2023 Semi-Annual Report

Second quarter 2023

BOARD OF DIRECTORS AND AUDITOR	2
SEMI-ANNUAL MANAGEMENT REPORT	4
GENERAL	4
RESULTS OF OPERATIONS	6
CONDENSED STATEMENT OF FINANCIAL POSITION BY ACTIVITY	21
LIQUIDITY AND CAPITAL RESOURCES	22
RELATED PARTY TRANSACTIONS	27
IMPORTANT EVENTS DURING THE FIRST SIX MONTHS OF 2023	27
RISKS AND UNCERTAINTIES	27
2023 FINANCIAL GUIDANCE	28
SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2023	29
Condensed Consolidated Income Statement	30
Condensed Consolidated Statement of Comprehensive Income	31
Condensed Consolidated Statement of Financial Position	32
Condensed Consolidated Statement of Cash Flows	34
Condensed Consolidated Statement of Changes in Equity	35
Notes	36
RESPONSIBILITY STATEMENT	61

Also available at www.ivecogroup.com

Iveco Group N.V.

Corporate Seat: Amsterdam, the Netherlands Principal Office and Business Address: Via Puglia 35, Turin, Italy Share Capital: €3,454,589.70 (as of 30 June 2023) Chamber of Commerce of the Netherlands: reg. no. 83102701

BOARD OF DIRECTORS AND AUDITOR

Suzanne Heywood - Chairperson

Gerrit Andreas Marx - Chief Executive Officer

Non-Executive Directors

Lorenzo Simonelli(1)(*)

Tufan Erginbilgic(2)(3)(**)

Essimari Kairisto(1)(**)

Linda Knoll(2)(3)

Alessandro Nasi(2)(3)

Olof Persson(1)(**)

Benoît Ribadeau-Dumas(1)

(1) Member of the Audit Committee

(2) Member of the Human Capital and Compensation Committee
(3) Member of the Environmental, Social and Governance ("ESG") Committee

(*) Independent Director and Senior Non-Executive Director

(**) Independent Director

Disclaimer

BOARD OF DIRECTORS INDEPENDENT AUDITOR

Executive Directors Deloitte Accountants B.V.

All statements other than statements of historical fact contained in this report, including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) per share, capital expenditures, dividends, liquidity, capital structure or other financial items; costs; and plans and objectives of management regarding operations and products, are forwardlooking statements. Forward-looking statements also include statements regarding the future performance of Iveco Group and its subsidiaries on a standalone basis. These statements may include terminology such as "may", "will", "expect", "could", "should", "intend", "estimate", "anticipate", "believe", "outlook", "continue", "remain", "on track", "design", "target", "objective", "goal", "forecast", "projection", "prospects", "plan", or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the Company's control and are difficult to predict. If any of these risks and uncertainties materialize (or they occur with a degree of severity that the Company is unable to predict) or other assumptions underlying any of the forward-looking statements prove to be incorrect, including any assumptions regarding strategic plans, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: the continued uncertainties related to the unknown duration and economic, operational and financial impacts of the Russia-Ukraine war; supply chain disruptions and global logistic constraints, including, industry capacity constraints, supplier viability issues, material availability and relevant price volatility; increased vulnerability to cybersecurity or data privacy incidents, also due to potential massive availability of Generative Artificial Intelligence; the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goodsrelated products, including demand uncertainty caused by current macroeconomic and geopolitical issues; changes in government policies regarding banking, monetary and fiscal policy; legislation, particularly pertaining to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; volatility in international trade caused by the imposition of tariffs, sanctions, embargoes, and trade wars; actions of competitors in the various industries in which we compete; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions, safety or other aspects of our products; production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; price pressure on new and used vehicles; the resolution of pending litigation and investigations on a wide range of topics, including dealer and supplier litigation, follow-on private litigation in various jurisdictions after the settlement of the EU antitrust investigation of the Iveco Group announced on 19th July 2016, intellectual property rights disputes, product warranty and defective product claims, and emissions and/or fuel economy regulatory and contractual issues; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of Iveco Group and its suppliers and dealers; security breaches with respect to our products; further developments of geopolitical threats (e.g. China Trade tensions) which could impact our operations, supply chains, distribution network, as well as negative evolutions of the economic and financial conditions at global and regional levels; political and civil unrest; volatility and deterioration of capital and financial markets, including other pandemics, terrorist attacks or acts of war in Europe and elsewhere; our ability to realise the anticipated benefits from our business initiatives as part of our strategic plan; our failure to realise, or a delay in realising, all of the anticipated benefits of our acquisitions, joint ventures, strategic alliances or divestitures and other similar risks and uncertainties, and our success in managing the risks involved in the foregoing.

Further information concerning factors, risks, and uncertainties that could materially affect Iveco Group's financial results is included in Iveco Group Report on Financial Statements at 31 December 2022, prepared in accordance with EU-IFRS. Investors are expressly invited to refer to and consider the information on risks, factors, and uncertainties incorporated in the above-mentioned document, in addition to the information presented here.

Forward-looking statements are based upon assumptions relating to the factors described in this report, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside Iveco Group's control. Except as may be required by applicable rules, Iveco Group expressly disclaims any intention to provide, update or revise any forward-looking statements in this report to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Further information concerning Iveco Group, including factors that potentially could materially affect Iveco Group's financial results, is included in Iveco Group's reports and filings under applicable regulations.

SEMI-ANNUAL MANAGEMENT REPORT

(Unaudited)

GENERAL

Iveco Group N.V. (the "Company" and, together with its subsidiaries, the "Iveco Group" or the "Group") was incorporated as a public limited company (naamloze vennootschap) under the laws of the Netherlands on 16 June 2021. The Company's corporate seat is in Amsterdam, the Netherlands, and its principal office and business address is Via Puglia n. 35, Turin, Italy. The Company is registered with the trade register of the Chamber of Commerce of the Netherlands (Kamer van Koophandel) under number 83102701. The Netherlands is the Company's home member state for the purposes of the EU Transparency Directive (Directive 2004/109/EC, as amended by Directive 2013/50/EU). Unless otherwise indicated or the context otherwise requires, the terms "we", "us" and "our" refer to Iveco Group N.V. together with its subsidiaries.

The Company, which upon incorporation was 100% owned by CNH Industrial N.V. ("CNH Industrial" and together with its subsidiaries the "CNH Industrial Group"), was formed in the context of the separation ("the Demerger") of the Commercial and Specialty Vehicles business, the Powertrain business as well as the related Financial Services business from CNH Industrial N.V. The Demerger became effective on 1 January 2022 (the "Effective Date"), and the Company ultimately began to act as a holding for the Iveco Group, also providing for central treasury activity in the interest of Group's subsidiaries.

On 3 January 2022, the Company's Common Shares started trading on Euronext Milan (previously named the Mercato Telematico Azionario), a regulated market operated by Borsa Italiana S.p.A. in Milan, Italy. Effective from the Demerger, Iveco Group N.V. is not anymore owned by CNH Industrial N.V. All shares in the Company issued upon incorporation to CNH Industrial were cancelled as part of the Demerger. As a result of the listing, the Company became a Dutch Public Interest Entity (OOB) on 3 January 2022.

Iveco Group reports quarterly and annual consolidated financial results in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted by the European Union ("EU-IFRS") for European listing proposes and for Dutch law requirements. This Semi-Annual Report is prepared using the euro as the presentation currency. Iveco Group reports its operations under three segments:

▪ Commercial and Specialty Vehicles designs, manufactures and distributes a full range of light, medium, and heavy vehicles for the transportation and distribution of goods under the IVECO brand, minibuses, city-buses, intercity buses and coaches under the IVECO BUS (previously Iveco Irisbus) and HEULIEZ brands, large-scale heavy-duty quarry and construction vehicles under the ASTRA brand, firefighting vehicles under the MAGIRUS brand, and vehicles for civil defense and peace-keeping missions under the IDV brand.
Powertrain designs, manufactures and distributes, under the FPT Industrial brand, a range of combustion engines, alternative propulsion systems, transmission systems and axles for on- and off-road applications, as well as for marine and power generation.
▪ Financial Services offers a range of financial products and services to dealers and customers. Financial Services provides and administers retail financing to customers for the purchase or lease of new and used vehicles sold by brand dealers and distributors of the Group or directly by subsidiaries of the Group. In addition, Financial Services provides wholesale financing to brand dealers and distributors of the Group. Wholesale financing consists primarily of floor plan financing and allows the dealers to purchase and maintain a representative inventory of products. Financial Services also provides trade receivables factoring services to Iveco Group Industrial Activities legal entities. Additionally, Financial Services grants support to CNH Industrial, by providing financial services for their European brands, dealers and customers under a vendor and service agreement, receiving a fee for the services rendered.

The activities carried out by Commercial and Specialty Vehicles, and Powertrain, as well as corporate functions, are collectively referred to as "Industrial Activities".

Certain financial information in this report has been presented by geographic area. Our geographical regions are: (1) Europe; (2) South America; (3) North America and (4) Rest of World. The geographic designations have the following meanings:

▪ Europe: member countries of the European Union, European Free Trade Association, the United Kingdom, Ukraine, and Balkans;
▪ South America: Central and South America, and the Caribbean Islands;
▪ North America: United States, Canada and Mexico; and
▪ Rest of World: Continental Asia (including Türkiye and Russia), Oceania and member countries of the Commonwealth of Independent States, the African continent, and Middle East.

This Semi-Annual Report is unaudited.

ALTERNATIVE PERFORMANCE MEASURES (OR "NON EU-IFRS FINANCIAL MEASURES")

Iveco Group monitors its operations through the use of several non EU-IFRS financial measures. Iveco Group's management believes that these non EU-IFRS financial measures provide useful and relevant information regarding its operating results and enhance the readers' ability to assess Iveco Group's financial performance and financial position. Management uses these non EU-IFRS measures to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions as they provide additional transparency with respect to our core operations. These non EU-IFRS financial measures have no standardized meaning under EU-IFRS and are unlikely to be comparable to other similarly titled measures used by other companies and are not intended to be substitutes for measures of financial performance and financial position as prepared in accordance with EU-IFRS.

Iveco Group's non EU-IFRS financial measures are defined as follows:

Adjusted EBIT: is defined as EBIT before restructuring costs and non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.
Adjusted Net Income/(Loss): is defined as profit/(loss) for the period, less restructuring costs and non-recurring items, after tax.
Adjusted Diluted EPS: is computed by dividing Adjusted Net Income/(Loss) attributable to Iveco Group N.V. by a weighted-average number of Common Shares outstanding during the period that takes into consideration potential Common Shares outstanding deriving from the Iveco Group share-based payment awards, when inclusion is not anti-dilutive. When Iveco Group provides guidance for adjusted diluted EPS, the Group does not provide guidance on an earnings per share basis because the IFRS measure will include potentially significant items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end.
Adjusted Income Taxes: is defined as income taxes less the tax effect of restructuring expenses and non-recurring items, and non-recurring tax charges or benefits.
Adjusted Effective Tax Rate (Adjusted ETR): is computed by dividing a) adjusted income taxes by b) profit (loss) before income taxes, less restructuring expenses and non-recurring items.
Net Cash (Debt) and Net Cash (Debt) of Industrial Activities: Net Cash (Debt) is defined as total Debt plus Derivative liabilities, net of Cash and cash equivalents, Derivative assets and other current financial assets (primarily current securities, short-term deposits and investments towards high-credit rating counterparties) and financial receivables from CNH Industrial deriving from financing activities and sale of trade receivables. Iveco Group provides the reconciliation of Net Cash (Debt) to Total (Debt), which is the most directly comparable EU-IFRS financial measure included in the Group's consolidated statement of financial position. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Cash (Debt) of Industrial Activities.
Free Cash Flow of Industrial Activities (or Industrial Free Cash Flow): refers to Industrial Activities, only, and is computed as consolidated cash flow from operating activities less: cash flow from operating activities of Financial Services; investments of Industrial Activities in property, plant and equipment and intangible assets; as well as other changes and intersegment eliminations.
Available Liquidity: is defined as cash and cash equivalents, including restricted cash, undrawn medium-term unsecured committed facilities, other current financial assets (primarily current securities, short-term deposits and investments towards high-credit rating counterparties), and financial receivables from CNH Industrial deriving from financing activities and sale of trade receivables.

RESULTS OF OPERATIONS

Introduction

The operations, key financial measures, and financial analysis differ significantly for manufacturing and distribution businesses and financial services businesses; therefore, for a better understanding of our operations and financial results, we present the following commentary split by Industrial Activities and Financial Services. Industrial Activities represent the activities carried out by Commercial and Specialty Vehicles, Powertrain, as well as the holding company Iveco Group N.V., that also provides centralized treasury services.

Russia-Ukraine conflict

The geopolitical situation and the Russia-Ukraine conflict escalated since the end of February 2022. Iveco Group has operations in both Russia and Ukraine, which have been suspended during the first quarter of 2022. During that quarter, Iveco Group recorded a negative after-tax impact of €51 million in connection with its operations in Russia and Ukraine, primarily due to the impairment of certain assets and EU sanctions preventing further commercial activities with Russian legal entities and individuals. On 20 July 2022, the Company executed a dissolution agreement with the Russian JV, IVECO AMT, also formally presenting its withdrawal from the legal entity. Accordingly, the Iveco Group stake (33.3%) was returned to IVECO AMT. While Russia and Ukraine do not constitute a material portion of the Group business, a significant escalation or expansion of economic disruption could have a material adverse effect on Iveco Group results of operations. The Group is closely monitoring the impact of the Russia-Ukraine conflict on its employees and all aspects of its business, the Group's results of operations, financial condition and cash flows.

Three months ended 30 June 2023 compared to three months ended 30 June 2022

Consolidated Results of Operations

			Three months ended 30 June 2023					Three months ended 30 June 2022
(€ million)	Industrial Activities(1)	Financial Services	Elimination	Consolidated	Industrial Activities(1)	Financial Services	Elimination	Consolidated
			(2)				(2)
Net revenues	4,108	117	(45)	4,180	3,329	60	(18)	3,371
Cost of sales	3,441	57	(3) (45)	3,453	2,894	20	(3) (18)	2,896
Selling, general and administrative costs	233	21	—	254	206	15	—	221
Research and development costs	147	—	—	147	122	—	—	122
Result from investments	2	3	—	5	4	3	—	7
Gains/(losses) on disposal of investments	—	—	—	—	(1)	—	—	(1)
Restructuring costs	6	—	—	6	3	—	—	3
Other income/(expenses)	(29)	(2)	—	(31)	(41)	(1)	—	(42)
EBIT	254	40	—	294	66	27	—	93
Financial income/ (expenses)	(83)	—	—	(83)	(28)	—	—	(28)
PROFIT/(LOSS) BEFORE TAXES	171	40	—	211	38	27	—	65
Income tax (expense) benefit	(48)	(13)	—	(61)	(22)	(7)	—	(29)
PROFIT/(LOSS) FOR THE PERIOD	123	27	—	150	16	20	—	36

(1) Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes Commercial and Specialty Vehicles and Powertrain segments, as well as the holding company Iveco Group N.V.

(2) Elimination of Financial Services' interest income earned from Industrial Activities.

