CIE Automotive SA
MAD:CIE
Earnings Call Analysis
Q4-2023 Analysis
CIE Automotive SA
The company's focus on profitability has borne fruit, with EBITDA scaling new heights and surpassing EUR 700 million for the first time, closing at EUR 713 million. This represents a noteworthy increase of 13% despite the headwinds posed by exchange rates. Contributing to this success is an 18% EBITDA margin over sales, which is an advance from the preceding year and is consistent across all geographies. The company has already realized 75% of the strategic plan's goal to enhance EBITDA margin over sales, setting a positive tone for future growth. Additionally, net profit growth stood at 7%, a remarkable achievement considering the tripled financial expenses compared to the prior year, an additional EUR 60 million in financial expenses, and the negative impact of exchange rate fluctuations.
The year 2023 saw the company achieve an EBITDA conversion into operating cash flow at 65%, amassing EUR 450 million in operating cash, inching closer to the strategic milestone of EUR 500 million set for 2025. Despite market challenges, the company has shown resilience by delivering a free cash flow slightly under EUR 300 million and reducing its debt by over EUR 150 million, achieving a debt level below 1.6x net financial debt EBITDA. This financial prudence and operational efficiency underscore the company's commitment to its 2025 commitments despite facing a fiercely changing environment.
The company provided an in-depth analysis of various geographic markets with Europe expected to decline by 3% in 2024 but to stabilize at a modest 1% annual growth medium to long term. North America shows favorable dynamics with the United States growing more rapidly than Mexico, which is projected to have a more stable 2024. China anticipates a normalized 2% growth for 2024 after a strong performance the previous year, while India expects sustainable growth at an average of 5% medium to long term. Brazil, buoyed by lower interest rates and investments by OEMs, forecasts a 3% rise in 2024, steadily approaching pre-COVID levels. Overall, a global market flat for 2024 is projected, though market performance varies significantly by region.
Digging deeper into the company's financials reveals consistent growth mirroring market growth, remarkable given the backdrop of exchange rate challenges and negative pass-through effects. The insistence on focusing on rapidly expanding markets has paid off, enabling the company to far surpass the market's performance in these areas.
An impressive accomplishment for the year has been the ability to improve margins in every geographic area, leading to an overall EBITDA of 18% over sales. This robust margin reflects both the company's operational excellence and its ability to adapt to diverse market conditions.
The intense price competition and rapid industry evolution, particularly in the Chinese market, have necessitated continuous monitoring. With significant industry discounts and bankruptcies among suppliers and OEMs, the landscape for electric vehicles is likewise undergoing a transitional period with expected slowdowns in electrification. This environment presents both challenges and opportunities, particularly as Chinese manufacturers aim to establish production in Europe amid regulatory changes.
Capital allocation remains a strategic focus, with mergers and acquisitions (M&A) forming a core component of the company's DNA. Despite challenges in closing M&A transactions due to high multiples demanded by unlisted companies, the company is actively exploring opportunities to provide value. The pursuit of a 20% Return on Net Assets (RONA) underscores the company's commitment to investments that promise substantial returns. The discipline in selecting investments with a high RONA of at least 20% has been instrumental in driving near-to-goal performance, as the close of 2023 showed a rate close to 19%.
Looking ahead, the company has set sights on continued enhancements in EBITDA and operational effectiveness. The Bloomberg consensus anticipates an approximate EUR 50 million increase in EBITDA year over year, aligning with the company's objectives. Executive confidence in meeting, if not exceeding, this target and other financial metrics is high, despite acknowledging the unpredictability of financial expenses in light of interest rate fluctuations.
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Good morning, everyone, and welcome to the conference call on the results for CIE Automotive in [indiscernible]. Jesus Herrera, our CEO; and Lorea Aristizabal Abasolo, Director for Corporate Development will be with us.
At the end of the presentation, there will be a Q&A. [Operator Instructions] And now I hand over to Lorea. Go ahead, please.
A very good morning, everyone, and welcome to the conference call for the results of the fourth quarter. We can start by beginning the main event during this fourth quarter in the market. We'll start talking about Europe. During 2023, the European market has grown by significant 13% due to 2 main factors. On the one hand, a very undemanding comparable base with the year 2022, that was still at minus 26% versus the pre-pandemic. And on the other hand, the [indiscernible] demand, basically in the Fleet segment, a segment which in Europe carries a weight of approximately 50% of the market.
