again a couple weeks ago and now expecting a flat market in twenty twenty one. So, am I right in thinking your guidance is valid even in the case? The market would be flat in twenty twenty one?

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43 We adjusted our forecast in the September. As whether we said, is not respect which because the EDI that information receiving everyday for our customers because EDI remains very high while because customers tried to take also products they can. And so, they won't somewhere to [Indiscernible] which is products because in the long-term, we can see big adjustment. So, between the first week of the month that the last week of the month, today, we see adjustment of the sales up to ten percent for the group. We think this some zone, it could be twenty five percent almost. So, it is a work count and this unfortunately. As I've finished. Second thing, I will not adjust of course, like forecast, [Indiscernible] at the beginning of the year, we are much more cautious and see much more cautious and unfortunately, we were right. So, I will not adjust my forecast again making, I’d say what we think. We have today the forecast is of course, which we have done in the September, press overview with always the discounted EDI that we are guessing so it seems that you are right, so we can confirm the guidance and with these videos. [Indiscernible].

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19 Yes, makes sense. Thank you. Thank you very much for that. And then the second question on seating. So, you are basically causing the delay in North America to your customer, right? So, are you viable to some compensations into the second part of the year?

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36 The compensation, sorry let's we see…

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39 For the delays goes in the ramp up of the new platform?

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45 No, on the usually the ramp up except you have a big of difference of time. And in that case, we can of course ask for compensation that we're speaking of weeks. So, now we will not ask any compensation. No way. And anyway, when Tiffany is that we are asking a compensation for some stem up goes up because we are adjusting connectivity, we are committed to a certain level of capacity. So, when the customer [Indiscernible] we cannot act. So, we are asking for some compensation on that. So, which is battle we say. We say way to compensates on that and we see difficult but so this is a normal I would say where to better adjusted activity that we are not asking any compensation for the delay of this.

25

44 Okay. So definitely you are not causing the relay. So just that the customer is having issues with the ramp up of it at platforms.

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53 Okay. And with this time sir, if you like, I can take on business sorry for your question. Seating is a mix; it was very positive in Q2 and stronger restructuring members that performance respect to the other business and essentially there is a mix of others we are negative, and which is back to positive. So, we are this as well as this variability, which is the fact, but anywhere we see more cities should be normally is the best performer in Q4.

26

24 Okay. And so, maybe just one last one on Clarion. Can you make the comment on what is what activities are causing the pickup up in our performance and organic growth?

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38 If you remember, we have just around I would say starting production. Some from Nissan, I will took, it was Nissan Leaf and Nissan frontier, which was [Indiscernible] Q3 and Q4. We have a similar start up production for [Indiscernible] will be some Chinese, would be a significant customer now onwards for client.

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11 Thank you very much.

27

12 Thank you.

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14 Thank you. Your next question comes from the line of Gabriel Adler of Citi, Please ask your question.

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21 Thanks, good morning. My first question. is on seating as well please. Was just hoping you could elaborate maybe a little bit more on what the operational issues you're having in Seating were and necessarily relating to the delay and the ramp up of anything else? And what gives you confidence that the impact on profitability is going to be fixed before the end of twenty twenty one just we have some confidence isn't going to drive into twenty twenty two? And then my second question is on the Holiday, and whether you could maybe just provide in more details on the product one time when you announced today and what steps have you already taken to ensure that the synergies can be effective from day one and are you're in a position yet now to provide any more detail maybe on where you think these cost will mainly be coming from? Thank you.

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09 Thank you. So, I first want to see that’s why I'm not guilty here as a principle when we have a difficult ramp up and you know that you keep wonderful forgot two mix ramp up and the states are not often easy because we said feasibility on one side and if some reasons, the lack of industrial I would signature. In number of cases, the difficulties was a big seat. So, we have to start from scratch, and we didn’t have any more in seating plant in the platform. 28