(3) Elimination of Industrial Activities' interest expense to Financial Services.

Net revenues

Net revenues were €4,180 million in the three months ended 30 June 2023, an increase of 24.0% compared to the three months ended 30 June 2022. Net revenues of Industrial Activities were €4,108 million in the three months ended 30 June 2023, an increase of 23.4% compared to the three months ended 30 June 2022, mainly due to positive price realisation and higher volumes and mix.

Cost of sales

Cost of sales was €3,453 million for the three months ended 30 June 2023 compared with €2,896 million for the three months ended 30 June 2022. As a percentage of net revenues of Industrial Activities, cost of sales was 83.8% in the three months ended 30 June 2023 (86.9% for the three months ended 30 June 2022).

Selling, general and administrative costs

Selling, general and administrative costs were €254 million during the three months ended 30 June 2023 (6.1% of net revenues) compared to €221 million for the three months ended 30 June 2022 (6.6% of net revenues).

Research and development costs

In the three months ended 30 June 2023, research and development costs were €147 million (€122 million in the three months ended 30 June 2022), and included all the research and development costs not recognised as assets in the period, amounting to €90 million (€69 million in the three months ended 30 June 2022), and the amortization of capitalized development costs of €57 million (€53 million in the three months ended 30 June 2022). During the three months ended 30 June 2023, Iveco Group capitalized new expenditures for development costs for €108 million (€86 million in the three months ended 30 June 2022). The costs in both periods were primarily attributable to spending on engine development costs associated with emission requirements and continued investment in new products.

Result from investments

Result from investments was a net gain of €5 million in the three months ended 30 June 2023 compared to €7 million for the three months ended 30 June 2022.

Gains/(losses) on disposal of investments

Gains on disposal of investments were nil in the three months ended 30 June 2023 (€1 million loss in the three months ended 30 June 2022).

Restructuring costs

Restructuring costs for the three months ended 30 June 2023 were €6 million compared to €3 million for the three months ended 30 June 2022.

Other income/(expenses)

Other expenses were €31 million for the three months ended 30 June 2023 and €42 million in the three months ended 30 June 2022. In both periods, this item primarily included legal costs, indirect taxes, and separation costs related to the spin-off of the Iveco Group business. In the second quarter of 2022, this item also included the negative impact of €14 million deriving from the first-time adoption of hyperinflationary accounting in Türkiye, in accordance with IAS 29 - Financial reporting in hyperinflationary economies, effective from 1 January 2022.

Financial income/(expenses)

Net financial expenses were €83 million for the three months ended 30 June 2023, compared to €28 million for the three months ended 30 June 2022. The increase was mainly due to higher interest rates and hyperinflation accounting in Argentina and Türkiye.

Income tax (expense) benefit

	Three months ended 30 June
(€ million)	2023	2022
Profit (loss) before taxes	211	65
Income tax (expense) benefit	(61)	(29)
Effective tax rate	28.9 %	44.6 %

Income tax expense for the three months ended 30 June 2023 was €61 million based on profit before taxes of €211 million, compared to tax expense of €29 million for the three months ended 30 June 2022, based on profit before taxes of €65 million. The effective tax rates for the three months ended 30 June 2023 and 2022 were 28.9% and 44.6%, respectively. Excluding the pre-tax and corresponding tax impact of costs related to certain claims arising from the EU Commission's 2016 antitrust settlement decision, the positive impact from the release of provisions related to the Russia and Ukraine conflict, as well as restructuring costs and the cost related to the spin-off of the Iveco Group business, the effective tax rate was 28% for the three months ended 30 June 2023. Excluding the pre-tax and corresponding tax impact of the first-time adoption of hyperinflationary accounting in Türkiye, the separation costs related to the spin-off, restructuring costs, and other minor items, the effective tax rate was 33% for the three months ended 30 June 2022.

Profit/(loss) for the period

Profit was €150 million for the three months ended 30 June 2023 compared to €36 million for the three months ended 30 June 2022), primarily due to profitability improvements across the segments.

Reconciliation of Profit/(loss) to Adjusted net profit/(loss)

The following tables summarize the reconciliation of Adjusted net profit/(loss), a non EU-IFRS financial measure, to Profit/(loss), the most comparable EU-IFRS financial measure, for the three months ended 30 June 2023 and 2022.

	Three months ended 30 June
(€ million)	2023	2022
Profit /(loss)	150	36
Adjustments impacting Profit/ (loss) before income tax (expense) benefit (a)	7	25
Adjustments impacting Income tax (expense) benefit (b)	(1)	(1)
Adjusted net Profit/ (loss)	156	60
Adjusted net Profit/ (loss) attributable to Iveco Group N.V.	157	54
Weighted average shares outstanding – diluted (million)	274	272
Adjusted diluted EPS (€)	0.57	0.20
Profit/ (loss) before income tax (expense) benefit	211	65
Adjustments impacting Profit/ (loss) before income tax (expense) benefit (a)	7	25
Adjusted profit/ (loss) before income tax (expense) benefit (A)	218	90
Income tax (expense) benefit	(61)	(29)
Adjustments impacting Income tax (expense) benefit (b)	(1)	(1)
Adjusted income tax (expense) benefit (B)	(62)	(30)
Adjusted Effective Tax Rate (Adjusted ETR) (C=B/A)	28 %	33 %
a) Adjustments impacting Profit/(loss) before income tax (expense) benefit
Restructuring costs	6	3
Spin-off costs	1	6
Impacts from Russia and Ukraine conflict	(5)	—
Costs related to certain claims arising from the EU Commission's 2016 antitrust settlement	5	—
First-time adoption of hyperinflationary accounting in Türkiye	—	14
Other	—	2
Total	7	25
b) Adjustments impacting Income tax (expense) benefit
Tax effect of adjustments impacting Profit/(loss) before income tax (expense) benefit	(1)	(3)
Net discrete tax benefit	—	1
Other	—	1
Total	(1)	(1)

Industrial Activities Performance

The following tables show net revenues and Adjusted EBIT by segment. Also included is a discussion of results by Industrial Activities and each business segment.

Net revenues by segment

(€ million)		Three months ended 30 June
	2023	2022	% change
Commercial and Specialty Vehicles	3,563	2,790	27.7
Powertrain	1,135	1,023	10.9
Eliminations and Other	(590)	(484)	—
Total Net revenues of Industrial Activities	4,108	3,329	23.4
Financial Services	117	60	95.0
Eliminations and Other	(45)	(18)	—
Total Net revenues	4,180	3,371	24.0

Adjusted EBIT by segment

		Three months ended 30 June
(€ million)	2023	2022	Change	2023 Adjusted EBIT margin	2022 Adjusted EBIT margin
Commercial and Specialty Vehicles	252	78	174	7.1 %	2.8 %
Powertrain	66	47	19	5.8 %	4.6 %
Unallocated items, eliminations and other	(52)	(34)	-18	—	—
Adjusted EBIT of Industrial Activities	266	91	175	6.5 %	2.7 %
Financial Services	35	27	8	29.9 %	45.0 %
Eliminations and Other	—	—	—	—	—
Total Adjusted EBIT	301	118	183	7.2 %	3.5 %

Net revenues of Industrial Activities were €4,108 million during the three months ended 30 June 2023, an increase of 23.4% compared to the three months ended 30 June 2022, mainly due to positive price realisation and higher volumes and mix.

Adjusted EBIT of Industrial Activities was €266 million during the three months ended 30 June 2023, compared to €91 million during the three months ended 30 June 2022, with a steadily improving re-positioning of our vehicles supporting a strong price realization more than offsetting higher raw material and energy costs.

Reconciliation of EBIT and Adjusted EBIT

The following tables summarize the reconciliation of Adjusted EBIT of Industrial Activities, a non EU-IFRS financial measure, to EBIT, the most comparable EU-IFRS financial measure, for the three months ended 30 June 2023 and 2022.

	Three months ended 30 June 2023
(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, elimination and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	248	64	(58)	254	40	—	294
Adjustments:
Restructuring costs	4	2	—	6	—	—	6
Other discrete items (1)	—	—	6	6	(5)	—	1
Adjusted EBIT	252	66	(52)	266	35	—	301

(1) In the three months ended 30 June 2023, this item primarily includes €5 million costs related to certain claims arising from the EU Commission's 2016 antitrust settlement decision and €5 million positive impact from the release of provisions related to the Russia and Ukraine conflict.

						Three months ended 30 June 2022
(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, elimination and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	59	47	(40)	66	27	—	93
Adjustments:
Restructuring costs	3	—	—	3	—	—	3
Other discrete items (1)	16	—	6	22	—	—	22
Adjusted EBIT	78	47	(34)	91	27	—	118

(1) In the three months ended 30 June 2022, this item primarily included €14 million related to the first-time adoption of hyperinflationary accounting in Türkiye and €6 million in separation costs related to the spin-off of the Iveco Group business.

Commercial and Specialty Vehicles

Net revenues

The following table shows Commercial and Specialty Vehicles' net revenues by geographic region for the three months ended 30 June 2023 compared to the three months ended 30 June 2022:

Commercial and Specialty Vehicles Net revenues – by geographic region:

		Three months ended 30 June
(€ million)	2023	2022	% change
Europe	2,825	2,068	36.6
South America	369	369	—
North America	31	32	-3.1
Rest of World	338	321	5.3
Total	3,563	2,790	27.7

Commercial and Specialty Vehicles' net revenues were €3,563 million in the three months ended 30 June 2023, an increase of 27.7% compared to the three months ended 30 June 2022, primarily driven by higher truck volumes and mix in Europe, and positive price realisation.

During the three months ended 30 June 2023, the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, increased 14% compared to the same period in 2022. In Europe, the light commercial vehicles ("LCV") market (GVW 3.5-7.49 tons) increased 12% and the Medium & Heavy ("M&H") truck market (GVW ≥7.5 tons) increased 18%. In South America, new truck registrations (GVW ≥3.5 tons) decreased 23% over the same period of 2022, with a decrease of 26% in Brazil and 2% in Argentina. In Rest of World, new truck registrations increased by 30%. Bus registration increased 1% in Europe and 37% in South America.

In the three months ended 30 June 2023, trucks' estimated market share in the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, was 11.7%, down 1.0 percentage points ("p.p.") compared to the three months ended 30 June 2022. In the three months ended 30 June 2023, trucks' market share in the South American was 14.7%, up 1.8 p.p. compared to the three months ended 30 June 2022.

Commercial and Specialty Vehicles delivered approximately 49,000 vehicles (including buses and specialty vehicles) in the three months ended 30 June 2023, up 22% compared to the second quarter of 2022. Further, volumes were 24% higher both in LCV and in M&H truck segments. Commercial and Specialty Vehicles' deliveries were up 35% in Europe, down 34% in South America, and up 16% in Rest of World.

Iveco Group is on track in shortening order books to healthier levels preparing for the order opening for Model Year 2024, with 27 weeks of production already sold for light commercial vehicles ("LCV") and 26 and 23 weeks for medium and heavy-duty trucks ("M&H") respectively. Worldwide truck book-to-bill was 0.70 at the end of the second quarter 2023. Trucks deliveries were up 24% on a worldwide basis, with Europe alone up 37% compared to the second quarter 2022.

Adjusted EBIT

Adjusted EBIT was €252 million in the three months ended 30 June 2023, an increase of €174 million compared to the three months ended 30 June 2022 driven by positive price realisation and higher volumes, partially offset by higher product costs mainly due to increased raw material and energy costs. Adjusted EBIT margin was 7.1% in the three months ended 30 June 2023 (2.8% in the three months ended 30 June 2022).

Powertrain

Net revenues

Powertrain's net revenues were €1,135 million in the three months ended 30 June 2023, an increase of 10.9% compared to the three months ended 30 June 2022, mainly driven by higher volumes and positive price realisation. Sales to external customers accounted for 51% of total net revenues (56% in the three months ended 30 June 2022).

During the three months ended 30 June 2023, Powertrain sold approximately 125,700 engines, an 1% increase compared to the three months ended 30 June 2022. In terms of customers, 40% of engine units were supplied to Commercial and Specialty Vehicles and 60% to external customers. Additionally, Powertrain delivered approximately 18,200 transmissions and 62,100 axles (of which 400 E-axles and 400 batteries), an increase of 10% and 21%, respectively, compared to the three months ended 30 June 2022.

Adjusted EBIT

Adjusted EBIT was €66 million for the three months ended 30 June 2023, up €19 million compared to the three months ended 30 June 2022, mainly due to positive price realisation more than offsetting increased raw material and energy costs. Adjusted EBIT margin was 5.8% in the three months ended 30 June 2023 (4.6% in the three months ended 30 June 2022).

Financial Services Performance

		Three months ended 30 June
(€ million)	2023	2022	Change
Net revenues	117	60	95.0 %
Adjusted EBIT	35	27	8

Net revenues

Financial Services' net revenues totalled €117 million in the three months ended 30 June 2023, up 95.0% compared to the three months ended 30 June 2022, mainly due to higher base rates and higher receivables portfolio.

Adjusted EBIT

Adjusted EBIT was €35 million in the three months ended 30 June 2023, an increase of €8 million compared to the three months ended 30 June 2022, primarily due to higher receivables portfolio and better collection performances on managed receivables.

In the three months ended 30 June 2023, retail loan originations, including unconsolidated joint ventures, were €369 million, up €56 million compared to the three months ended 30 June 2022. The Iveco Group managed portfolio, including unconsolidated joint ventures, was €7,090 million as of 30 June 2023 (of which retail was 40% and wholesale 60%), up €1,384 million compared to 30 June 2022.

At 30 June 2023, the receivable balance greater than 30 days past due as a percentage of receivables was 2.3% (3.6% as of 30 June 2022).

Six months ended 30 June 2023 compared to six months ended 30 June 2022

Consolidated Results of Operations

			Six months ended 30 June 2023					Six months ended 30 June 2022
(€ million)	Industrial Activities(1)	Financial Services	Elimination	Consolidated	Industrial Activities(1)	Financial	Services Eliminations	Consolidated
			(2)					(2)
Net revenues	7,436	216	(73)	7,579	6,339	109	(29)	6,419
Cost of sales	6,266	111	(3) (73)	6,304	5,516	60	(29)	(3) 5,547
Selling, general and administrative costs	441	42	—	483	413	30	—	443
Research and development costs	272	—	—	272	230	—	—	230
Result from investments	(7)	7	—	—	1	7	—	8
Gains/(losses) on disposal of investments	—	—	—	—	4	—	—	4
Restructuring costs	8	—	—	8	4	—	—	4
Other income/(expenses)	(115)	5	—	(110)	(72)	(1)	—	(73)
EBIT	327	75	—	402	109	25	—	134
Financial income/ (expenses)	(157)	—	—	(157)	(62)	—	—	(62)
PROFIT/(LOSS) BEFORE TAXES	170	75	—	245	47	25	—	72
Income tax (expense) benefit	(63)	(22)	—	(85)	(45)	(6)	—	(51)
PROFIT/(LOSS) FOR THE PERIOD	107	53	—	160	2	19	—	21

(2) Elimination of Financial Services' interest income earned from Industrial Activities.

(3) Elimination of Industrial Activities' interest expense to Financial Services.