In 2023, all the quarters have grown significantly. This last fourth quarter has grown by 7%, the same as the third quarter below the 2 first quarters that showed high double-digit growth. Three main headlines in Europe. One of the issues that has covered most headlines in these months has been the cooling off in the demand for the electric vehicle, a reality with more or less significant impacts on the production planning of many Tier 1 and OEMs and something that is used communicating vessel effect in relation to the production of combustion engine vehicles with total productions that have had a very good performance.
Another big issue on the front pages during 2023 has been the thrust of the Chinese OEMs that are gaining market share from the incumbent OEMs, BYD, MG from the [indiscernible] group. And Geely have been some of the names that have stood out. In response to the entry of the Chinese OEMs, European manufacturers are trying to protect their market shares with electric vehicles at lower prices and with strategic alliances such as the agreement between Stellantis and the Chinese company, Leapmotor. One of the first consequences of this new scenario is that for the first time in 2023, European exports have been on the same level as imports when there had always been a vehicle trade surplus in Europe. The fact that this trade continues for 2020 through '26, it is expected that there will be a trade deficit of around 1 million cars.
And the third European headline regarding the news of suppliers, the focus is on the inevitable consolidation process. Two main variables are on the table. Firstly, the enormous existing surplus capacity with a market size to produce 27 million cars that are which is stabilizing at around 17 million vehicles, which means a utilized capacity of only 60%.
And then secondly, the lack of profitability of suppliers with over 50% of the suppliers are operating below 5% EBIT according to the [indiscernible] data. A reflection of this complicated situation is that the chain of -- that we've seen from Scheffler, Continental, Bosch, ZF or more recently [indiscernible]. If we talk about the United States of fourth quarter where unlike previous quarters, the market has been flat with the impact of the strike of the UAW. In the total for 2023, a U.S. market that has grown 6% based mostly on the gradual replacement of stock and on a strong demand with incentive levels from the OEMs that are still 35% below pre-pandemic levels.
As we saw in Europe, also in the United States, there's talk about the slowdown in the demand for electric vehicles. And this communicating vessel effect has occurred with the internal combustion vehicles, for which has generated a good performance in total vehicle production. Moreover, the context is that the number of electric models in the U.S. that are eligible for tax deduction was reduced after the last legislative update. Therefore, the OEMs are now working to adjust their supply chains with the aim of their cars becoming eligible for the Green vehicle credit.
In parallel, we have Mexico, the Mexican automotive industry that has proved to be very dynamic during the fourth quarter, as indicated by the IHS production data with an increase of 17% in production, a very similar figure to the 15% in market growth for 2023 overall. The domestic market is still solid backed by favorable perspectives regarding fund income, a solid labor market and an increase in real wages.
On the other hand, sector exports consolidate its relevance for the Mexican economy, exports have increased by 15% in 2023, the biggest growth in the last 6 years and which represents approximately 85% of the Mexican production. Talking about the Chinese market, the headline is that this fourth quarter has been the best quarter in its history with 8.8 million vehicles produced, beating the previous record in the fourth quarter of 2017. Productions in the fourth quarter have grown by 21% contributing to 2023 of plus 10%.
A strong growth in production that is explained both by the pull of exports and by domestic consumption. Regarding exports, in 2023, China has become the biggest car exporter worldwide, almost 5 million vehicles exported overtaking the traditional great exporting powers like Japan with approximately 4 million vehicles or Germany with approximately 3 million vehicles exported last year.
Also, as a figure, almost 1/3 of the vehicles exported by China are electric. Regarding the Chinese domestic market, it has been particularly strong since [ 4th ] of September and continues to stand out for the continuous pull of the electric vehicle helped with the strong promotions marked by the OEMs. The Chinese government itself recognizes 2 important problems in the automotive industry. The surplus capacity with barely 60% of the capacity being utilized and the current price war in the Chinese market.
Therefore, the government has undertaken, and I quote, "to take strong measures to prevent superfluous projects around 200 electric vehicle manufacturers are currently operating in China, including small regional manufacturers with a very low technology and with production volumes over barely some tens of [ last ] cars." And therefore, many analysts expect a major wave of bankruptcies and a significant consolidation of the sector in the coming years that we'll need to monitor.