50 The second one, it was, of course, the lockdown because we were unable to send people is a civil buffer. And it's the tough quarter, which is already the difficulty. Taking is a very large activity as you know and the capacity to send people to secure start up production is. But anyway, and going back to the basics, our mainly is first to recruit twenty people. So, we haven’t twenty people. We have twenty five people, not only on the products that on the way to work in the limited and the figure big problem we have is [Indiscernible]. We faced some ton of which above ten percent for the first two weeks of October. Let's week to expect. So, we are progressively stabilizing but our problem, if I expect speak about cost is of course, that we have to further the people to keep them later. Second, we need a bit of separate factors to compensate give have as high level of cups if you have something that you from the customer, which is I think that we let's say no more that it is consequence. So, all altogether, you asked me a figure, I would say over cost for the last quarter, we believe one twenty euros, so which is significant figure, which is of course carry impacting by membership another speak to my guidance? No, it is the life we faced that in the past, and which fix it as quicker as possible. 30

29 Going back now to synergies. So, we have started, that's what I am thinking and just closing, so we have to act in a very, I would say strict pattern. We can speak of business whether there is something I would say confidential, reduce our positive decision. So, it is a way to prepare the things, second details that our plan is clearly reliable to add of course some also synergies a speed here mainly this processing for the momentum. On the organization revenue percent step, we say that November and if I chose decision for the day one and of course to make the synergies. So, we must talkative on the synergies when will be in, but carry today, what they can tell is that we are in the patterns at two hundred million euros is a minimum, but we will go back to you to give you not food that I don't keep if we use in February and later in the part of UA, we have been motivating. And as we can use that with the structure of the company will have the full component day one, so we can implement almost all the synergies except our control this is listed still some top people problems maybe sales a good point of view, that is subset, and will be able to achieve ninety five percent of the synergies plan.

32

09 Great. Thank you, Michel.

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14 Thank. And your next question comes from the line of Jose Asumendi of JPMorgan. Please ask your question.

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24 Good morning. And couple of questions, please. Thank before this so far. Can you talk a little bit please with regards to your Greenfield Michigan? And where are you going to see or when we would take any of greenfield facilities the opened next year. And across any divisions and talking a little more about the Michigan, which oriented supplying currently and well additional OEMs could be booked to that, that will be the first question. Second, can you talk about restructuring cash outflows? Or the second half of the year? And also, to indeed that was two and then three, can you help you these a little bit with working capital and CapEx in the second half of the year? Thank you. 33

20 So last question Jose? So, and I'm not competitive with you is just first question about Michigan Greenfield. Also, with second, which I mentioned here. Michigan is a [Indiscernible] I think I have understood, if you remember it, was a very large business. More than hundred million dollars so to average legacy of EBITDA. So, in twenty twenty two we have more have some openings of new plants, but not limiting, I would say in the many reason, and I would say additions, mainly China, we are probably we have used twelve. So, I don't want to be overly opportunistic optimistic, but it will be probably easier to implement. 34

09 Going now to the cash that cash, cash discussions on this year will be probably something like one hundred fifty million euros. For next year, we are making a web budget, so probably, you did not well hundred million euros. We accelerating expect to the, I will say [Indiscernible] adjustment on accounts. Working capital, we are on the pressure and due to the Stop-and-Gos, so high level of inventories, we are currently making a plan to adjust. So, if we achieve this plan, number, we can commit to have a positive cash working capital, because as you understand that the deliver of business in December twenty twenty one with the unfortunately lower much slower than twenty twenty. CapEx, we continue to reduce particularly figures at maximum seven hundred million dollars cash out this year on CapEx. Is it okay for you?

35

17 Perfect. Thank you so much. Thank you. Thank you.

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20 Thank you. And your next question comes from the line of Victoria Greer Of Morgan Stanley. Please ask your question.

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27 And good morning a couple from me, please. And firstly, the news that we're starting to hear about magnesium and shortage. Can you talk us through where do you use magnesium directly in your products? And then where do you use Aluminium? And are you seeing any shortages right now? And the second question on the Hella deal, perhaps you can’t comment on this but is there anything you can tell us about the progressive of the takeover offer? And if you expect to own a one hundred percent of Hella at closing? Thank you.