Net revenues

Net revenues were €7,579 million in the six months ended 30 June 2023, an increase of 18.1% compared to the six months ended 30 June 2022. Net revenues of Industrial Activities were €7,436 million in the six months ended 30 June 2023, an increase of 17.3% compared to the six months ended 30 June 2022, mainly due to positive price realisation and higher volumes.

Cost of sales

Cost of sales was €6,304 million for the six months ended 30 June 2023, compared with €5,547 million for the six months ended 30 June 2022. As a percentage of net revenues, cost of sales of Industrial Activities was 84.3% in the six months ended 30 June 2023, compared to 87.0% for the six months ended 30 June 2022 which included €43 million related to the impairment of certain assets in connection with Group operations in Russia and Ukraine.

Selling, general and administrative costs

Selling, general and administrative costs were €483 million during the six months ended 30 June 2023 (6.4% of net revenues) compared to €443 million for the six months ended 30 June 2022 (6.9% of net revenues).

Research and development costs

In the six months ended 30 June 2023, research and development costs were €272 million (€230 million in the six months ended 30 June 2022) and included all the research and development costs not recognised as assets in the period amounting to €163 million (€122 million in the six months ended 30 June 2022) and the amortization of capitalized development costs of €109 million (€108 million in the six months ended 30 June 2022). During the six months ended 30 June 2023, Iveco Group capitalized new expenditures for development costs for €203 million (€145 million in the six months ended 30 June 2022). The costs in both periods were primarily attributable to spending on engine development associated with emission requirements and continued investment in new products.

Result from investments

Result from investments was nil in the six months ended 30 June 2023 compared to a net gain of €8 million in the six months ended 30 June 2022.

Gains/(losses) on disposal of investments

Gains/losses on disposal of investment were nil in the six months ended 30 June 2023 (net gain of €4 million in the six months ended 30 June 2022).

Restructuring costs

Restructuring costs were €8 million for the six months ended 30 June 2023 and €4 million in the six months ended 30 June 2022.

Other income/(expenses)

Other expenses were €110 million for the six months ended 30 June 2023 compared to €73 million in the six months ended 30 June 2022. In the six months ended 30 June 2023, this item primarily included the negative impact of €43 million from the acquisition of full ownership of Nikola Iveco Europe GmbH (refer to the Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023, Note 13 "Investments and other non-current financial assets", for details). In the six months ended 30 June 2022, this item included the negative impact of €14 million deriving from the first-time adoption of hyperinflation accounting in Türkiye, in accordance with IAS 29 - Financial reporting in hyperinflationary economies, effective from 1 January 2022. In both periods, this item also included legal costs, indirect taxes, and separation costs related to the spin-off of the Iveco Group business.

Financial income/(expenses)

Net financial expenses were €157 million in the six months ended 30 June 2023, compared to €62 million in the six months ended 30 June 2022. The increase was primarily attributable to higher interest rates and the impact of hyperinflation accounting in Argentina and Türkiye.

Income tax (expense) benefit

		Six months ended 30 June
(€ million)	2023	2022
Profit (loss) before taxes	245	72
Income tax (expense) benefit	(85)	(51)
Effective tax rate	34.7 %	70.8 %

Income tax expense for the six months ended 30 June 2023 was €85 million based on profit before taxes of €245 million, compared to tax expense of €51 million for the six months ended 30 June 2022, based on profit before taxes of €72 million. The effective tax rates for the six months ended 30 June 2023 and 2022 were 34.7% and 70.8%, respectively. Excluding the negative impact of €43 million (€44 million after tax) from the acquisition of full ownership of Nikola Iveco Europe GmbH, the pre-tax and corresponding tax impact of cost related to certain claims arising from the EU Commission's 2016 antitrust settlement decision, the positive impact from the release of provisions related to the Russia and Ukraine conflict, restructuring costs, and the cost related to the spin-off of the Iveco Group business, the effective tax rate was 28% in the six months ended 30 June 2023. Excluding the pre-tax and corresponding tax impact related to the costs for the impairment of certain assets in connection with our operations in Russia and Ukraine, the impact from the first-time adoption of the hyperinflationary accounting in Türkiye, restructuring costs, the separation costs related to the spin-off, impairment costs of certain assets held for sale, the valuation allowance on Russian deferred tax assets, as well as other minor items, the effective tax rate was 35% in the in the six months ended 30 June 2022.

Profit/(loss) for the period

Profit was €160 million for the six months ended 30 June 2023 compared to a net profit of €21 million for the six months ended 30 June 2022, primarily due to profitability improvements across the segments.

Reconciliation of Profit/(loss) to Adjusted net profit/(loss)

2023 2022 (€ million) Profit /(loss) 160 21 Adjustments impacting Profit/ (loss) before income tax (expense) benefit (a) 61 86 Adjustments impacting Income tax (expense) benefit (b) (2) (5) Adjusted net Profit/ (loss) 219 102 Adjusted net Profit/ (loss) attributable to Iveco Group N.V. 216 94 Weighted average shares outstanding – diluted (million) 275 272 Adjusted diluted EPS (€) 0.79 0.35 Profit/ (loss) before income tax (expense) benefit 245 72 Adjustments impacting Profit/ (loss) before income tax (expense) benefit (a) 61 86 Adjusted Profit/ (loss) before income tax (expense) benefit (A) 306 158 Income tax (expense) benefit (85) (51) Adjustments impacting Income tax (expense) benefit (b) (2) (5) Adjusted Income tax (expense) benefit (B) (87) (56) Adjusted Effective Tax Rate (Adjusted ETR) (C=B/A) 28 % 35 % a) Adjustments impacting Profit/(loss) before income tax (expense) benefit Restructuring costs 8 4 Spin-off costs 3 10 Impacts from Russia and Ukraine conflict (5) 53 Acquisition of full ownership of Nikola Iveco Europe GmbH 43 — Costs related to certain claims arising from the EU Commission's 2016 antitrust settlement 12 — Impairment of certain assets held for sale — 3 First-time adoption of hyperinflationary accounting in Türkiye — 14 Other — 2 Total 61 86 b) Adjustments impacting Income tax (expense) benefit Tax effect of adjustments impacting Profit/(loss) before income tax (expense) benefit (2) (9) Valuation allowance on Russian deferred tax assets — 4 Other — — Total (2) (5)		Six months ended 30 June

Industrial Activities and Business Segment

The following tables show net revenues and Adjusted EBIT by segment. Also included is a discussion of results by Industrial Activities and each business segment.

Net revenues by segment

		Six months ended 30 June
(€ million)	2023	2022	% change
Commercial and Specialty Vehicles	6,368	5,294	20.3
Powertrain	2,248	1,998	12.5
Eliminations and Other	(1,180)	(953)	—
Total Net revenues of Industrial Activities	7,436	6,339	17.3
Financial Services	216	109	98.2
Eliminations and Other	(73)	(29)	—
Total Net revenues	7,579	6,419	18.1

Adjusted EBIT by segment

		Six months ended 30 June
(€ million)	2023	2022	Change	2023 Adjusted EBIT margin	2022 Adjusted EBIT margin
Commercial and Specialty Vehicles	379	171	208	6.0 %	3.2 %
Powertrain	127	92	35	5.6 %	4.6 %
Unallocated items, eliminations and other	(106)	(90)	-16	—	—
Adjusted EBIT of Industrial Activities	400	173	227	5.4 %	2.7 %
Financial Services	63	47	16	29.2 %	43.1 %
Eliminations and Other	—	—	—	—	—
Total Adjusted EBIT	463	220	243	6.1 %	3.4 %

Net revenues of Industrial Activities were €7,436 million during the six months ended 30 June 2023, an increase of 17.3% compared to the six months ended 30 June 2022, mainly due to positive price realisation and higher volumes.

Adjusted EBIT of Industrial Activities was €400 million during the six months ended 30 June 2023, compared to €173 million during the six months ended 30 June 2022. The increase was primarily attributable to positive price realisation, higher volumes and better mix more than offsetting higher raw material and energy costs.

Reconciliation of EBIT to Adjusted EBIT

The following tables summarize the reconciliation of Adjusted EBIT, a non EU-IFRS financial measure, to EBIT, the most comparable EU-IFRS financial measure, for the six months ended 30 June 2023 and 2022.

		Six months ended 30 June 2023
(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, elimination and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	373	125	(171)	327	75	—	402
Adjustments:
Restructuring costs	6	2	—	8	—	—	8
Other discrete items(1)	—	—	65	65	(12)	—	53
Adjusted EBIT	379	127	(106)	400	63	—	463

(1) In the six months ended 30 June 2023, this item mainly includes €43 million from the agreed acquisition of full ownership of Nikola Iveco Europe GmbH, €12 million costs related to certain claims arising from the EU Commission's 2016 antitrust settlement decision, as well as €5 million positive impact from the release of provisions related to the Russia and Ukraine conflict.

Six months ended 30 June 2022

(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, elimination and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	120	92	(103)	109	25	—	134
Adjustments:
Restructuring costs	4	—	—	4	—	—	4
Other discrete items(1)	47	—	13	60	22	—	82
Adjusted EBIT	171	92	(90)	173	47	—	220

(1) In the six months ended 30 June 2022, this item mainly included €53 million in connection with our operations in Russia and Ukraine, primarily due to the impairment of certain assets, €14 million related to the first-time adoption of the hyperinflationary accounting in Türkiye, €10 million separation costs related to the spin-off of the Iveco Group business, and €3 million related to the impairment of certain assets held for sale.

Industrial Activities Performance

Commercial and Specialty Vehicles

Net revenues

The following table shows Commercial and Specialty Vehicles' net revenues by geographic region for the six months ended 30 June 2023 compared to the six months ended 30 June 2022:

Commercial and Specialty Vehicles Net revenues – by geographic region:

		Six months ended 30 June
(€ million)	2023	2022	% change
Europa	4,982	3,984	25.1
South America	693	656	5.6
North America	61	54	13.0
Rest of World	632	600	5.3
Total	6,368	5,294	20.3

Commercial and Specialty Vehicles' net revenues were €6,368 million in the six months ended 30 June 2023, an increase of 20.3% compared to the six months ended 30 June 2022, primarily driven by positive price realisation and higher volumes.

During the six months ended 30 June 2023, the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, increased 13% compared to the same period in 2022. In Europe, the LCV market (GVW 3.5-7.49 tons) increased 10% and the M&H truck market (GVW ≥7.5 tons) increased 19%. In South America, new truck registrations (GVW ≥3.5 tons) decreased 12% in the six months ended 30 June 2023 compared to the same period of 2022, with a decrease of 15% in Brazil and an increase of 2% in Argentina. In Rest of World, new truck registrations increased by 18%. Bus registration increased 6% in Europe and 45% in South America.

In the six months ended 30 June 2023, trucks' estimated market share in the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, was 11.7%, down 0.8 p.p. compared to the six months ended 30 June 2022. In the six months ended 30 June 2023, trucks' market share in South America was 13.4%, up 0.6 p.p. compared to the six months ended 30 June 2022.

In the six months ended 30 June 2023, Commercial and Specialty Vehicles delivered approximately 83,900 vehicles (including buses and specialty vehicles), representing a 6% increase compared to the same period of 2022. Further, volumes were down 2% in LCV and up 22% in M&H truck segments. Commercial and Specialty Vehicles' deliveries increased 13% in Europe, and decreased 24% in South America and 1% in Rest of World, respectively.

Adjusted EBIT

Adjusted EBIT was €379 million in the six months ended 30 June 2023 (up €208 million compared to the six months ended 30 June 2022), driven by positive price realisation, higher volumes and better mix, partially offset by higher product costs mainly due to increased raw material and energy costs. Adjusted EBIT margin was 6.0% in the six months ended 30 June 2023 (3.2% in the six months ended 30 June 2022).

Powertrain

Net revenues

Powertrain's net revenues were €2,248 million in the six months ended 30 June 2023, an increase of 12.5% compared to the six months ended 30 June 2022, mainly driven by positive price realisation, higher volumes and better mix. Sales to external customers accounted for 51% of total net revenues (55% in the six months ended 30 June 2022).

During the six months ended 30 June 2023, Powertrain sold approximately 248,900 engines, up 1% compared to the six months ended 30 June 2022. In terms of customers, 40% of engine units were supplied to Commercial and Specialty Vehicles and 60% to external customers. Additionally, Powertrain delivered approximately 34,300 transmissions, a decrease of 1% compared to the six months ended 30 June 2022, and approximately 123,400 axles (of which 700 E-axles and 700 batteries), an increase of 16% compared to the six months ended 30 June 2022.

Adjusted EBIT

Adjusted EBIT was €127 million for the six months ended 30 June 2023, up €35 million compared to the six months ended 30 June 2022 mainly due to positive price realisation and higher volumes, more than offsetting increased raw material and energy costs. Adjusted EBIT margin was 5.6% in the six months ended 30 June 2023 (4.6% in the six months ended 30 June 2022).

Financial Services Performance

	Six months ended 30 June
(€ million)	2023	2022	Change
Net revenues	216	109	98.2 %
Adjusted EBIT	63	47	16

Net revenues

Financial Services' net revenues totalled €216 million in the six months ended 30 June 2023, almost doubled compared to the six months ended 30 June 2022, mainly due to higher base rates and higher receivables portfolio.

Adjusted EBIT

Adjusted EBIT was €63 million in the six months ended 30 June 2023, an increase of €16 million compared to the six months ended 30 June 2022, primarily due to higher receivables portfolio and better collection performances on managed receivables.

At 30 June 2023, the receivables balance greater than 30 days past due as a percentage of receivables was 2.3% (3.6% as of 30 June 2022).