Talking about India, the Indian light vehicle market has grown by 5% in the fourth quarter and accumulates an annual increase of 6%. Since in India, the passenger vehicle represents 50% of our sales and that we are exposed to other market concerns, we're also going to talk about its performance. The Motorbike segment, which is approximately 20% of our sales has grown by 4% in this 2023. The Truck segment, 10% of our sales has been practically flat. And the Tractor segment, which is another 20% of our sales has dropped by 2%. So developments that are very different in the various segments during this year.
India, like China has this double driver of its domestic market and being considered a growing export hub. When we talk about the Indian domestic market, it's worthwhile regarding its magnitude and relevance in the world. India is the biggest motorbike market in the world with 18 million units sold. India is the biggest tractor market in the world with approximately 1 million tractors sold. India is the third biggest market in the world in the sale of light passenger vehicles with more than 4 million units sold. India is the third biggest market in the world in trade vehicles with approximately 1 million units sold. If to all this, we add that it's a market that recently is producing to export and is exporting approximately 3.5 million motorbikes and 700,000 cars to the rest of the world.
And we also highlight not just the strength of the Indian market in terms of volume and dimension, but also in Indian market that is looking for a new, more advanced characteristics and [ extras ] in this vehicle. For example, a growing demand for roof systems in the country, where 25% of the cars sold in 2023 were equipped with roof systems compared to 7% 5 years ago.
We move to Brazil. The last quarter showed a shrinkage of 4% in production. The closing of 2023 shows an increase of 1%. And we have seen a Brazilian market favored by 2 macroeconomic effects. Firstly, a lower unemployment rate, which has gone from 11% at the end of 2022 to a current level of 8%. And on the other hand, a drop in interest rates from approximately 14% to the current 11%, something that is very favorable in a market where more than half of the vehicle purchases are financed. With this review of the geographies, we've seen a global automotive market that continues to show a recovery and growth, which has been translated into a global increase of production of almost 10% with a strong growth in all quarters during the year.
We're now going to review the evolution of CIE in this context, starting with the magnitude related to the P&L. First of all, I'd like to remind you that during the fourth quarter, and specifically in October, we have closed the sale of our German forge business. Sales in 2023, which has an equal exchange rate and eliminating the negative effect on the pass-through because of the drop in prices and materials, we have grown globally in sales at a rate similar to that of the market. But it's true that we've had a 2023 that was characterized by 2 different situations in terms of market outperformance.
On the one hand, markets like India, Brazil or North America, healthy markets with good growth prospects, where we've significantly outperformed, and on the other hand, markets like Europe and China, which we can qualify as highly stressed markets. Markets on the one hand, with a significant overcapacity. And secondly, a market with a price war. Markets where our strategy is to preserve profitability in spite of the volume or a potential underperformance. In any case, we feel that the situation in these 2 markets is nonsustainable, it's circumstantial. And in any case, at the end of 2023, after the first 3 years of the strategic plan, we have met 75% of our ambitious outperformance goal.
We focus on profitability with an EBITDA that for the first time, has surpassed the barrier of EUR 700 million, reaching EUR 713 million, an increase of 13% in spite of the negative impact of the exchange rate and EBITDA that implies a margin over sales of 18% and a strong expansion compared to last year's margin, highlighting that EBITDA expands practically in all geographies and also grows in absolute value.
As occurred with the outperformance, we are barely halfway through the strategic plan, and we have already met 75% of our goal to expand EBITDA margin over sales. To this, we add in terms of net profit, we've grown by 7%, which is a tremendous merit. If we bear in mind that our financial expenses have tripled compared to the previous year, with a EUR 60 million in additional financial expenses and the exchange rate has had a negative impact and that has drained our net results. In other words, our operating management has more than offset the increase in nonoperating expenses, nonoperating expenses that we also managed as far as possible, as shown, for example, by the fact that we have continued to increase the percentage of debt at a fixed rate, which is now approximately 55%, and this partially buffers the impact of the increase in interest rates.
We'll now move on to analyze the cash flow, and we have achieved an EBITDA conversion into operating cash of 63% in the fourth quarter and 65% for the year 2023. A year during which we have generated EUR 450 million in operating cash flow, which means reaching 80% of the goal in the strategic plan of reaching EUR 500 million in 2025. A free cash flow that has been slightly under EUR 300 million and discounting M&A plus dividends, we have achieved a debt reduction of more than EUR 150 million in the year overall, which implies closing 2023 with a debt level below 1.6x net financial debt EBITDA.