35

57 Thank you, Victoria. So, I believe that's anything about the offer because as you know, before we bring their shares at the last days. So today, we have a very partial view. But when you see the price normally, the success the level first should be high. Is what I can tell you today, but of course, please be little patient on until the sixteenth of November. Magnesium, according to manage, nothing. Aluminium indirectly very small, but very, very small. We are, as you know how very, but I think between two trillions director versus processing not more so the direct cost mainly for the group. And Mortgage, so as you know, we have a big team less than seven million euros. Big procedure of plastic equivalents and some chemicals products simply more less seven hundred million euros, so which is a two I’d say material impacts plus the semiconductor because we have some other costs of semiconductors [Indiscernible] that we are today plus go to our customers, so semiconductors, I cannot tell you that we will not have any impact, but you can take it to account that this will be normally much less than five million euros net impact of for you. That’s directly…

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31 Thank you.

37

32 Not indirect, direct impact.

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38 Thank you. Your next question comes from the line of Martino De Ambroggi of Equita. Please ask your question.

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48 Thank you. Good morning.

37

50 Hi, Martin.

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49 Hi, Michel. My focus is on the clean mobility, if you could provide a rough indication on what's your expectation for Q4. If you could remind us what is the operating leverage of this division, and your best estimate on the split for the full year between among hybrid electric IC and the usual split that you provide for this division.

38

22 I expect we see forecast that your definitely will be in Q4 respect Q3. So, and the capability would be as acreage posted very a good figure, on profitability side. If the operating leverage, as you know, is little retail higher for capability close to fifty percent respect to some of our business not twenty five and NCT is lowest at twenty percent and your question was about the mix complicated to see the mix. Probably, if I pick you up, between deals and hybrid, it will be over ten percent and we don't know that our customers optimize respect to the manage, I will say management and respect to your acquisition. But as you know, I read is the are mainly and impact on Europe retail in China and Europe. So, we continue to see a big increase hybrid as I mentioned here, mainly of second and as you know, we have a significant market sharing [Indiscernible].

39

42 Okay. Thank you. And just double check, you mentioned that the Michigan plant issue will cost twenty million euro in the second half and full stop, am I right?

39

53 No, twenty million it was in Q4. [Indiscernible] achieve a shipment plus Q4. So, whatever we expect is that unfortunately, have cost of new one twenty million in Q4.

40

15 Okay. Thank you.

40

20 Thank you. And your next question comes from the line of [Indiscernible] Deutsche Bank. Please ask your question.

40

29 Hi good morning. Thank you for taking my questions. It's really only short ones. The first one would be also on the U. S. And the situation with the labor shortage there. Is it really just a function of salary increases? And that Obviously, you can be quite confident as long as you're willing to pay. You get the start. Or with the high turn, are there other mechanisms working, which could make it more complicated even later in Q4? And the second question will be, I understand your comments in a way that the volatility of the production remains pretty high also in October. And most likely for Q4 as well. Do you also see a risk that there might be even early shutdowns in December, end of December that several OEMs decide to close for the year, potentially both flight inventory and this sort in January on a cleaner base or so far, not part of any discussions that you have?

41

35 Thank you for your questions. The first one, I don't want to comment too much on American pattern some regions it is where that some reason are more difficult to direct of the view that others. Our difficulty is does one to find qualified people, because if you want to find people does let's work in the last four years, yeah, as understand what it is, so to find and we say qualified people. And the second point is to keep them and because industry is not, I would say the most night for the nicest work in this world. I don't, we not said that two mechanisms [Indiscernible] but probably people would like to make some things. So, we have this difficulty and I think repeat we have just ten around people whatever the fact that we today overpay respect to the market by something like fifteen percent to twenty percent. 42

45 So we are in the first weeks first months that we say. So, we need ready to make people lower. So, this will improve week after week. Is ramp up as well because we have to demonstrate capital capacity, we will have one hundred fifty cash sets, we say just six months is more than twenty fifteen. Very happy more. I will say the customers stop to them. And we have to go place to more than childhood. And we said progress with the pricing at the end of the year priorities done this. So, it is, and we say the industry is the capacity to reduce viability. So, this is I would say good, and I will to their work is discount and which is much more positive but now we can bring people, which was not, and we see the case until probably early October. 43

49 Your second question, story was?

43

54 Volatility.

43

53 Volatility at the end of December. Here, I don't know you're very, I don't know. We see customers and it giving us I would say, AGI sign much higher forecast. We think of that that consist sometimes as they concern data. So, we see probably semiconductor improving. So, I don't know how much will go to automotive sector because automotive sector is only eight percent to ten percent of the worldwide need. So, as well as some [Indiscernible] sector, so it's difficult for me to comment which will be the trend December. But it's a key element to secure the level of sales as that we have. So, I cannot comment today, it will be my opportunity [Indiscernible].