CONDENSED STATEMENT OF FINANCIAL POSITION BY ACTIVITY

	At 30 June 2023				At 31 December 2022
(€ million)	Industrial Activities(1)	Financial Services	Eliminations	Consolidated	Industrial Activities(1)	Financial Services	Eliminations	Consolidated
ASSETS
Intangible assets	1,642	15	—	1,657	1,496	15	—	1,511
Property, plant and equipment	3,043	1	—	3,044	3,096	1	—	3,097
Investments and other non-current financial assets:	70	160	—	230	84	153	—	237
Investments accounted for using the equity method	18	147	—	165	10	140	—	150
Equity investments measured at fair value through other comprehensive income	25	—	—	25	62	—	—	62
Other investments and financial assets	27	13	—	40	12	13	—	25
Leased assets	15	48	—	63	19	51	—	70
Deferred tax assets	609	73	—	682	622	78	—	700
Total Non-current assets	5,379	297	—	5,676	5,317	298	—	5,615
Inventories	3,746	3	—	3,749	2,838	—	—	2,838
Trade receivables	342	19	(10) (3)	351	334	18	(11) (3)	341
Receivables from financing activities	1,168	5,260	(1,760) (3)	4,668	772	4,758	(1,152) (3)	4,378
Current tax receivables	164	4	(31) (4)	137	120	5	(30) (4)	95
Other current receivables and financial assets	257	116	(21) (2)	352	267	92	(20) (2)	339
Prepaid expenses and other assets	61	13	—	74	58	10	—	68
Derivative assets	46	1	(4) (5)	43	51	2	(3) (5)	50
Cash and cash equivalents	1,383	308	—	1,691	2,100	188	—	2,288
Total Current assets	7,167	5,724	(1,826)	11,065	6,540	5,073	(1,216)	10,397
Assets held for sale	59	—	—	59	1	—	—	1
TOTAL ASSETS	12,605	6,021	(1,826)	16,800	11,858	5,371	(1,216)	16,013
EQUITY AND LIABILITIES
Total Equity	1,665	811	—	2,476	1,623	768	—	2,391
Provisions:	2,010	101	—	2,111	2,000	108	—	2,108
Employee benefits	433	11	—	444	495	15	—	510
Other provisions	1,577	90	—	1,667	1,505	93	—	1,598
Debt:	1,370	5,013	(1,760) (3)	4,623	1,173	4,412	(1,152) (3)	4,433
Asset-backed financing	—	3,301	—	3,301	—	3,149	—	3,149
Other debt	1,370	1,712	(1,760) (3)	1,322	1,173	1,263	(1,152) (3)	1,284
Derivative liabilities	77	2	(4) (5)	75	47	2	(3) (5)	46
Trade payables	4,093	24	(3) —	4,117	3,660	32	(2) (3)	3,690
Tax liabilities	115	40	(43) (4)	112	113	22	(28) (4)	107
Deferred tax liabilities	20	—	—	20	25	—	—	25
Other current liabilities	3,196	30	(19) (2)	3,207	3,217	27	(31) (2)	3,213
Liabilities held for sale	59	—	—	59	—	—	—	—
Total Liabilities	10,940	5,210	(1,826)	14,324	10,235	4,603	(1,216)	13,622
TOTAL EQUITY AND LIABILITIES	12,605	6,021	(1,826)	16,800	11,858	5,371	(1,216)	16,013

(2) This item includes the elimination of intercompany activity between Industrial Activities and Financial Services.

(3) This item includes the elimination of receivables/payables between Industrial Activities and Financial Services.

(4) This item includes the elimination of tax receivables/payables between Industrial Activities and Financial Services and reclassifications needed for appropriate consolidated presentation.

(5) This item includes the elimination of derivative assets/liabilities between Industrial Activities and Financial Services.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion of liquidity and capital resources primarily focuses on our condensed consolidated statement of cash flows and our condensed consolidated statement of financial position. The Group's operations are capital intensive and subject to seasonal variations in financing requirements for dealer receivables and dealer and company inventories. Whenever necessary, funds from operating activities are supplemented from external sources. Iveco Group, focusing on cash preservation and leveraging its good access to funding, continues to maintain solid financial strength and liquidity.

Cash Flow Analysis

The following table presents the cash flows from operating, investing and financing activities by activity for the six months ended 30 June 2023 and 2022:

					2023				2022
	(€ million)	Industrial Activities(1)	Financial Services	Eliminations	Consolidated	Industrial Activities(1)	Financial	Services Eliminations	Consolidated
A)	CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD	2,100	188	—	2,288	726	171	—	897
B)	CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES:
	Profit/(loss) for the period	107	53	—	160	2	19	—	21
	Amortization and depreciation (net of vehicles sold under buy-back commitments and operating leases)	283	1	—	284	278	1	—	279
	(Gains)/losses on disposal of property plant and equipment and intangible assets (net of vehicles sold under buy-back commitments)	—	—	—	—	(12)	—	—	(12)
	Other non-cash items	7	(21)	—	(14)	—	13	—	13
	Dividends received	21	—	(21) (2)	—	21	—	(21) (2)	—
	Change in provisions	27	(7)	—	20	(18)	—	—	(18)
	Change in deferred income taxes	4	4	—	8	(17)	(5)	—	(22)
	Change in items due to buy-back commitments	(a) (34)	—	—	(34)	7	8	—	15
	Change in operating lease items	(b) (3)	(7)	—	(10)	2	(11)	—	(9)
	Change in working capital	(500)	(16)	—	(516)	(260)	5	—	(255)
	TOTAL	(88)	7	(21)	(102)	3	30	(21)	12
C)	CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES:
	Investments in:
	Property, plant and equipment and intangible assets (net of vehicles sold under buy-back commitments and operating leases)	(329)	—	—	(329)	(247)	—	—	(247)
	Consolidated subsidiaries and other equity investments	(21)	—	—	(21)	(20)	—	—	(20)
	Proceeds from the sale of non-current assets (net of vehicles sold under buy back commitments)	1	—	—	1	15	—	—	15
	Net change in receivables from financing
	activities	16	(314)	—	(298)	7	(283)	—	(276)
	Change in other current financial assets Other changes	11 (121)	— 196	— —	11 75	15 252	— 264	— —	15 516
	TOTAL	(443)	(118)	—	(561)	22	(19)	—	3
D)	CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
	Net change in debt and derivative assets/ liabilities	(58)	252	—	194	462	30	—	492
	Dividends paid	—	(21)	21 (2)	—	—	(21)	21 (2)	—
	Purchase of treasury shares	(21)	—	—	(21)	—	—	—	—
	TOTAL	(79)	231	21	173	462	9	21	492
	Translation exchange differences	(97)	—	—	(97)	26	1	—	27
E)	TOTAL CHANGE IN CASH AND CASH EQUIVALENTS	(707)	120	—	(587)	513	21	—	534
F)	CASH AND CASH EQUIVALENTS AT END OF THE PERIOD(*)	1,393	308	—	1,701	1,239	192	—	1,431

(a) Cash generated from the sale of vehicles under buy-back commitments, net of amounts included in Profit/(loss), is recognised under operating activities in a single line item, which includes changes in working capital, capital expenditure, depreciation and impairment losses.

(b) Cash from operating lease is recognised under operating activities in a single line item, which includes capital expenditure, depreciation, write-downs and changes in inventory. (1) Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes Commercial and Specialty Vehicles and Powertrain segments, as well as the holding company Iveco Group N.V.

(2) This item includes the elimination of dividend from Financial Services to Industrial Activities.

(*) At 30 June 2023, it includes €10 million classified as "Assets held for sale" in the Condensed Consolidated Statement of Financial Position.

Six months ended 30 June

At 30 June 2023, the Group had cash and cash equivalents of €1,701 million, including €10 million classified as "Assets held for sale" in the Condensed Consolidated Statement of Financial Position. The decrease of €587 million, or -25.7%, from €2,288 million at 31 December 2022, was mainly due to Free Cash Flow absorption in the period.

Cash and cash equivalents at 30 June 2023 included €105 million (€83 million at 31 December 2022) of restricted cash that was reserved primarily for the servicing of securitization-related debt. At 30 June 2023, undrawn medium-term unsecured committed facilities were €2,006 million (€2,000 million at 31 December 2022) and other current financial assets were €14 million (€26 million at 31 December 2022).

At 30 June 2023, the aggregate of cash and cash equivalents, undrawn medium-term unsecured committed facilities and other current financial assets, which the Group considers to constitute the Group's principal liquid assets (or "Available liquidity"(1)), totalled €3,764 million (€4,364 million at 31 December 2022), which also included €43 million financial receivables (€50 million at 31 December 2022) from CNH Industrial deriving from financing activities and sale of trade receivables.

Net Cash from Operating Activities

Cash used by operating activities in the six months ended 30 June 2023 totalled €102 million and primarily comprised the following elements:

change in working capital which absorbed €516 million;
plus €284 million in non-cash charges for depreciation and amortization (net of commercial vehicles sold under buy-back commitments and operating leases);
plus €160 million profit.

In the six months ended 30 June 2022, cash generated by operating activities was €12 million, primarily due to €279 million non-cash charges for depreciation and amortization and €21 million profit, partially offset by €255 million seasonal working capital absorption.

Net Cash from Investing Activities

In the six months ended 30 June 2023, cash used by investing activities was €561 million, primarily due to investments in tangible and intangible assets of €329 million (including €203 million in capitalized development costs) and a net increase in receivables from financing activities of €298 million. Investments in tangible and intangible assets are net of investments in commercial vehicles for the Group's long-term rental operations and of investments relating to vehicles sold under buy-back commitments, which are reflected in cash flows relating to operating activities.

In the six months ended 30 June 2022, cash provided by investing activities totalled €3 million, with other changes of €516 million, deriving from the change in receivables/payables from/to CNH Industrial, and the change in other financial assets of €15 million almost offset by expenditures on tangible and intangible assets of €247 million (including €145 million in capitalized development costs) and a net increase in receivables from financing activities of €276 million.

Net Cash from Financing Activities

In the six months ended 30 June 2023, cash provided by financing activities was €173 million primarily due to asset-backed financing increase, compared to €492 million provided in the six months ended 30 June 2022, primarily deriving from drawing the €500 million syndicated term loan.

(1) a non EU-IFRS financial measure as defined in paragraph "Alternative performance measures (or "Non EU-IFRS financial measures") of section "General" above.

Consolidated Debt

Our consolidated Debt at 30 June 2023 and 31 December 2022 is as detailed in the following table:

		At 31 December 2022
(€ million)	Consolidated	Industrial Activities	Financial Services	Consolidated	Industrial Activities	Financial Services
Total Debt	4,623	1,370	5,013	4,433	1,173	4,412

Iveco Group believes that Net Cash (Debt), a non EU-IFRS financial measure as defined in paragraph "Alternative performance measures (or "Non EU-IFRS financial measures")" of section "General" above, is a useful analytical metric for measuring our effective borrowing requirements. We provide a separate analysis of Net Cash (Debt) of Industrial Activities and Net Cash (Debt) of Financial Services to reflect the different cash flow management practices in the two activities. Industrial Activities reflects the consolidation of all majority-owned subsidiaries, except for Financial Services. Financial Services reflects the consolidation of the Financial Services' businesses.

The calculation of Net Cash (Debt) at 30 June 2023 and 31 December 2022, and the reconciliation of Total (Debt), the EU-IFRS financial measure that we believe to be most directly comparable, to Net Cash (Debt), are shown below:

			At 31 December 2022
(€ million)	Consolidated	Industrial Activities	Financial Services	Consolidated	Industrial Activities	Financial Services
Third party (debt)	(4,391)	(722)	(3,669)	(4,156)	(739)	(3,417)
Intersegment notes (payable)(1)	—	(643)	(1,117)	—	(432)	(720)
(Debt) payable to CNH Industrial(2)	(232)	(5)	(227)	(277)	(2)	(275)
Total (Debt)	(4,623)	(1,370)	(5,013)	(4,433)	(1,173)	(4,412)
Cash and cash equivalents(*)	1,701	1,393	308	2,288	2,100	188
Intersegment financial receivables(1)	—	1,117	643	—	720	432
Financial receivables from CNH Industrial(3)	102	43	59	146	50	96
Other current financial assets(4)	14	14	—	26	26	—
Derivative assets(5)	43	46	1	50	51	2
Derivative (liabilities)(5)	(75)	(77)	(2)	(46)	(47)	(2)
Net Cash (Debt)(6)	(2,838)	1,166	(4,004)	(1,969)	1,727	(3,696)

(1) As a result of the role played by the central treasury, debt for Industrial Activities also includes funding raised by the central treasury on behalf of Financial Services (included under Intersegment financial receivables). Intersegment financial receivables for Financial Services, on the other hand, represent loans or advances to Industrial Activities – for receivables sold to Financial Services that do not meet the derecognition requirements – as well as cash deposited temporarily with the central treasury. Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of €643 million and €432 million as of 30 June 2023 and 31 December 2022, respectively. Total Debt of Financial Services includes Intersegment notes payable to Industrial Activities of €1,117 million and €720 million as of 30 June 2023 and 31 December 2022, respectively.

(2) This item includes payables related to purchases of receivables or collections with settlement in the following days. (3) This item includes receivables related to sales of receivables or collections with settlement in the following days.

(4) This item includes short-term deposits and investments towards high-credit rating counterparties.

(5) Derivative assets and Derivative liabilities include, respectively, the positive and negative fair values of derivative financial instruments.

(6) The net intersegment receivable/(payable) balance recorded by Financial Services relating to Industrial Activities was €-474 million and €-288 million as of 30 June 2023 and 31 December 2022, respectively.

(*) At 30 June 2023, it includes €10 million classified as "Assets held for sale" in the Condensed Consolidated Statement of Financial Position.

Net Debt at 30 June 2023 increased by €869 million compared to 31 December 2022 mainly reflecting €462 million negative Free Cash Flow of Industrial Activities and an increased Financial Services' third party debt driven by higher portfolio.

The following table shows the change in Net Cash (Debt) of Industrial Activities for the six months ended 30 June 2023 and 2022:

		Six months ended 30 June
(€ million)	2023	2022
Net Cash (Debt) of Industrial Activities at beginning of period	1,727	1,063
Adjusted EBIT of Industrial Activities	400	173
Depreciation and amortization	283	278
Depreciation of assets under operating leases and assets sold with buy-back commitments	115	111
Cash interest and taxes	(102)	(52)
Changes in provisions and similar(1)	(284)	(247)
Change in working capital	(500)	(260)
Operating cash flow of Industrial Activities	(88)	3
Investments in property, plant and equipment, and intangible assets(2)	(329)	(247)
Other changes	(45)	(33)
Free Cash Flow of Industrial Activities	(462)	(277)
Capital increases, dividends and share buy-backs	(21)	—
Currency translation differences and other	(78)	(161)
Change in Net Cash (Debt) of Industrial Activities	(561)	(438)
Net Cash (Debt) of Industrial Activities at end of period	1,166	625

(1) Including other cash flow items related to operating lease and buy-back activities. (2) Excluding assets sold under buy-back commitments and assets under operating leases.

Iveco Group believes that Free Cash Flow of Industrial Activities (a non EU-IFRS financial measure as defined in paragraph "Alternative performance measures (or "Non EU-IFRS financial measures")" of section "General" above) is a useful analytical metric for measuring the cash generation ability of our Industrial Activities. For the six months ended 30 June 2023, the Free Cash Flow of Industrial Activities was negative for €462 million, €185 million worse compared to the six months ended 30 June 2022 primarily due to working capital absorption (mainly from inventory) and higher R&D spending, partially offset by higher EBIT in the period.

The reconciliation of Free Cash Flow of Industrial Activities to Net cash provided by (used in) Operating Activities, the EU-IFRS financial measure that we believe to be most directly comparable, for the six months ended 30 June 2023 and 2022, is shown below:

	Six months ended 30 June
(€ million)	2023	2022
Net cash provided by (used in) Operating Activities	(102)	12
Less: Cash flows from Operating Activities of Financial Services net of eliminations	14	(9)
Operating cash flow of Industrial Activities	(88)	3
Investments in property, plant and equipment, and intangible assets of Industrial Activities	(329)	(247)
Other changes(1)	(45)	(33)
Free Cash Flow of Industrial Activities	(462)	(277)

(1) This item primarily includes change in intersegment financial receivables and capital increases in intersegment investments.

The non EU-IFRS financial measures (Available liquidity, Net Cash (Debt) and Free Cash Flow of Industrial Activities), used in this section, should neither be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with EU-IFRS. In addition, these non EU-IFRS financial measures may not be computed in the same manner as similarly titled measures used by other companies.

