Tom Narayan: Any breakout of the three OEMs, or–?
Louis Tonelli: I can get that for you, Tom. I don’t have it at my fingertips.
Tom Narayan: Okay, no worries. Then the other one is we’ve been hearing about some EV slowdown chatter, specifically with legacy North American OEMs. It’s coming up in a lot of these supplier calls. Just curious if you’re seeing this or if this is impacting your EV business more near term, or if you’re seeing anything there.
Swamy Kotagiri: Yes Tom, good morning. This is Swamy. I think if you look at it–I mean, really, the EV business is just, call it early days. It’s just launching and it’s just taking–if you look at the numbers, we are, what, like 2 million or so in vehicles, so it’s more about how you position yourself on the right programs and looking at each of these, how we go about and what type of thinking you have in processing these programs. I think that’s the important part. I don’t know – if you go back two or three years, we talked with a different tone, and today it’s with a different tone. I think we need to take a more calm approach, and as I’ve said, I believe and we believe at Magna that it’s a trend here to stay. We have to figure out how to manage the transition and that’s where our focus is.
Tom Narayan: Okay, thanks. Then lastly, if I look at the two segments I think were pretty interesting in Q2, B&S very strong, and then P&V maybe a little bit lighter than maybe some folks expected, but then you raised sales forecasts for both. I know things can be kind of lumpy from quarter to quarter. Just curious about Q1 sustainability in these two segments in H2 – clearly you’re expecting an improvement in P&V, and how should we t think about these two segments Q2 versus H2? Thanks.
Swamy Kotagiri: Yes, I think we touched on some of the factors that contributed to the strong BES contribution, right, and we kind of see that going forward. There is no reason for us to think any different, given there is no other major disruption or some industry-wide thing. We are starting to see, like I said, the efforts on all the initiatives that we have in place and stability in production and increasing volumes. The P&V, as you mentioned, really the net input costs were a headwind year-over-year in the first half. The acquisition of Veoneer Active Safety negatively impacted the Q2, and we talked about a few things in the first quarter which was a warranty item, there was net negative commercial items in Q2, and some higher engineering costs that were associated with the launch of the program.
Operationally it’s good, all of this, call it one-timers were lumped in the first half of the year, so we see going forward, if you exclude those things, a better run rate.
Patrick McCann: Yes, if you kind of–excluding those items, the pull-through is actually quite good in P&V in the quarter.
Tom Narayan: Got it, okay. Thanks a lot.
Operator: Thank you. Our next question comes from the line of Colin Langan with Wells Fargo. Please proceed with your question.
Colin Langan: Great, thanks for taking my questions. Just at a high level if I look at the guidance first half to second half, you have sales down 600, and that’s with Veoneer, which I assume means it’s over a billion in first half-second half, but EBIT up, so what are the major puts and takes that get that up? I assume also that the guidance doesn’t include any sort of factor for UAW [indiscernible].
Patrick McCann: Morning Colin. H1 versus H2, I think was your question, just the Magna consolidated variance. The second part of your question was, you’re correct, we haven’t modeled in our factored in a UAW disruption, if any. I think Swamy’s touched on a lot of the points, but big picture when you take a step back and look at our H1 versus H2, there’s a couple of factors. We expect–on the recoveries, we expect those to be more back half versus first half, and that’s what we’ve projected from the beginning of the year and that’s what we’re continuing to see, so that’s number one. Number two, there were some discrete items that happened in the first half of the year that aren’t expected to recover, so Swamy touched on the warranty issue that we had in Q1.
There was a few commercial settlements that had happened that positively impacted us in the second quarter, that were retro back into Q1, a portion back into Q2. Then as we move forward, we’re still seeing stabilization of the production schedules, which is benefiting us, but I think again, I just want to reinforce, when you come in with a lot of these operational improvements that we talk about, they take time to gain traction, so you implement a strategy and then you start permutating them across the various divisions and you gain acceleration as you go through. For example, Swamy touched on our ability to make improvements at our underperforming division in Germany – that’s what we’re seeing, so those are sequential improvements that we’re seeing from H1 into H2.