44

57 I appreciate it. Thank you.

44

57 Thank you. The next question comes from the line of Michael Jackson of Bank of America. Please ask your question.

45

04 Hey. Good morning, Michel. Hi, thanks for taking my question. Following on from one of the previous credits on labor, inflationary pressures of also building in energy and freight rates. But a lot of this has seen to come later in the quarter and won't fully impact the second half upside of the twenty million euro impact in North America, what is the magnitude of the incremental cost impact you see in Q4 versus Q3? That's the first question? And the second question is to what extent do you think that non-raw material inflation can be passed on the OEMs? Thank you.

45

41 I don't have so it's a bit between to go to see this. Probably when we see the inflation, it could be up to twenty million euros. Are you cost respect to position, what they can tell you is that when we see the total efficient cost that we are facing between raw material and other costs, we're speaking over the three percent that was deposit group for one year [Indiscernible] twenty two? So, the management of inflation and the capacity to bus customer. I mean today, my view is that twenty twenty two budgets will give probably impacted percent in next fifty basis points and efficient that they repeat to be committed with the last negotiation with customers.

46

35 Thanks, Michel. If I can maybe just ask one more follow-up on freight costs is for SGA any significant in any significant way to costs? And if so, the contracts tend to be completed on a rolling basis or on an annual basis?

46

55 No, it depends on which your like, if they speak about is a yearly cost. But as you know, we have eventually we said level of, I would say overseas, transportation is mainly from China with the other regions. So, we are fortunately very poorly impacted. And anyway, due to the fact that often it was a request on our customers because the going to double adversely. We are first full that, but we speak we are basically prospect of [Indiscernible]. So is not my first occupation. To be understood, but probably we take of ten to fifteen million euros was the quarter as initial cost as well this will be probably of Christina and to pass. We have one tabs is that with our work carbon connectivity we are reducing our electricity consumption. So probably we'd be able to deposit by our work productivity. So, this will be on efficient negative impact. Globally as group I think real composite, which completely sure that every composite. So that is not the key, because except we see some regions next [Indiscernible]. We don't normally have any existing customers. But we see set of increase in North America when he just states over five percent mid, we have a change of the profit sharing, this is any impact of eight percent. So, year, it is a big change of cofactor growth. So same, we have some negotiations in process.

48

45 Very clear. Thank you.

48

50 Thank you. Your next question comes from the line of Alexis Albert of DNCA. Please ask your question.

48

57 Good morning.

48

57 Good morning.

48

58 Yeah, good morning, Michel, can you hear me well?

48

59 Yes.

49

01 Okay. Good. Three questions on my side. First one is regarding the free cash flow, so we are pretty much beginning of November. So, we are close to sixty days from the end of the year. So, you would you confirm that your visibility and your free cash flow guidance is, I mean, ninety percent ninety five percent Is am I right like ninety percent, you know your free cash flow today?

49

25 [Indiscernible] After that, but we are significantly the CapEx, but this is our decision and less than less than the objective, I can add as effectively.

49

52 Okay. Okay, Good. So, four fifty million it's pretty much done? Second question is regarding the margin. So, a consensus of six point two percent, I mean, the market has been tough a bit tougher than I mean you talked about all that over the last fifty minutes. But is it fair to assume that something around mid? Is it sensible does it make sense? So, would that be too optimistic?

50

21 About what?

50

23 Mid brands for the guidance so six point one percent do you think it's the fair assumption that considering the production level and all the Stop-and-Gos you might get for the next months.

50

35 it is from six to six point two. So of course, I may forecast the six point one as at least. The only message I can give you is that not at least, of course, with the accident we see may respect to my guidance. This is the only message I can give you today because usually, I have, I would say good [Indiscernible] is now what you are saying.

51

02 Okay. Okay. Sounds good. And the last question is regarding the bond market to be said, I was expecting you to announce today financing operation with the Q3, we are getting close to the year end of the year. I know the bond market gets a bit more difficult to access from mid-November and until the end of the year. So, when do you think we should expect that you were to get the acceptance rates? I mean when do you think we should expect a bond financing operation?