With the purpose of further diversifying its funding structure, Iveco Group has established a commercial paper program. IC Financial Services S.A. in Europe issued commercial paper under a program which had an amount of €10 million outstanding at 30 June 2023 (€66 million at 31 December 2022).

Iveco Group continues to closely monitor its liquidity and capital resources for any potential impact that the challenging environment in which it operates, including current macroeconomic and geopolitical issues, supply chain issues and global logistic constraints, energy and material availability and relevant price variability, may have on its operations. Iveco Group believes that its cash and cash equivalents, access to credit facilities and cash flows from future operations will be adequate to fund its known cash needs also in the context of that challenging environment.

RELATED PARTY TRANSACTIONS

See Note 28. "Related party transactions" of the Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023.

IMPORTANT EVENTS DURING THE FIRST SIX MONTHS OF 2023

On 11 January, IVECO BUS signed a three-year framework agreement to supply up to 150 E-WAY full electric city buses to Busitalia, the FS Italiane Group's bus company that mainly operates local public transport services.
On 24 January, IDV, the brand of Iveco Group specialised in defence and civil protection equipment, announced it entered into an agreement to acquire a controlling stake in MIRA UGV, the Uncrewed Ground Vehicle division of HORIBA MIRA, a global provider of automotive engineering, research and test services, headquartered in the U.K. The controlling stake was acquired during the first quarter.
On 25 January, IVECO BUS, a brand of Iveco Group N.V., signed a framework agreement with the Flemish government-owned public transport enterprise De Lijn for the sale of a first batch of 65 E-WAY full electric city buses and further batches up to a total of 500 vehicles.
On 16 February, IVECO BUS was awarded a public tender for the supply of 120 E-WAY full electric city buses for Autoguidovie Group, the largest Italian privately owned local public transport company.
On 30 March, Iveco Group signed a Letter of Intent for the transfer of its Nordic retail commercial operations for light, medium and heavy trucks and minibuses to Hedin Mobility Group, a leader in the distribution of vehicles and spare parts in the Nordic region and internationally.
On 14 April, at the Annual General Meeting (the "AGM"), Iveco Group shareholders adopted the 2022 Annual Financial Statements. Furthermore, shareholders authorised the Board of Directors to repurchase up to 10,000,000 Common Shares with a maximum total allocation of €130,000,000 for a period of 18 months from the date of the AGM.
On 17 April, IVECO BUS with its electric E-WAY competed in a tender awarded by Consip, the central purchasing body of the Italian public administration, won a total order that is expected to exceed 1,000 buses in 2023 alone.
On 18 April, Iveco Group returned to producing buses in Italy with the inauguration of its new plant in Foggia dedicated to the production of zero- and low-emission buses.
On 9 May, Iveco Group and Nikola Corporation announced they entered in a new phase of their partnership, and that Iveco Group would assume full ownership of the joint venture in Europe, Nikola Iveco Europe GmbH. On 30 June, Iveco Group, following the finalization of the definitive agreements with Nikola Corporation acquired the full and sole ownership of the German company resulting from the former joint venture Nikola Iveco Europe GmbH, now to be renamed as EVCO.
On 22 May, Iveco Group announced it will support EDEKA Minden-Hannover, one of the leading food retailers in Germany, in converting the entire 700-vehicle company fleet from diesel to Bio-Liquified Natural Gas ("LNG") propulsion by 2025.
On 16 June, IDV signed a framework agreement with the Swedish Defence Materiel Administration to provide up to 3,000 light vehicles to the Swedish Armed Forces, with an initial order for 400 vehicles.
On 27 June, Iveco Group and Air Liquide reaffirmed their commitment to hydrogen at the inauguration of the first high pressure hydrogen station for long-haul trucks in Europe.
On 30 June, Iveco Group reiterated its commitment with Shell to foster the decarbonisation of the road transport industry.

RISKS AND UNCERTAINTIES

The Company believes that the risks and uncertainties identified for the second half of 2023 are in line with the main risks and uncertainties to which Iveco Group N.V. and the Group are exposed and that the Company presented in its Annual Report at 31 December 2022, available on the Company website. Those risks and uncertainties should be read in conjunction with this Semi-Annual Report, including its notes and disclosures.

Although the Company believes that those risks and uncertainties are material risks and uncertainties concerning the Group's business and industry, they are not the only risks and uncertainties relating to the Group. Other risks, events, facts or circumstances not presently known to the Group, or that the Group currently deems to be immaterial could, individually or cumulatively, alone or in combination with other events or circumstances, prove to be important and may have a significant negative impact on the Group's business, financial condition, results of operations and prospects.

2023 FINANCIAL GUIDANCE(*)

Based on current industry outlook, solid price realisation, strong order backlogs and no signs of unusual levels of order cancellations, Iveco Group is raising its full year 2023 preliminary financial guidance as follows:

Consolidated Adjusted EBIT increased between €750 million and €800 million (previous guidance: between €600 million and €640 million)
Net revenues of Industrial Activities(**) increased up between 5% and 8% versus full year 2022 (previous guidance: up between 3% and 5% versus full year 2022)
Adjusted EBIT of Industrial Activities increased at between €650 million and €700 million (previous guidance: at between €510 million and €550 million)
SG&A costs of Industrial Activities confirmed at ~ 6% of net revenues
Net cash of Industrial Activities at ~ €2.0 billion, including share buy-back and extraordinary transactions already communicated (previous guidance: at ~ €2.0 billion, excluding share buy-backs but including extraordinary transactions already communicated)
Investments of Industrial Activities(***) confirmed up ~ 15% versus full year 2022.
(*) Financial Guidance based on current visibility. A significant escalation or expansion of current macroeconomic and geopolitical issues, supply chain issues and global logistic constraints, and energy and material availability and relevant price variability could have a material adverse effect on Iveco Group financial results.
(**) Including currency translation effects.
(***) Investments in property, plant and equipment, and intangible assets (excluding assets sold under buy-back commitments and assets under operating leases).

SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2023

Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 29

CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)

Three months ended 30 June			Six months ended 30 June
(€ million)	Note	2023	2022	2023	2022
Net revenues	(1)	4,180	3,371	7,579	6,419
Cost of sales	(2)	3,453	2,896	6,304	5,547
Selling, general and administrative costs	(3)	254	221	483	443
Research and development costs	(4)	147	122	272	230
Result from investments:	(5)	5	7	—	8
Share of the profit/(loss) of investees accounted for using the equity method		5	7	—	8
Gains/(losses) on the disposal of investments		—	(1)	—	4
Restructuring costs	(6)	6	3	8	4
Other income/(expenses)	(7)	(31)	(42)	(110)	(73)
EBIT		294	93	402	134
Financial income/(expenses)	(8)	(83)	(28)	(157)	(62)
PROFIT/(LOSS) BEFORE TAXES		211	65	245	72
Income tax (expense) benefit	(9)	(61)	(29)	(85)	(51)
PROFIT/(LOSS) FOR THE PERIOD		150	36	160	21
PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the parent		151	30	157	13
Non-controlling interests		(1)	6	3	8

(10)	0.56	0.11	0.58	0.05
(10)	0.55	0.11	0.57	0.05

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

		Three months ended 30 June		Six months ended 30 June
(€ million)	Note	2023	2022	2023	2022
PROFIT/(LOSS) FOR THE PERIOD (A)		150	36	160	21

Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss:
Net change in fair value of equity investments measured at fair value through other comprehensive income	(20)	—	(130)	(23)	(106)
Tax effect of Other comprehensive (loss)/income that will not be reclassified subsequently to profit or loss	(20)	—	—	—	—
Total Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss, net of tax (B1)		—	(130)	(23)	(106)
Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedging instruments	(20)	(14)	(9)	(15)	(35)
Exchange gains/(losses) on translating foreign operations	(20)	(58)	14	(101)	63
Share of Other comprehensive income/(loss) of entities accounted for using the equity method	(20)	—	7	—	7
Tax effect of Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss	(20)	1	5	1	4
Total Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss, net of tax (B2)		(71)	17	(115)	39
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX (B) = (B1) + (B2)		(71)	(113)	(138)	(67)
TOTAL COMPREHENSIVE INCOME/(LOSS) (A)+(B)		79	(77)	22	(46)
TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO:
Owners of the parent		84	(80)	21	(57)
Non-controlling interests		(5)	3	1	11

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Unaudited)

(€ million)	Note	At 30 June 2023	At 31 December 2022
ASSETS
Intangible assets	(11)	1,657	1,511
Property, plant and equipment	(12)	3,044	3,097
Investments and other non-current financial assets:	(13)	230	237
Investments accounted for using the equity method		165	150
Equity investments measured at fair value through other comprehensive income		25	62
Other investments and non-current financial assets		40	25
Leased assets	(14)	63	70
Deferred tax assets		682	700
Total Non-current assets		5,676	5,615
Inventories	(15)	3,749	2,838
Trade receivables	(16)	351	341
Receivables from financing activities	(16)	4,668	4,378
Current tax receivables	(16)	137	95
Other current receivables and financial assets	(16)	352	339
Prepaid expenses and other assets		74	68
Derivative assets	(17)	43	50
Cash and cash equivalents	(18)	1,691	2,288
Total Current assets		11,065	10,397
Assets held for sale	(19)	59	1
TOTAL ASSETS		16,800	16,013

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Unaudited)

(CONTINUED)

(€ million)	Note	At 30 June 2023	At 31 December 2022
EQUITY AND LIABILITIES
Issued capital and reserves attributable to owners of the parent		2,420	2,354
Non-controlling interests		56	37
Total Equity	(20)	2,476	2,391
Provisions:		2,111	2,108
Employee benefits	(21)	444	510
Other provisions	(21)	1,667	1,598
Debt:	(22)	4,623	4,433
Asset-backed financing	(22)	3,301	3,149
Other debt	(22)	1,322	1,284
Derivative liabilities	(17)	75	46
Trade payables	(23)	4,117	3,690
Tax liabilities		112	107
Deferred tax liabilities		20	25
Other current liabilities	(24)	3,207	3,213
Liabilities held for sale	(19)	59	—
Total Liabilities		14,324	13,622
TOTAL EQUITY AND LIABILITIES		16,800	16,013

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

		Six months ended 30 June
(€ million)	Note	2023	2022
A) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	(18)	2,288	897
B) CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES:
Profit/(loss) for the period		160	21
Amortization and depreciation (net of vehicles sold under buy-back commitments and operating leases)		284	279
(Gains)/losses on disposal of non-current assets (net of vehicles sold under buy-back commitments)		—	(12)
Other non-cash items		(14)	13
Dividends received		—	—
Change in provisions		20	(18)
Change in deferred income taxes		8	(22)
Change in items due to buy-back commitments	(a)	(34)	15
Change in operating lease items	(b)	(10)	(9)
Change in working capital		(516)	(255)
TOTAL		(102)	12
C) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES:
Investments in:
Property, plant and equipment and intangible assets (net of vehicles sold under buy-back commitments and operating leases)		(329)	(247)
Consolidated subsidiaries and other equity investments		(21)	(20)
Proceeds from the sale of non-current assets (net of vehicles sold under buy-back commitments)		1	15
Net change in receivables from financing activities		(298)	(276)
Change in other current financial assets		11	15
Other changes		75	516
TOTAL		(561)	3
D) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
Issuance of other medium-term borrowings (net of repayment)		121	(28)
Net change in other financial payables and derivative assets/liabilities		73	520
Purchase of treasury shares		(21)	—
TOTAL		173	492
Translation exchange differences		(97)	27
E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS		(587)	534
F) CASH AND CASH EQUIVALENTS AT END OF PERIOD	(18)	1,701	1,431

(b) Cash from operating lease is recognised under operating activities in a single line item, which includes capital expenditure, depreciation, write-downs and changes in inventory.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

	Attributable to the owners of the parent
(€ million)	Invested capital and retained earnings (*)	Share capital	Treasury shares	Capital reserves	Earnings reserves	Cash flow hedge reserve	Cumulative translation adjustment reserve	Defined benefit plans remeasu rement reserve	Equity investments at FVTOCI	Cumulative share of OCI of entities consolidated under the equity method	Non controlling interests	Total
AT 31 DECEMBER 2021	2,653	—	—	—	—	5	(247)	(151)	(7)	36		22 2,311
Allocation of combined invested capital following the Demerger of CNH Industrial	(2,653)	3	—	2,294	356	—	—	—	—	—	—	—
Share-based compensation expense	—	—	—	8	—	—	—	—	—	—	—	8
Profit/(loss) for the period	—	—	—	—	13	—	—	—	—	—	8	21
Other comprehensive income/(loss) for the period	—	—	—	—	—	(32)	61	—	(106)	7	3	(67)
Total Comprehensive income/(loss)	—	—	—	—	13	(32)	61	—	(106)	7	11	(46)
Other changes(1)	—	—	—	—	18	—	—	—	—	—	(1)	17
AT 30 JUNE 2022	—	3	—	2,302	387	(27)	(186)	(151)	(113)	43		32 2,290

Attributable to the owners of the parent

(€ million)	Share capital	Treasury shares	Capital reserves	Earnings reserves	Cash flow hedge reserve	Cumulative translation adjustment reserve	Defined benefit plans remeasu rement reserve	Equity investments at FVTOCI	Cumulative share of OCI of entities consolidated under the equity method	Non controlling interests	Total
AT 31 DECEMBER 2022	3	—	2,311	566	(3)	(255)	(89)	(179)	—		37 2,391
Purchase of treasury shares	—	(21)	—	—	—	—	—	—	—	—	(21)
Common shares issued from treasury shares for share-based compensation	—	6	(6)	—	—	—	—	—	—	—	—
Share-based compensation expense	—	—	8	—	—	—	—	—	—	—	8
Profit/(loss) for the period	—	—	—	157	—	—	—	—	—	3	160
Other comprehensive income/ (loss) for the period	—	—	—	—	(14)	(99)	—	(23)	—		(2) (138)
Total Comprehensive income/(loss) for the period	—	—	—	157	(14)	(99)	—	(23)	—	1	22
Other changes(1)	—	—	—	58	—	—	—	—	—	18	76
AT 30 JUNE 2023	3	(15)	2,313	781	(17)	(354)	(89)	(202)	—		56 2,476

(1) Other changes of "Earnings reserves" primarily include the impact of IAS 29 - Financial reporting in hyperinflationary economies applied for subsidiaries that prepare their financial statements in a functional currency of a hyperinflationary economy. In particular, from 1 July 2018, Argentina's economy was considered to be hyperinflationary. Furthermore, as of 30 June 2022, the Company applied the hyperinflationary accounting in Türkiye, with effect from 1 January 2022.

(*) During the year ended 31 December 2021, Iveco Group did not comprise a separate parent company or group of entities. The amounts at 31 December 2021 have been prepared in connection with the Demerger and have been derived from the Consolidated Financial Statements and accounting records of CNH Industrial, on a combined basis. Therefore, it was not meaningful to present separately share capital or an analysis of reserves. Following the Demerger, the combined Invested capital and earnings reserves have been allocated reflecting the impact of the Demerger.