One year more, we have deleveraged between 0.4 and 0.5x net financial debt to EBITDA. In other words, an extremely high capacity the generation and deleveraging, which is absolutely unusual in the sector. Looking forward in a sector where there are still many uncertainties that hover over the sector of various characteristics, macroeconomic and geopolitical, I'm going to review some of the key aspects of the industry in the future.
Europe, now that the -- demand has been practically met and that inventories are normalized. The main catalyst of the future of the European market is the renewal of the vehicle population, which has an average age of 12 years, record level. The incentives that exist for the purchasing vehicles and the [indiscernible] price reduction should help during this replacement for this. Even so minus 3% is expected for Europe in 2024. And on a more medium and long term, a growth of barely up 1% average per year is expected with 27 million vehicles produced and not recovering the pre-COVID levels.
A future where one of the keys will be the Chinese OEMs making their own production plant implementations in the European market and generating major business opportunities for suppliers in the region. North America with very favorable dynamics has grown strongly in 2023 is expected to continue to grow in 2024 although at the usual rate of 1%. In North America, the United States is expected to grow more strongly in the short term, more than Mexico, driven by the inventories that are 35% below the historical levels and the possible reduction in interest rates. However, Mexico is expected to have in the short term, a year 2024 without significant changes with plus 1%. A certain political uncertainty that may be generated with the election situation, although the polls talk about a continuation.
But with the growth in the North American market and especially in the Mexican market benefiting from its condition of best cost country and the trend of nearshoring and [ frontshoring ]. China, the macro trend, which weighs on the Chinese market without a doubt with a strong growth in 2023, make it foreseeable, but growth will be less in 2024, inventories that are still below the historical levels. It's estimated that there will be a growth of 2% for 2024, which is normalized as well as growth in the medium and long term.
And India that will continue to grow after several years, extremely strong growth with a 2024 at more normal rates around 3%. But many sustainable growth drivers, as you know, including the low-rate vehicle ownership, and therefore, a growth in the medium and long term with an average of 5%.
Brazil, a trend to lower interest rates, announcements for capacity and production increases at various OEMs like BMW, Volkswagen, Renault, BYD. And this means that the market will continue to grow and will gradually come closer to pre-COVID levels. A year 2024, with plus 3% with inventories that are still 40% below historical levels, which means that the medium- and long-term growth shows an average of 7% year-to-year. An estimate of the global market flat for 2024 with a very different snapshot depending on which market we're talking about with very different performances. But it's important to underline that the IHS forecasts are still cautious in comparison with the forecast of other analysts in the sector that talk about up to 2% to 3% for 2024, with the main differences in Europe and China.
In the medium and long term, an average growth is expected of 2% normalizing the situation in the automotive sector with a record level of 95 million vehicles that will be recovered in 2028, but with very different geographic contributions. Regarding the future of CIE, we confirm once again our 2025 commitments, i.e.: reconfirmation that may sound repetitive, but it has to be underlined, the strategic plan was prepared at the end of 2020 with a 5-year horizon. Where today, it's estimated that 25 million vehicles less will be produced under the plan. Nobody then knew what a semiconductor was, nobody could guess the war in Ukraine and nobody knew about the increase in raw material prices, energy, the cost of transportation or inflation in general. The interest rate has gone up by more than 400 points. So the context surrounding the strategic plan has [indiscernible] an absolutely radical change. And even so, we reconfirm our ambition and our guidance for 2025.
And with this, we end the call, we're going to give you a 1-minute video summary in 2023. So that we'll remember what this year has been. And after that, we'll move on to the questions for [indiscernible] and myself. Thank you very much.
[Operator Instructions] We'll be moving on to the questions. As usual, we'll group them together because there are a lot of questions and many of them are on the same subject. Starting with the top line. As for an explanation on the different evolution of the outperformance -- underperformance by geographies and quarters, what are the keys to understand that different evolution by geography and by orders in 2023?