51

35 As you know, I cannot comment on the date.

51

38 Yes, of course.

51

40 I think both market is expecting inflation.

51

45 I know it is.

51

49 I guess you have understood closing within January or February, so [Indiscernible] money today. And so, what we will do, will be I would say refinancing and that I love to ready if any risk so, of course, I will act to refinance data.

52

12 And just do you need, or do you want to know the acceptant and rent, the acceptance rate of the offer or you don't really need that information to tap the bond market?

52

23 No I don't think because.

52

25 Okay.

52

25 Because whatever the successor, I already to finance not from them because if there is [Indiscernible] three point five.

52

36 Okay.

52

37 I guess way to three three point five and part of the cash that they can use, but in tender offer at the end of the year. So, anyway I have to go to the market to finance five billion I would say, minimum.

52

54 Okay. Okay, great. Yeah.

52

58 [Indiscernible].

52

58 Okay, great. Thank you, Michel. That's all clear. Talk soon, bye.

53

02 Thank you.

53

03 Thank you. Your next question comes from the line of Michael [Indiscernible]. Please ask your.

53

12 Good morning, Michael.

53

14 Good morning. One last one follow-up on Alexis questions. How should we think of the eight hundred million euros right issue? Does it depend on the success of the minor, which is take away? Meaning that if you don't have the forty percent, you would not necessarily use this financing option?

53

35 We, I can't answer as you know. We cannot talk. So, is the financing it is a part of the financing as you know? More or less fifteen percent less for financing. After that [Indiscernible] and we want to optimize any ways education shareholders. So, which was capable [Indiscernible].

53

58 Okay. Thanks.

54

02 Thank you. Your next question comes from the line of Edoardo Spina of HSBC. Please ask your question.

54

09 Good morning Edoardo.

54

13 Thank you. Good morning. And I have just one question it's about the microchips. I mean, you have a growing exposure to them via acquire and Hella. Some OEMs have publicly complained about how suppliers managed that procurement process, not about for Asia to be clear, but given your past experience within the model leads, do you see any reason or any signs that the OEMs are trying to do the same as the moderator and being directly with the semiconductor suppliers even just to secure the supply? Thank you.

54

45 To be honest I don’t know. Probably, yes. Some like onto the low-volume, that to be fact I don’t know.

54

58 Okay.

54

59 And as you look, we are effective about Hella we are effective speak was that Hella is the [Indiscernible] so many semiconductor light but as well impacted and managing that the attitude of customers but we have understood very different [Indiscernible]. Some are very aggressive to suppliers. I don't know if you choose this status switch whack term because the day that since come back and it shows that you play your figure on customers which some key [Indiscernible]? continue to understand better the market.

55

42 Thanks.

55

43 What I can tell you is that what has been a problem, some final disaster some fluid disaster, some as we says in COVID manage. For the moment if it is up, so we see the semiconductor production it's easy, I don't know [Indiscernible] because this will be profitable to secure eighteen million gap production for the last quarter, which is the [Indiscernible] third quarter, but still very low. We see probably some restructuring in some regions section China. We see potentially, I would say leasing customer Electronics but too early to have conclusion on that.

56

35 Thank you very much.

56

37 Thank you. And your final question comes from the line of [Indiscernible] Stifel. Please ask your question.

56

46 Good morning. Can you hear me correctly?

56

50 Yes.

56

51 Okay. Just one final back on the Macro side once again. I appreciate that December is a bit far from today's point of view. But just to speak with the mouse of October, how would you qualify the production flow versus the situation back four to six weeks. You see a significant improvement in the – in your factories, weather, you are producing in October versus early September or is it still heavily disrupted no real improvements. Thank you.

57

29 What we see is two weeks, so two first weeks very much disruptive. Another week almost stable. It is this discrete or lot of closures. And due to the feast of [Indiscernible] So difficult to comment October is low months. If I can tell you respect to recent history, so we don’t see yet big trees of end recovery.

58

01 Okay. Thanks very much.

58

07 Thank you. There are no further questions on the line. Please continue.

58

11 Okay, Christy, thank you. Thank you very much. Thank you to all of you for your attendance and the with [Indiscernible] for any questions. Have a very good day and see you soon. Bye bye.

58

25 Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.