NOTES

(Unaudited)

CORPORATE INFORMATION

Iveco Group N.V. is a global automotive leader that, through its various businesses, designs, produces and sells trucks, commercial vehicles, buses and specialty vehicles, in addition to a broad portfolio of powertrain applications. In addition, Iveco Group's Financial Services segment offers a range of financial products and services to dealers and customers. See Note 26 "Segment reporting" for additional information on Iveco Group's segments.

ACCOUNTING POLICIES

Basis of preparation

The Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 together with the notes thereto (the "Semi-Annual Condensed Consolidated Financial Statements") were authorized for issuance on 1 August 2023 and have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU-IFRS"). The designation "IFRS" also includes International Accounting Standards ("IAS"), as well as all interpretations of the IFRS Interpretations Committee ("IFRIC").

The Semi-Annual Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 - Interim Financial Reporting applying the same accounting principles and policies used in the preparation of Iveco Group Consolidated Financial Statements at 31 December 2022, available on the Company's website, except as described in the following paragraph "New standards and amendments effective from 1 January 2023".

The financial statements are prepared under the historical cost convention, modified as required for the measurement of certain financial instruments, as well as on a going concern basis. Despite operating in a continuously difficult economic and financial environment negatively impacted by the effects of current macroeconomic and geopolitical issues, supply chain issues and global logistic constraints, energy and material availability and relevant price variability, the Group's assessment is that no material uncertainties (as defined in paragraph 25 of IAS 1) exist about its ability to continue as a going concern, in view also of the measures undertaken by the Group to preserve cash and contain costs, and to preserve its industrial and financial flexibility and its strong liquidity position.

These Semi-Annual Condensed Consolidated Financial Statements are prepared using the euro as the presentation currency.

Use of accounting estimates and management's assumptions

The preparation of the Semi-Annual Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of income, expenses, assets, liabilities, accumulated other comprehensive income and disclosure of contingent assets and contingent liabilities. Furthermore, certain valuation procedures, in particular those of a more complex nature, are only carried out in full during the preparation of the annual financial statements, when all the information required is available, other than in the event that there are indications of impairment when an immediate assessment is necessary. In the same way, the actuarial valuations that are required for the determination of employee benefit provisions are also usually carried out during the preparation of the annual consolidated financial statements. The recoverability of deferred tax assets is assessed quarterly using financial results and figures from budget and plans for subsequent years. Income taxes are recognised based upon the best estimate of the actual income tax rate expected for the full financial year.

Due to the currently unforeseeable global consequences of current macroeconomic and geopolitical issues, supply chain issues and global logistic constraints, energy and material availability and relevant price variability, these estimates and assumptions are subject to increased uncertainty. Actual results could differ materially from the estimates and assumptions used in preparation of the financial statements. If in the future such

Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 36

estimates and assumptions, which are based on management's best judgment at the date of the Semi-Annual Condensed Consolidated Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

These Semi-Annual Condensed Consolidated Financial Statements include all updates of estimates and assumptions considered necessary by management to fairly state the Group's results of operations, financial position and cash flows. See section "Significant accounting policies", paragraph "Use of estimates", in the Iveco Group Consolidated Financial Statements at 31 December 2022 for a description of the significant estimates, judgments and assumptions at that date.

Iveco Group is exposed to operational financial risks such as credit risk, liquidity risk and market risk, mainly relating to exchange rates and interest rates. These Semi-Annual Condensed Consolidated Financial Statements do not include all the information and notes about financial risk management required in the preparation of annual financial statements. Iveco Group believes that the risks and uncertainties identified are in line with the main risks and uncertainties to which the Group is exposed and that were presented in its Annual Report at 31 December 2022. For a detailed description of this information see the "Risk factors" section and Note 30 "Information on financial risks" of Iveco Group Consolidated Financial Statements at 31 December 2022. Those risks and uncertainties should be read in conjunction with this Semi-Annual Report, including its notes and disclosures. Additional risks and uncertainties not currently known or that are currently judged to be immaterial may also materially affect the Group's business, financial condition or operating results.

Format of the financial statements

Iveco Group presents an income statement using a classification based on the function of expenses (otherwise known as the "cost of sales" method), rather than one based on their nature, as this is believed to provide information that is more relevant.

For the statement of financial position, a mixed format has been selected to present current and non-current assets and liabilities, as permitted by IAS 1 – Presentation of Financial Statements. Legal entities carrying out industrial activities and those carrying out financial services are both consolidated in the Group's financial statements. The investment portfolios of Financial Services are included in current assets, as the investments will be realized in their normal operating cycle. Financial Services, though, obtains funds only partially from the market: the remainder is obtained from Iveco Group through its central treasury (included in Industrial Activities), which lends funds both to Industrial Activities and to Financial Services legal entities as the need arises. This Financial Services structure within the Group means that any attempt to separate current and noncurrent liabilities in the consolidated statement of financial position is not meaningful.

The statement of cash flows is presented using the indirect method.

New standards and amendments effective from 1 January 2023

On 12 February 2021 the IASB issued the Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies, requiring to disclose the material accounting policy information rather than the significant accounting policies. Furthermore, the amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures. These amendments are effective from 1 January 2023. These amendments had no impact on these Semi-Annual Condensed Consolidated Financial Statements.
On 12 February 2021 the IASB issued the Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates. The amendments clarify how to distinguish changes in accounting policies (generally also applied retrospectively to past transactions and other past events) from changes in accounting estimates (applied prospectively only to future transactions and other future events). These amendments are effective from 1 January 2023. These amendments had no impact on these Semi-Annual Condensed Consolidated Financial Statements.
▪ On 7 May 2021 the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12), which specifies how companies should account for deferred tax on transactions such as leases and decommissioning obligations. The amendments clarify that no exemption applies on such transactions and that companies are required to recognise deferred tax when they recognise the related assets or liabilities for the first time. The amendments are effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted. These amendments had no impact on these Semi-Annual Condensed Consolidated Financial Statements.

Accounting standards, amendments and interpretations not yet applicable and not early adopted by the Group

See paragraph "Accounting standards, amendments and interpretations not yet applicable and not early adopted by the Group" of the section "Significant accounting policies" in the Notes to Consolidated Financial Statements at 31 December 2022, for a description of other new standards not yet effective and not adopted as of 30 June 2023.

Furthermore, at the date of these Semi-Annual Condensed Consolidated Financial Statements, the European Union has not yet completed its endorsement process for these amendments:

▪ On 23 May 2023, the IASB issued International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12, introducing a mandatory temporary exception to the accounting for deferred taxes and disclosure requirements arising from the jurisdictional implementation of the Pillar Two model rules. The mandatory temporary exception, the use of which is required to be disclosed, applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any interim periods ending on or before 31 December 2023.

▪ On 25 May 2023, the IASB issued the Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures Supplier Finance Arrangements, requiring an entity to provide information about the impact of supplier finance arrangements on liabilities and cash flows, including terms and conditions of those arrangements, quantitative information on liabilities related to those arrangements as at the beginning and end of the reporting period and the type and effect of non-cash changes in the carrying amounts of those arrangements. The amendments will be effective for annual reporting periods beginning on or after 1 January 2024.

The Group is currently evaluating the impact of the adoption of these amendments on its Consolidated Financial Statements or disclosures.

Russia-Ukraine conflict

BUSINESS COMBINATIONS

In the first quarter of 2023, IDV, the brand of Iveco Group specialised in defence and civil protection equipment, acquired a controlling stake in MIRA UGV, the Uncrewed Ground Vehicle division of HORIBA MIRA, a global provider of automotive engineering, research and test services, headquartered in the U.K., for a total consideration of £41.5 million (approximately €47 million), of which £26.6 million already paid. The initial accounting for this business combination is still in progress, as such, in compliance with IFRS 3, we reported in our financial statements some provisional amounts, including the recognition of €25 million goodwill. During the measurement period, usually not exceeding one year from the acquisition date, the Group will retrospectively adjust the provisional amounts recognised to reflect any new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date.

COMPOSITION AND PRINCIPAL CHANGES

1. Net revenues

The following table summarizes Net revenues for the three and six months ended 30 June 2023 and 2022:

	Three months ended 30 June	Six months ended 30 June
(€ million)	2023	2022	2023	2022
Commercial and Specialty Vehicles	3,563	2,790	6,368	5,294
Powertrain	1,135	1,023	2,248	1,998
Eliminations and Other	(590)	(484)	(1,180)	(953)
Total Industrial Activities	4,108	3,329	7,436	6,339
Financial Services	117	60	216	109
Eliminations and Other	(45)	(18)	(73)	(29)
Total Net revenues	4,180	3,371	7,579	6,419

The following table disaggregates Net revenues by major source for the three and six months ended 30 June 2023 and 2022:

		Three months ended 30 June	Six months ended 30 June
(€ million)	2023	2022	2023	2022
Revenues from:
Sales of goods	3,894	3,112	7,005	5,898
Rendering of services and other revenues	143	147	290	300
Rents and other income on assets sold with a buy-back commitment	71	70	141	141
Revenues from sales of goods and services	4,108	3,329	7,436	6,339
Finance and interest income	64	35	127	66
Rents and other income on operating lease	8	7	16	14
Total Net revenues	4,180	3,371	7,579	6,419

During the three months ended 30 June 2023 and 2022, revenues included €116 million and €118 million, respectively, related to the reversal of contract liabilities outstanding at the beginning of each period. During the six months ended 30 June 2023 and 2022, revenues included €246 million and €254 million, respectively, related to the reversal of contract liabilities outstanding at the beginning of each period. Refer to Note 24 "Other current liabilities" for additional details on contract liabilities.

As of 30 June 2023, the aggregate amount of the transaction price allocated to remaining performance obligations related to extended warranties/ maintenance and repair contracts, and transactions for the sale of vehicles with a buy-back commitment was approximately €2.0 billion (approximately €2.2 billion as of 31 December 2022). Iveco Group expects to recognise revenue on approximately 32% and 75% of the remaining performance obligations over the next 12 and 36 months, respectively (approximately 32% and 76%, respectively, as of 31 December 2022), with the remaining recognised thereafter.

2. Cost of sales

Cost of sales amounted to €3,453 million and €6,304 million in the three and six months ended 30 June 2023, respectively, compared to €2,896 million and €5,547 million in the three and six months ended 30 June 2022, respectively. In the six months ended 30 June 2022, cost of sales included €43 million related to the impairment of certain assets in connection with Group operations in Russia and Ukraine.

3. Selling, general and administrative costs

Selling, general and administrative costs amounted to €254 million and €483 million in the three and six months ended 30 June 2023, respectively, compared to €221 million and €443 million recorded in the three and six months ended 30 June 2022, respectively. Selling, general and administrative costs were 6.1% and 6.4% of net revenues in the three and six months ended 30 June 2023, respectively, compared to 6.6% and 6.9% of net revenues for the three and six months ended 30 June 2022.

4. Research and development costs

In the three months ended 30 June 2023, research and development costs were €147 million (€122 million in the three months ended 30 June 2022) and included all the research and development costs not recognised as assets in the period amounting to €90 million (€69 million in the three months ended 30 June 2022) and the amortization of capitalized development costs of €57 million (€53 million in the three months ended 30 June 2022). During the three months ended 30 June 2023, the Group capitalized new development costs of €108 million (€86 million in the three months ended 30 June 2022).

In the six months ended 30 June 2023, research and development costs were €272 million (€230 million in the six months ended 30 June 2022) and included all the research and development costs not recognised as assets in the period amounting to €163 million (€122 million in the six months ended 30 June 2022) and the amortization of capitalized development costs of €109 million (€108 million in the six months ended 30 June 2022). During the six months ended 30 June 2023, the Group capitalized new development costs of €203 million (€145 million in the six months ended 30 June 2022).

The costs in all periods were primarily attributable to spending on engine development associated with emission requirements and continued investment in new products.

5. Result from investments

This item mainly includes Iveco Group's share in the net profit or loss of the investees accounted for using the equity method, as well as any impairment losses, reversal of impairment losses, accruals to the investment provision, and dividend income. In the three and six months ended 30 June 2023, Iveco Group's share in the net profit or loss of the investees accounted for using the equity method was a gain of €5 million and nil, respectively. In the three and six months ended 30 June 2022, Result from investment was a gain of €7 million and €8 million, respectively.

6. Restructuring costs

Iveco Group incurred restructuring costs of €6 million and €8 million during the three and six months ended 30 June 2023, respectively, compared to €3 million and €4 million during the three and six months ended 30 June 2022, respectively.

7. Other income/(expenses)

This item consists of miscellaneous costs which cannot be allocated to specific functional areas, such as accruals for various provisions not attributable to other items of cost of sales or selling, general and administrative costs, net of income arising from operations which is not attributable to the sale of goods and services.

This item amounted to other expenses, net for €31 million and €42 million in the three months ended 30 June 2023 and 2022, respectively (other expenses, net for €110 million and €73 million in the six months ended 30 June 2023 and 2022, respectively).

In the six months ended 30 June 2023, this item primarily included the negative impact of €43 million from the acquisition of full ownership of Nikola Iveco Europe GmbH (refer to Note 13 "Investments and other non-current financial assets" for details). In the three and six months ended 30 June 2022, this item included €14 million related to the first time adoption of hyperinflation accounting in Türkiye, in accordance with IAS 29 – Financial reporting in hyperinflationary economies, effective from 1 January 2022.

In all periods, this item also included legal costs, indirect taxes, and separation costs related to the spin-off of the Iveco Group business.

8. Financial income/(expenses)

The item "Financial income/(expenses)" is detailed as follows:

	Three months ended 30 June			Six months ended 30 June
(€ million)	2023	2022	2023	2022
Financial income	26	10	59	19
Interest and other financial (expenses)	(64)	(39)	(130)	(70)
Net income/(expenses) from derivative financial instruments, exchange rate differences and other	(45)	1	(86)	(11)
Net financial income/(expenses)	(83)	(28)	(157)	(62)

The increase in the three and six months ended 30 June 2023 compared to the corresponding periods of 2022 was primarily attributable to higher interest rates and the impact of hyperinflation accounting in Argentina and Türkiye.

Capitalized borrowing costs amounted to €11 million and €6 million during the six months ended 30 June 2023 and 2022.

9. Income tax (expense) benefit

Income tax (expense) benefit recognised in the condensed consolidated income statement consists of the following:

		Three months ended 30 June		Six months ended 30 June
(€ million)	2023	2022	2023	2022
Current taxes	(57)	(43)	(96)	(73)
Deferred taxes	(6)	11	9	21
Taxes relating to prior periods	2	3	2	1
Total Income tax (expense) benefit	(61)	(29)	(85)	(51)

The effective tax rates for the three months ended 30 June 2023 and 2022 were 28.9% and 44.6%, respectively. The effective tax rates for the six months ended 30 June 2023 and 2022 were 34.7% and 70.8%, respectively. The effective tax rates for the three and six months ended 30 June 2023 primarily reflect the impact of restructuring costs, cost related to certain claims arising from the EU Commission's 2016 antitrust settlement decision, the positive impact from the release of provisions related to the Russia and Ukraine conflict, the impact of cost related to the spin-off of the Iveco Group business, the different tax rates applied in the jurisdictions where the Group operates, the deferred tax assets unrecognised in certain jurisdictions, and some other discrete tax items. The effective tax rate for the six months ended 30 June 2023 also reflects the negative impact of €43 million (€44 million after-tax) from the acquisition of full ownership of Nikola Iveco Europe GmbH. The effective tax rates for the three and six months ended 30 June 2022 primarily reflected the impacts of the first time adoption of hyperinflationary accounting in Türkiye, restructuring costs, the cost related to the spin-off of the Iveco Group business, the different tax rates applied in the jurisdictions where the Group operates, the deferred tax assets unrecognised in certain jurisdictions, and certain other discrete tax items. The effective tax rate for the six months ended 30 June 2022 also reflected the impact of assets impairment in connection with the Group's operations in Russia and Ukraine.