Good morning, everyone. I think that the comparison with the market cannot be made on a single quarter, you need to analyze the whole year. And looking at the whole year, what we find is that bearing in mind the same exchange rate and the negative pass-through in the end this year, we've obtained a growth that's similar to the market, a growth of 9 points both for the market and us with a few [indiscernible] difference that is important. I say it isn't important because the negative pass-through is difficult to calculate exactly. And that's why we feel that this year, we've grown at the same rate as the market. So I wouldn't talk about underperformance at all.
And regarding the markets, well, you know that we focus on those markets that are going to grow the most in the short and medium term. And these are the markets where we beat the rest of the market by far.
And going into the P&L. What is the general impact of the strike in the U.S. on sales and results for CIE?
Well, the impact so far in 2023 has been very small. Therefore, there's nothing to be said. But there could be 2 phenomena, one positive and another one negative, let's say, but we hope that the scales will tip in our favor, of course, on the one hand, the trade union agreements reached in the United States could mean that some of the projects launched in Mexico will be transferred to the United States. So there, we could have a slight loss.
But on the other hand, we have to consider that the U.S. today is losing competitiveness in relation to Mexico. So the transfer of the supply chain from Mexico or from United States to Mexico, like from Asia to Mexico is going to be quicker. Therefore, CIE is focusing many of its investments in Mexico. CIE is building new companies, especially in the north. They don't go directly to the Mexican market, but to the American market where logistics are very favorable.
Could you explain the evolution in margin by geography in the fourth quarter? Most of the questions are focused on India and Brazil.
Well, as I said earlier, focusing on a single quarter. I want to make it clear that the results we report for 2023 for all the geographies are the recurrent results we have in all geographies. In certain quarters, the margin may be more positive, like this quarter in India or more negative as in this quarter in Brazil. But we shouldn't take that quarter in particular, we should look at the whole year. And for the whole year, what's obvious is that we've improved margins, a great deal in all geographic areas. And the result of all this is an EBITDA of 18% over sales, which I think is a highly valuable EBITDA for our company.
And in fact, there was a more concrete question linked to the pass-through issue in the first question. What is the actual margin growth, that 18% bearing in mind the pass-through?
Well, it's very easy to read. In 2022, and we mentioned it, we had 5 positive points in -- both in sales because of the pass-through because of the increase in raw materials that represented the loss of 1 point in EBITDA. So in a way without pass-through, it was 17.5. And with the pass-through, it became 16.5. This, we've recovered approximately half with a negative pass-through. So that 16.5 from last year, it becomes 17%. And if our results has been 18%, more or less, we've improved our EBITDA by 1 point during the whole year. And as I said before, it improves in all geographic areas.
More related to the nonoperating accounts. Why have financial expenses go up -- gone up so much? And what can we expect in the future?
Well, they've gone up so much, I don't know whether they've gone up that much -- have gone up or the interest rates have gone up the 400 basis points which with the debt, we have make it what it is, we have very little margin. It's true that the forecast, is this going to drop, the [indiscernible] is dropping and a drop in interest rates is expected for the coming months that will obviously help to continue to increase our net profit.
But I think that the most important thing to be highlighted is that those EUR 60 million more in financial expenses we've had this year have been offset by production improvements in our EBITDA of over EUR 80 million, which has provided this EUR 20 million growth in the bottom line. It's been a magnificent year, a magnificent year once again, which gives us confidence that our ambition, our management model and our culture is the right one to be successful in this sector.
There are some questions related to cash flow. The first, the investment of almost EUR 50 million in working capital. Other years, we haven't invested that much or it hasn't been so relevant. What has affected this figure this year?
Well, we have to bear in mind that we grow in sales figures year-by-year. And when you increase sales, you increase investments in fixed assets and working capital and our aim is to maintain the same percentage over year over sales year by year. And we're being successful even though the investment may be a little bit more, a little bit less, but nothing worrying. And this year, it's been a year of success in our company because of the major reduction in inventories with a lot of work being done at each one of the 110 companies we have over the world.
And continuing with the cash flow, and this is a question related to CapEx and the conversion of operating cash flow in the fourth quarter, which has been 63.5%, and the CapEx growth has been higher. What is the recurring figure in the future regarding CapEx and operating cash flow, the conversion ratio?
Well, we also mentioned it earlier, the goal was 65%, which we've achieved the 3 years. And this year, with those EUR 60 million more in financial expenses too. So a little more has to be said, that 65% would come close to 70% if the interest rates have been what they were 2 or 3 years ago. So we continue with all the guidance with that goal of 65% because, again, the improvement we're having is greater than expected.
