Emmanuel Caprais: And Vlad, this is a underserved market. So we are lucky enough to be able to guarantee our customers the same performance we deliver to them on conventional vehicles on those high-performance vehicles. And so given this — the differentiation we have with the competition, we feel very confident that this is a high success — we have a high success rate here. In fact, we already, as Luca was mentioning, got some awards, and it was a great combination because the awards that we got work for high-performance vehicles, but also including low emission break options. Which are fully fitting the Euro 7 requirements that we’ll have to face in 2 years. So it’s also a great testing ground for this new technology.
Operator: Our next question comes from Matt Summerville from D.A. Davidson.
Matt Summerville: A couple of questions. First, just on Friction OEM, what sort of production outlook are you looking at for ’23 and maybe an early thought on how you’re building your business plan around the ’24 production outlook, regional color would also be helpful. And then maybe touch on 500 basis points of outperformance. I guess I thought you guys had talked about that gap may be starting to close. But indeed, you’re still holding on to a pretty wide margin relative to global vehicle output. So maybe touch on that a little bit.
Luca Savi: Sure. Thank you, Matt. So Q1 and Q2 production have been a pleasant surprise because they were better than the original forecast. So the first half is roughly plus 11% worldwide. So when you look at the forecast for the full year, today is mid-single digit. This is what IHS is saying, roughly 86.7 million vehicles produced. We tend to be more conservative. So we are more on the low single digit worldwide, right? 84 million, 85 million vehicle produced, and we continuously expect to outperform that market growth. Then you asked about the region. We think that Europe is probably growing mid-single digits. Year-to-date, they grew at 16% for H1. We think China is going to be probably flattish, whereas North America is probably growing mid-single digit.
This is when it comes to the market and the region. As I said, we still expect to outperform, we are quoting 500 basis points in outperformance in Q2. I would say, the outperformance was outstanding in China. China did extremely well. I will talk a little bit about that in a second but we expect the outperformance to continue that because we keep on winning a very fair share of new platforms. To give you an idea, we have been awarded 100% of the front axle and 100% of the rare axle of a major EU premium OEM EV platform. This is for Friction, the largest award ever. The launch will be in 2025, and OE will last for 10 years. OES, will last for 20 years. So think about the visibility that you have on this platform. We won with BYD. We won the front axle of the Cybertruck with Tesla.
So we continue to see that electrification is really a tailwind for our outperformance in the future.
Matt Summerville: That’s great. Appreciate all that color, Luca. And then just maybe comment on the M&A pipeline, actionability, what you’re seeing from a multiple standpoint among the 3 business segments, maybe where you’re seeing the most near-term activity and maybe what your expectations are for incremental deals to close beyond the one you had made.
Luca Savi: Sure when you look at the M&A, you know we have built a strong M&A function. We continue to build the pipeline. We see some good interesting opportunities move through the pipeline and those range from the bolt-ons to larger scale transaction. So we stay focused on the strategic fit and the asset quality, and I will say the area that we are making progress on, particularly because the pipeline is richer and because it’s also our focus are really in flow, which means pumps and valves and connectors.
Emmanuel Caprais: And from a multiple standpoint, I would say that we see still pretty high multiples I think it’s difficult for sellers to give up on those high multiples that they had before. And so that’s why we pay real attention to the business case that are presented to us with those opportunities. And I think that we’ve been pretty successful in rationalizing the business case and really discussing with sellers the logic of those. And in some cases, debunking also there assumptions because they were proved to be too optimistic. So we’re very attention on the valuation. We’re very attentive on the business spend that are presented to us because we want to make sure that we stay close to the returns we’ve been able to provide so far.
Operator: Our next question comes from Mike Halloran from Baird.