As in all financial reporting periods, Iveco Group assessed the realizability of its deferred tax assets, which relate to multiple tax jurisdictions in all regions of the world. While no assessment changes occurred during the current period, it is possible that, within the next twelve months, assessment changes could occur and may have a material impact on Iveco Group's results of operations. Iveco Group operates in many jurisdictions around the world and is routinely subject to income tax audits. As various ongoing audits are concluded, or as the applicable statutes of limitations expire, it is possible Iveco Group's amount of unrecognised tax benefits could change during the next twelve months.

10. Earnings per share

Basic earnings/(loss) per common share ("EPS") is computed by dividing the Profit/(loss) for the period attributable to the owners of the parent by the weighted average number of Common Shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur on the conversion of all dilutive potential Common Shares into common shares. Restricted share units and performance share units deriving from the Iveco Group share-based payment awards are considered dilutive potential common shares.

Shares acquired under the buy-back program are included in the issued shares of the Company and treasury stock, but are not included in average shares outstanding when calculating earnings per share. For additional information on the buy-back program, see Note 20 "Equity".

A reconciliation of basic and diluted earnings/(loss) per share is as follows:

			Three months ended 30 June		Six months ended 30 June
		2023	2022	2023	2022
Basic:
Profit/(loss) attributable to the owners of the parent	€ million	151	30	157	13
Weighted average Common Shares outstanding – basic	million	270	271	271	271
Basic earnings/(loss) per common share	€	0.56	0.11	0.58	0.05
Diluted:
Profit/(loss) attributable to the owners of the parent	€ million	151	30	157	13
Weighted average Common Shares outstanding – basic	million	270	271	271	271
Effect of dilutive potential Common Shares (when dilutive):
Share compensation plans	million	4	1	4	1
Weighted average Common Shares outstanding – diluted	million	274	272	275	272
Diluted earnings/(loss) per common share	€	0.55	0.11	0.57	0.05

11. Intangible assets

Changes in the carrying amount of Intangible assets for the six months ended 30 June 2023 were as follows:

(€ million)	Carrying amount at 31 December 2022	Additions	Amortization	Foreign exchange effects and other changes	Carrying amount at 30 June 2023
Goodwill	69	25	—	(2)	92
Development costs	1,284	203	(109)	1	1,379
Other	158	21	(19)	26	186
Total Intangible assets	1,511	249	(128)	25	1,657

Increases in Goodwill refer to the acquisition discussed in section "Business combinations" above.

Goodwill is allocated to the segments as follows: Commercial and Specialty Vehicles for €76 million, Powertrain for €4 million, and Financial Services for €12 million. Goodwill and intangible assets with indefinite useful lives are tested for impairment annually or more frequently if a triggering event occurs and impairment indicators are identified. Iveco Group performed its most recent annual impairment review as of 31 December 2022. The results of the impairment tests confirmed the absence of an impairment loss. During the six months ended 30 June 2023, no impairment indicators were identified.

12. Property, plant and equipment

Changes in the carrying amount of Property, plant and equipment for the six months ended 30 June 2023 were as follows:

(€ million)	Carrying amount at 31 December 2022		Additions Depreciation	Impairment	Foreign exchange effects	Transfer to assets held for sale	Disposals and other changes	Carrying amount at 30 June 2023
Property, plant and equipment acquired	1,559	105	(124)	—	(11)	(2)	24	1,551
Right-of-use assets	183	45	(32)	—	(1)	(4)	3	194
Assets sold with a buy back commitment	1,355	218	(112)	(13)	(1)	(15)	(133)	1,299
Total Property, plant and equipment	3,097	368	(268)	(13)	(13)	(21)	(106)	3,044

At 30 June 2023, right-of-use assets refer primarily to the following lease contracts: industrial buildings for €133 million (€127 million at 31 December 2022), plant, machinery and equipment for €18 million (€16 million at 31 December 2022), and other assets for €43 million (€40 million at 31 December 2022). For a description of the related lease liabilities, refer to Note 22 "Debt".

Short-term and low-value leases are not recorded in the statement of financial position; Iveco Group recognises lease expense (€6 million and €4 million in the six months ended 30 June 2023 and 2022, respectively) in the income statement for these leases on a straight-line basis over the lease term.

13. Investments and other non-current financial assets

Investments and other non-current financial assets at 30 June 2023 and 31 December 2022 consisted of the following:

(€ million)	At 30 June 2023	At 31 December 2022
Equity investments measured at fair value through other comprehensive income	25	62
Other investments	191	161
Total Investments	216	223
Non-current financial receivables and other non-current securities	14	14
Total Investments and other non-current financial assets	230	237

At 30 June 2023, equity investments measured at fair value through other comprehensive income mainly include 5 million shares (€14 million) held by Iveco Group in Nikola Corporation ("Nikola"). At 31 December 2022, this item also included 20.6 million Nikola shares which, as per the binding terms sheet entered between Iveco Group and Nikola in May 2023 (see below for details on such transaction), are expected to be paid to Nikola in the second half of 2023, at the completion of certain specific conditions. At 30 June 2023, these 20.6 million Nikola shares are included in item "Other investments". In the three months ended 30 June 2023 the pre- and after-tax effect recorded in Other comprehensive income from the remeasurement at fair value of the investment in Nikola was nil (a pre- and after-tax loss of €130 million in the three months ended 30 June 2022). In the six months ended 30 June 2023, a pre- and after-tax loss of €23 million (a pre- and after-tax loss of €106 million in the six months ended 30 June 2022) was recorded in Other comprehensive income from the remeasurement at fair value of the investment in Nikola.

At 30 June 2023, Equity investments measured at fair value through other comprehensive income also included a minor investment in a non-listed company in India considered strategic in nature.

Changes in Investments were as follows:

(€ million)	At 31 December 2022	Revaluations/ (Write-downs)	Acquisitions and capitalizations	Fair value remeasurements	Other	changes At 30 June 2023
Equity investments measured at fair value
through other comprehensive income	62	—	1	(23)	(15)	25
Other investments	161	—	21	—	9	191
Total Investments	223	—	22	(23)	(6)	216

Other investments amounted to €191 million at 30 June 2023 (€161 million at 31 December 2022) and primarily included for €109 million (€104 million at 31 December 2022) CIFINS S.p.A., legal entity jointly held by Iveco Group and CNH Industrial, which holds 49.9% of CNH Capital Europe S.a.S., a joint venture with the BNP Paribas Group providing financing solutions to customers of both Iveco Group and CNH Industrial Group in several European countries.

At 31 December 2022, Other investments also included the investment in Nikola Iveco Europe GmbH, 50/50 owned by Iveco Group and Nikola at that time and accounted for under the equity method. In the first quarter of 2023, Iveco Group agreed the acquisition from Nikola of the full ownership of Iveco Nikola Europe GmbH (now to be renamed as EVCO), as per the binding term sheet entered in May 2023 and definitively finalised in June 2023. As a consequence, in the first quarter of 2023 Iveco Group recorded, in the income statement, a one-off, after-tax €44 million negative impact deriving from the agreement. At the end of June 2023 Iveco Group paid the envisaged cash portion of the capital outlay (USD 35 million) for the shares acquisition, while it is expected to pay the portion represented by 20.6 million of Nikola shares in the second half of 2023, at the completion of certain specific conditions. As a consequence of the above, Iveco Nikola Europe GmbH is now consolidated on a lineby-line basis.

Revaluations and write-downs primarily consist of adjustments for the result of the period to the carrying amount of investments accounted for using the equity method.

14. Leased assets

Leased assets primarily include equipment and vehicles leased to retail customers by Financial Services under operating lease arrangements. Such leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenues for non-lease components are accounted for separately.

Changes in the carrying amount of Leased assets for the six months ended 30 June 2023 were as follows:

(€ million)	Carrying amount at 31 December 2022		Additions Depreciation	Foreign exchange effects	Disposals and other changes	Carrying amount at 30 June 2023
Leased assets	70	23	(15)	(2)	(13)	63

15. Inventories

At 30 June 2023 and 31 December 2022, Inventories consisted of the following:

(€ million)	At 30 June 2023	At 31 December 2022
Raw materials	687	649
Finished goods and work-in-progress	3,062	2,189
Total Inventories	3,749	2,838

At 30 June 2023, Inventories included assets which are no longer subject to operating lease arrangements or buy-back commitments and were held for sale for a total amount of €16 million (€11 million at 31 December 2022).

16. Current receivables and Other current financial assets

A summary of Current receivables and Other current financial assets as of 30 June 2023 and 31 December 2022 is as follows:

(€ million)	At 30 June 2023	At 31 December 2022
Trade receivables	351	341
Receivables from financing activities	4,668	4,378
Current tax receivables	137	95
Other current receivables and financial assets:
Other current receivables	339	313
Other current financial assets	13	26
Total Other current receivables and financial assets	352	339
Total Current receivables and Other current financial assets	5,508	5,153

Receivables from financing activities

A summary of Receivables from financing activities as of 30 June 2023 and 31 December 2022 is as follows:

(€ million)	At 30 June 2023	At 31 December 2022
Retail:
Retail financing	14	10
Finance leases	60	57
Total Retail	74	67
Wholesale:
Dealer financing	4,474	4,156
Total Wholesale	4,474	4,156
Other	120	155
Total Receivables from financing activities	4,668	4,378

Iveco Group provides and administers financing for retail purchases of new and used vehicles sold through its dealer network. The terms of retail and other notes and finance leases generally range from two to six years, and interest rates vary depending on prevailing market interest rates and incentive programs offered by Industrial Activities.

Wholesale receivables arise primarily from the sale of goods to dealers, distributors and end customers and, to a lesser extent, the financing of dealer operations. Under the standard terms of the wholesale receivable agreements, during the "interest free" period, Financial Services is compensated by Industrial Activities based on market interest rates. After the expiration of any "interest-free" period, interest is charged to dealers on outstanding balances until Iveco Group receives payment in full. The "interest-free" periods are determined based on the type of vehicle sold and the time of year of the sale. Iveco Group evaluates and assesses dealers on an ongoing basis as to their credit worthiness. Iveco Group may be obliged to repurchase the dealer's vehicle upon cancellation or termination of the dealer's contract for such causes as change in ownership, closeout of the business, or default. There were no significant losses in the three and six months ended 30 June 2023 and 2022 relating to the termination of dealer contracts.

Iveco Group assesses and monitors the credit quality of its financing receivables based on whether a receivable is classified as Performing or Non-Performing. Financing receivables are considered past due if the required principal and interest payments have not yet been received as of the date such payments were due. Delinquency is reported on financing receivables greater than 30 days past due. Non-performing financing receivables represent loans for which Iveco Group has ceased accruing finance income. These receivables are generally 90 days delinquent. Finance income for non-performing receivables is recognised on a cash basis. Interest accrual is resumed if the receivable becomes contractually current and collections becomes probable.

The aging of Receivables from financing activities as of 30 June 2023 and 31 December 2022 is as follows (receivables are primarily related to Europe region):

								At 30 June 2023
(€ million)	Total Current	31-60 Days Past Due	61-90 Days Past Due	Total Performing	Non Performing	Total	Allowance	Total, net of allowance
Total Retail	93	2	—	95	24	119	(45)	74
Total Wholesale	4,516	21	1	4,538	56	4,594	(120)	4,474
								At 31 December 2022
(€ million)	Total Current	31-60 Days Past Due	61-90 Days Past Due	Total Performing	Non Performing	Total	Allowance	Total, net of allowance
Total Retail	102	—	1	103	26	129	(62)	67
Total Wholesale	4,204	7	5	4,216	60	4,276	(120)	4,156

Receivables from financing activities have significant concentrations of credit risk in the Commercial and Specialty Vehicles segment. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. Iveco Group typically retains as collateral a security interest in the vehicles associated with retail notes, wholesale notes and finance leases.

A financial asset has experienced a significant increase in credit risk when the customer shows signs of operational or financial weakness including past dues, which requires significant collection effort and monitoring, and generally occurs when the customer becomes past due greater than 30 days. The assessment considers available information regarding the financial stability of the customer and other market/industry data; an account is typically considered in default when it is 90 days past due.

Iveco Group utilizes three categories for receivables from financing activities that reflect their credit risk and how the loan provision is determined.

Internal risk grade	IFRS 9 classification	Definition	Basis for recognition of expected credit loss provision
		Low risk of default; payments are generally less than 30
Performing	Stage 1	days past due	12 month expected credit losses
		Significant increase in credit risk; payments generally
Performing	Stage 2	between 31 and 90 days past due	Lifetime expected credit losses
		Accounts are credit impaired and/or a legal action has been
Non-performing	Stage 3	initiated; payments generally greater than 90 days past due	Lifetime expected credit losses

Charge-offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible. Iveco Group continues to engage in collection efforts to attempt to recover the receivables. When recoveries are collected, these are recognised as income.

Allowance for Credit Losses

Iveco Group's allowance for credit losses is segregated into two portfolio segments: retail and wholesale. A portfolio segment is the level at which Iveco Group develops a systematic methodology for determining its allowance for credit losses. Typically, Iveco Group's receivables within a portfolio segment have similar risk profiles and methods for assessing and monitoring risk. These classes align with management reporting.

The Group accounts for its credit risk by appropriately providing for expected credit losses on a timely basis. In calculating the expected credit loss rates, Iveco Group considers historical loss rates for each category of customer and adjusts for forward looking macroeconomic data.

In calculating the expected credit losses, Iveco Group's calculations depend on whether the receivable has been individually identified as being impaired. The first component of the allowance for credit losses covers the receivables specifically reviewed by management for which Iveco Group has determined it is probable that it will not collect all of the contractual principal and interest. Receivables are individually reviewed for impairment based on, among other items, amounts outstanding, days past due and prior collection history. Expected credit losses are measured by considering: the unbiased and probability-weighted amount; the time value of money; and reasonable and supportable information (available without undue costs or effort) at the reporting date about past events, current conditions and forecasts of future economic conditions. Expected credit losses are measured as the probability-weighted present value of all cash shortfalls over the expected life of each financial asset.

The second component of the allowance for credit losses covers all receivables that have not been individually reviewed for impairment. The allowance for these receivables is based on aggregated portfolio evaluations, generally by financial product. The allowance for wholesale and retail credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward looking macroeconomic factors. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgement.