Yes, because [indiscernible], I think you were asking about CapEx, too, that has been a little bit higher in the last quarter. But life is not linear, life is not linear and there's an investment schedule. And that the total for the year is 5-point-something percent over sales, which is where we are, and we maintain the guidance of approximately EUR 1 billion in CapEx for the total of the 5 years. So it doesn't mean that there's a change in trend or anything.
Yes, and we also have to understand that the guidance which were prepared at the end of 2020 with certain variables. The variables have changed significantly, and yet our guidance doesn't change. And we are going to meet all of them during this period up to 2025.
And looking at the future at 2024 and starting with sales. They ask, do we fare to grow in 2024? And will this growth be an outperformance versus the market?
The fact is that we expect there will be no more pass-throughs of any kind. And what we're seeing now, and we've just finished the first month of the year. But yes, we're seeing a significant outperformance of this year. I think that from the first quarter, we're going to have an outperformance that will be recurrent during the rest of the quarters.
And we also asked about the expansion of margins in a more complicated macro environment. How much should we expect our margins to increase, if they do?
Well, those that have been following the company in recent years, CIE is improving its margins every year. More or less, except this year where the improvement has been enormous, but the improvement has been EUR 50 million in EBITDA year-after-year without the market improving. And these improvements have been that we are improving EBITDA by about 0.5 point a year. And this is what you can expect for this year, an improvement in growth, an improvement in margins and with this an improvement in our net profit once again. So the summary is that year after year, we are setting historical records. We've done it in 2023, and you can expect the same for 2024.
And asking about the underperformance in China, what are we doing to correct it? And is the price pressure being passed on to the change the suppliers? And is it that way, it's more difficult to create this up, so how are we managing underperformance in China?
Well, during the various calls, we've said that the local Chinese customers are taking on a very significant market share at a very low price. We have a star product -- and obviously, it can't be sold at that price level. In the continuous defensive margins, and you can see that the margins in China are very important. Sometimes, we have to say no. And sometimes, we have to lose a bit of market share because, again, what's important to see is profitability and to continue to generate cash and not get into competition or products with very low margins.
And I would say, in many cases, negative margins. And that's why many component suppliers in China are closing. They're shutting down. So it's a niche we're not interested in. And I said at the last call that we're trying to make some products that are less brilliant than the ones we make, to make them more competitive, but we haven't got into that niche in a significant way yet. As I said, it's not very interesting. But we're looking at it and developing it.
But to supplement, it's a bit complicated, a market that's constantly evolving like the Chinese market. To give you some idea, the discounts in industry and the price war is brutal. The average market discount has gone from approximately 10% last year, 10% of the value of the vehicle to almost 20%. It's a double. And Jesus [ Bari ] was saying that suppliers are vanishing and OEMs are vanishing.
We've seen at least 4 bankruptcies in this case in a ways -- like you said innovate [indiscernible]. In other words, we're seeing the changing world. We're seeing players like [indiscernible] take on large market shares. They've gone from nothing to 13% total market share and 35% in the electric sector, but others are having a very difficult time like NIO that hasn't reached bankruptcy but has major losses and is talking about cutting down thousands of jobs.
So it's a context that changes significantly, and we have to continuously monitor it to see what effect it has on OEMs and suppliers as [indiscernible] said, we'll have to monitor it.
And we're asked Chinese outside China. In other words, in Europe, is it a threat or an opportunity? And are there any breakthroughs in the negotiations with BYD in Brazil or in other geographies with BYD?
Well, the Chinese, if they come to produce in Europe, which seems is going to be the trend because I don't think there's a very clear future for exports in China, the European Union has of 2026 that is going to set up a sort of duty for CO2 emissions in the production of cars. So the only way will be to produce here. And if they produce here, obviously, it would be an opportunity and BYD in Brazil. You know they bought the plant in Bahia. You know that we are the only plant that are still standing there in Camacari and its true that we're the company is currently negotiating directly for different technologies for the 3 cars they want to use and also for the battery plant they want to set up.
So we're in a very good position. There have been a number of meetings, but we haven't closed any agreements yet. And regarding 2024, and the Chinese that are highly connected to the electric car, you see a slowdown in electrification in the various markets. It's not that we're saying it. Our customers say the OEMs when they themselves are delaying launchings and we're suffering that. They're delaying volumes that we are also suffering and they're reducing their investments. And Brussels set it, too, when they consider changing the law that forbids combustion engine cars in 2035. So yes, there's a slowdown.
And they also asked to close the chapter for 2024. What do we think about the consensus on this?
Well, master consensus I've just mentioned. In the Bloomberg consensus, they refer to an improvement of approximately EUR 50 million EBITDA year after year. That's our target. So I think it's perfect. That's what we're aiming at and that's where we'll be and we'll achieve it. And the Bloomberg consensus is true that they are very optimistic about financial expenses, but that's a variable that's not up to us. It depends on how interest rates evolve if they go down drastically or not and that will affect the last line. But EBITDA improvements, efficiency, continuing to improve margin and providing the EUR 50 million more. We think that's perfect, and that's where we're heading.
Then there are a couple of questions, 2 sides of the same coin about the guidance moving on to something else. The underperformance in 2023. Does it put at risk the -- our performance guidance of 20 points? And well, others ask us about the other side of the coin. The strong accumulated outperformance, could you consider bringing forward your plan? In other words, the glass half empty or half full?
It's hard to answer that. Without a doubt, we're going to meet all the guidance, as I said earlier. And we're still in the first month of the year. And we have a positive forecast, as I said earlier. But I prefer to wait a few months to have more certain forecasts about the first half year, for example, to have a clearer picture and to see whether as we've done in the past, we can bring forward the plan because, as I said, we're between 75% to 85% of the completion of the plant with 2024, where we are going to outperform and improve margins, et cetera, et cetera. You can imagine that we'll be up to a figure of the plan completion, we'll start with a [indiscernible].
And talking about capital allocation. What do you have in your M&A pipeline? The EUR 0.5 billion reference to wait for, is there something in the short term?
When we talk about corporate operations. We don't just talk about M&A. We talk about M&A, the buying of our own stock -- minority stake operations. We have already invested 10% more or less of this amount. M&A without a doubtful part of the DNA of our company, and we're analyzing an M&A operation crosses my desk every day. But it's true that the current M&A that good companies -- means very high multiples and compared with our share pricing, it's almost double.
Years ago, companies that were listed on the stock market had a premium of 20%, 25%. And today, it's the opposite. Today, as the companies are currently listed. You want to buy an unlisted company. And as I say, the multiples are 50% to 100% more expensive. And that's why closing an M&A operation becomes difficult. Having said all this, as I said at the beginning, is part of our DNA. We are still analyzing things. And if we find operations that will bring about significant improvements, that means contribute to provide value for our company, we'll look into them.
And also about capital allocation, what's the ROCE you're obtaining.
We used to report it. And we don't do it anymore. It's ceased to be an important KPI for us. Well, I would say is the most important KPI at our company. In other words, our company doesn't do anything that -- well, instead of ROCE, we use a RONA. We don't do anything that doesn't give us a RONA of 20%. Everything I sign that has to do with investments, projects, et cetera, should give us a RONA of 20% Otherwise, we don't go ahead.
When we carry out M&A operations, we did [ modern ] operations in 2019, [indiscernible], et cetera, et cetera. It's logical to have a significant drop in RONA and then year-by-year, we grow by 100 basis points, more or less. At the end of 2023, we are close to 19%. And the goal we have for the plan is a 20%. And this we achieved with no problem. So the RONA will be the most important thing at our country.
And to finish with capital allocation. Another question just come in. Doesn't it make more sense in view of the large multiples that are being asked for by companies for M&A. What do we think about that?
About what, about buying shares?
Yes.
This is something we're always discussing. Without a doubt, the cheapest operation is to buy CIEs and the most profitable. But if we buy CIEs, we will be listed because the free flow is very small. And that's why we put the brake on continuing to buy shares. But let's say, the feelings of the team and the feeling of the Board is that CIE is the best possible investment. But as I said, let's think more on the long term. So we're going to stay the way we are now.
Well, there are no further questions.
Well, thank you very much, [indiscernible] for joining us today, and thank you all very much being here and all the best with your results being -- well, thanks very much to everyone. And as I always say, keep trusting in this project, which is the most beautiful and most ambitious projects on the market. Thank you very much. Look forward to seeing you again. [Statements in English on this transcript were spoken by an interpreter present on the live call.]