Allowance for credit losses activity for the three and six months ended 30 June 2023 is as follows:

Three months ended 30 June 2023

	Retail
(€ million)	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total
Opening balance	3	—	51	54	27	—	98	125
Provision (benefit)	1	13	(23)	(9)	4	—	(9)	(5)
Ending balance	4	13	28	45	31	—	89	120

Six months ended 30 June 2023

	Retail
(€ million)	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total
Opening balance	2	—	60	62	25	—	95	120
Provision (benefit)	2	13	(32)	(17)	6	—	(6)	—
Ending balance	4	13	28	45	31	—	89	120
Receivables:
Ending balance	49	22	3	74	4,415	21	38	4,474

At 30 June 2023, the change in allowance for credit losses for the Retail portfolio is mainly related to the release of a specific provision for one large Italian customer. For the Wholesale portfolio the releases of specific reserves were offset by the collective provisions that increased following the increase of the receivable balance. This provision for credit losses has been included in cost of sales.

Allowance for credit losses activity for the three and six months ended 30 June 2022 and for the year ended 31 December 2022 is as follows:

							Three months ended 30 June 2022
	Retail Wholesale
(€ million)	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total
Opening balance	3	—	89	92	7	—	110	117
Provision (benefit)	—	—	(10)	(10)	—	—	(1)	(1)
Charge-offs, net of recoveries	—	—	(4)	(4)	9	—	—	9
Ending balance	3	—	75	78	16	—	109	125

							Six months ended 30 June 2022
		Retail
(€ million)	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total
Opening balance	3	—	86	89	8	—	90	98
Provision (benefit)	—	—	(6)	(6)	8	—	19	27
Charge-offs, net of recoveries	—	—	(5)	(5)	—	—	—	—
Ending balance	3	—	75	78	16	—	109	125
Receivables:
Ending balance	54	1	15	70	3,042	3	25	3,070

Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 46

Year ended 31 December 2022

	Retail Wholesale
(€ million)	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total	Stage 1 12 months ECL	Stage 2 Lifetime ECL	Stage 3 Lifetime ECL	Total
Opening balance	3	—	86	89	8	—	90	98
Provision (benefit)	(1)	—	(8)	(9)	17	—	19	36
Charge-offs, net of recoveries	—	—	(18)	(18)	—	—	(16)	(16)
Foreign currency translation and other	—	—	—	—	—	—	2	2
Ending balance	2	—	60	62	25	—	95	120
Receivables:
Ending balance	13	—	54	67	4,111	4	41	4,156

At 30 June 2022 the change in allowance for credit losses is mainly related to receivables from Russian counterparties that have been fully covered with allowances, while overall, for the year ended 31 December 2022, the change in allowance is mainly related to the write-offs registered over the period.

Iveco Group continues to monitor the situation and will update the macroeconomic factors and qualitative factors in future periods, as warranted. The provision for credit losses is included in cost of sales.

Transfers of financial receivables

The Group transfers a number of its financial receivables to securitization programs or factoring transactions.

A securitization transaction entails the sale of a portfolio of receivables to a securitization vehicle. This structured entity finances the purchase of the receivables through asset-backed financing. Asset-backed financing are divided into classes according to their degree of seniority and rating: the most senior classes are placed with investors on the market; the junior class, whose repayment is subordinated to the senior classes, is normally subscribed for by the seller. The residual interest in the receivables retained by the seller is therefore limited to the junior securities it has subscribed for. In accordance with IFRS 10 – Consolidated Financial Statements, all securitization vehicles are included in the scope of consolidation because the subscription of the junior note of the asset-backed securitization by the seller implies its control in substance over the structured entity.

Furthermore, factoring transactions may be either with recourse or without recourse; without recourse transfers include deferred payment clauses (for example, when the payment by the factor of a minor part of the purchase price is dependent on the total amount collected from the receivables), requiring first loss cover, meaning that the transferor takes priority participation in the losses, or requires a significant exposure to the cash flows arising from the transferred receivables to be retained. These types of transactions do not comply with the requirements of IFRS 9 – Financial Instruments for the derecognition of the assets, since the risks and rewards connected with collection are not substantially transferred and, accordingly, the Group continues to recognise the receivables transferred by this means in its consolidated statement of financial position and recognises a financial liability of the same amount under Asset-backed financing (see Note 22 "Debt"). The gains and losses arising from the transfer of these assets are only recognised when the assets are derecognised.

At 30 June 2023 and 31 December 2022, the carrying amounts of such restricted assets included in Receivables from financing activities are the following:

(€ million)	At 30 June 2023	At 31 December 2022
Restricted receivables:
Retail financing and finance lease receivables	18	21
Wholesale receivables	3,868	3,840
Total restricted receivables	3,886	3,861

Iveco Group has discounted receivables and bills without recourse having due dates beyond 30 June 2023 amounting to €213 million (€183 million at 31 December 2022, with due dates beyond that date), which refer to trade receivables.

17. Derivative assets and Derivative liabilities

These items consist of derivative financial instruments measured at fair value at the balance sheet date.

Iveco Group utilizes derivative instruments to mitigate its exposure to interest rate and foreign currency exposures. Derivatives used as hedges are effective at reducing the risk associated with the exposure being hedged and are designated as a hedge at the inception of the derivative contract. Iveco Group does not hold or enter into derivative or other financial instruments for speculative purposes. The credit and market risk

Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 47

related to derivatives is reduced through diversification among various counterparties, utilizing mandatory termination clauses and/or collateral support agreements. Derivative instruments are generally classified as Level 2 in the fair value hierarchy.

In accordance with IFRS 9, derivative financial instruments qualify for hedge accounting only when, at the inception of the hedge, there is formal designation and documentation of the hedging relationship, there is an economic relationship between the hedging instrument and the hedged item, credit risk does not dominate the value changes that result from the economic relationship, and the hedging relationship's hedging ratio reflects the actual quantity of the hedging instrument and the hedged item. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

With regard to hedge accounting, Iveco Group continues to monitor significant developments in order to assess the potential future impacts of current macroeconomic and geopolitical issues, supply chain issues and global logistic constraints, energy and material availability and relevant price variability, on the hedging relationships in place and to update its estimates concerning whether forecasted transactions can still be considered highly likely to occur.

Foreign Exchange Derivatives

Iveco Group has entered into foreign exchange forward contracts and swaps in order to manage and preserve the economic value of cash flows in a currency different from the functional currency of the relevant legal entity. Iveco Group conducts its business on a global basis in a wide variety of foreign currencies and hedges foreign currency exposures arising from various receivables, liabilities, and expected inventory purchases and sales. Derivative instruments utilized to hedge the foreign currency risk associated with anticipated inventory purchases and sales in foreign currencies are designated as cash flow hedges. Gains and losses on these instruments are deferred in accumulated other comprehensive income/ (loss) and recognised in earnings when the related transaction occurs.

For hedging cash flows in a currency different from the functional currency, the hedge relationship reflects the hedge ratio of 1:1, which means that relationship is characterized by the value of the hedging instrument and the value of the hedged item moving in the opposite direction as a result of the common underlying of hedged risk.

The main sources of hedge ineffectiveness are:

the effect of the counterparty and the Group's own credit risk on the fair value of the foreign exchange derivatives, which is not reflected in the change in the fair value of the hedged cash flow attributable to the change in the exchange rates, and
changes in timing of the hedged transaction.

Ineffectiveness related to these hedge relationships is recognised in the condensed consolidated income statement in the line "Financial income/ (expenses)" and was not significant for all periods presented. The maturity of these instruments does not exceed 24 months and the after-tax gains/(losses) deferred in accumulated other comprehensive income/(loss) that will be recognised in net revenues and cost of sales over the next twelve months, assuming foreign exchange rates remain unchanged, is €-17 million. If a derivative instrument is terminated because the hedge relationship is no longer effective or because the hedged item is a forecasted transaction that is no longer determined to be probable, the cumulative amount recorded in accumulated other comprehensive income/(loss) is recognised immediately in earnings. Such amounts were insignificant in all periods presented.

Iveco Group also uses forwards and swaps to hedge assets and liabilities denominated in foreign currencies. Such derivatives are considered economic hedges and not designated as hedging instruments. The changes in the fair values of these instruments are recognised directly in income in "Financial income/(expenses)" and are expected to offset the foreign exchange gains or losses on the exposures being managed.

All of Iveco Group's foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of Iveco Group's foreign exchange derivatives was €3.3 billion at 30 June 2023 and at 31 December 2022.

Interest Rate Derivatives

Iveco Group has entered into interest rate derivatives (mainly swaps) in order to manage interest rate exposures arising in the normal course of business. Interest rate derivatives that have been designated as cash flow hedges are being used by Iveco Group to mitigate the risk of rising interest rates related to existing debt and anticipated issuance of fixed-rate debt in future periods. Gains and losses on these instruments, to the extent that the hedge relationship has been effective, are deferred in other comprehensive income/(loss) and recognised in "Financial income/ (expenses)" over the period in which Iveco Group recognises interest expense on the related debt. The after-tax gains (losses) deferred in other comprehensive income/(loss) that will be recognised in interest expense over the next twelve months are insignificant.

Interest rate derivatives that have been designated as fair value hedge relationships have been used by Iveco Group to mitigate the volatility in the fair value of existing financing instruments due to changes in floating interest rate benchmarks. Gains and losses on these instruments are recorded in "Financial income/(expenses)" in the period in which they occur and an offsetting gain or loss is also reflected in "Financial income/ (expenses)" based on changes in the fair value of the debt instrument being hedged due to changes in floating interest rate benchmarks.

For hedging interest rate exposures, the hedge relationship reflects the hedge ratio 1:1, which means that relationship is characterized by the value of the hedging instrument and the value of the hedged item that move in the opposite direction as a result of the common underlying of hedged risk.

The main sources of hedge ineffectiveness are:

the effect of the counterparty and the Group's own credit risk on the fair value of the swaps, which is not reflected in the change in the fair value of the hedged cash flow attributable to the change in the interest rates, and
differences in repricing dates between the swaps and the borrowings.

Any ineffectiveness is recorded in "Financial income/(expenses)" in the condensed consolidated income statement and its amount was insignificant for all periods presented.

Iveco Group also enters into offsetting interest rate derivatives with substantially similar terms that are not designated as hedging instruments, to mitigate interest rate risk related to Iveco Group's committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognised directly in income. Net gains and losses on these instruments were insignificant.

All of Iveco Group's interest rate derivatives outstanding as of 30 June 2023 and 31 December 2022 are considered Level 2. The fair market value of these derivatives is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of Iveco Group's interest rate derivatives was nil at 30 June 2023 and at 31 December 2022.

As a result of the reform and replacement of specific benchmark interest rates, uncertainty remains regarding the timing and exact nature of those changes. The Group does not expect any material impact deriving from the replacement of benchmark interest rate.

Financial statement impact of Iveco Group derivatives

The following table summarizes the gross impact of changes in the fair value of derivatives recognised in other comprehensive income and profit or loss during the three and six months ended 30 June 2023 and 2022:

	Three months ended 30 June		Six months ended 30 June
(€ million)	2023	2022	2023	2022
Cash flow hedges
Recognised in Other comprehensive income (effective portion):
Foreign exchange derivatives	(19)	(2)	(28)	(43)
Interest rate derivatives	—	(10)	—	—
Reclassified from other comprehensive income (effective portion):
Foreign exchange derivatives - Net revenues	3	1	7	3
Foreign exchange derivatives - Cost of sales	(16)	—	(30)	(5)
Foreign exchange derivatives - Financial income/(expenses)	8	(4)	10	(6)
Interest rate derivatives - Cost of sales	—	—	—	—
Not designated as hedges
Foreign exchange derivatives - Financial income/(expenses)	(31)	—	(44)	(31)

The fair values of Iveco Group's derivatives as of 30 June 2023 and 31 December 2022 in the condensed consolidated statement of financial position are recorded as follows:

		At 30 June 2023	At 31 December 2022
(€ million)	Positive fair value	Negative fair value	Positive fair value	Negative fair value
Derivatives designated as hedging instruments
Cash flow hedges:
Foreign exchange derivatives	32	(57)	34	(32)
Total Cash flow hedges	32	(57)	34	(32)
Total Derivatives designated as hedging instruments	32	(57)	34	(32)
Derivatives not designated as hedging instruments
Foreign exchange derivatives	11	(18)	16	(14)
Total Derivatives not designated as hedging instruments	11	(18)	16	(14)
Derivative assets/(liabilities)	43	(75)	50	(46)

Derivatives not designated as hedging instruments consist mainly of derivatives (mostly currency-based derivatives) acquired to hedge receivables and payables subject to currency risk and/or interest rate risk which are not formally designated as hedges at Group level.

18. Cash and cash equivalents

Cash and cash equivalents include cash at bank and other easily marketable securities that are readily convertible into cash and are subject to an insignificant risk of changes in value.

At 30 June 2023, this item included €105 million (€83 million at 31 December 2022) of restricted cash which mainly includes bank deposits that may be used exclusively for the repayment of the debt relating to securitizations classified as Asset-backed financing.

At the same date, this item also included €83 million (€173 million at 31 December 2022) of money market securities and other cash equivalents.

19. Assets and liabilities held for sale

On 30 March 2023, Iveco Group announced the signing of a letter of intent for the transfer to Hedin Mobility Group AB of its distribution and retail commercial operations in Sweden, Norway, Finland, and Denmark. Specifically, the Group intends to transfer its commercial activities for light, medium and heavy trucks, including retail minibuses but excluding all other assets relating to bus activities, financial services, and other Group businesses. Subject to regulatory approval, the transaction is expected to be completed by the end of 2023 and the relevant operations have been classified as a disposal group held for sale and presented separately in the condensed consolidated statement of financial position. The major classes of assets and liabilities comprising the operations classified as held for sale at 30 June 2023 are Property, plant and equipment (€21 million), Cash and cash equivalents (€10 million), Inventories (€24 million), Provisions (€11 million), Other current liabilities (€42 million) and Trade payables (€3 million).

There are no cumulative income or expenses included in other comprehensive income relating to the disposal group.

In addition to the above, Assets held for sale at 30 June 2023 and 31 December 2022 also included certain buildings.

20. Equity Share capital

The Articles of Association of Iveco Group N.V. provide for authorized share capital of €8 million, divided into 400 million Common Shares and 400 million Special Voting Shares to be held with associated Common Shares, each having a par value of one euro cent (€0.01). As of 30 June 2023, the Company's share capital was €3,454,589.70, fully paid-in, and consisted of 271,215,400 Common Shares (269,332,777 Common Shares outstanding, net of 1,882,623 Common Shares held in treasury by the Company as described in the following section) and 74,243,570 Special Voting Shares (74,172,021 Special Voting Shares outstanding, net of 71,549 Special Voting Shares surrendered to the Company following the de-registration of the corresponding Qualifying Common Shares from the Loyalty Register and which are held as treasury shares by the Company as described in the following section).

For more complete information on the share capital of Iveco Group N.V., see Note 21 "Equity" to the Iveco Group Consolidated Financial Statements at 31 December 2022.

Treasury shares

As of 30 June 2023, the Company held 1,882,623 Common Shares in treasury, net of transfers of common shares to fulfill its obligations under its share-based compensation plans, at an aggregate cost of €14.5 million.

On 14 April 2023, the Annual General Meeting of Shareholders ("AGM") authorised the Board of Directors to decide upon the acquisition of the Company's own Common Shares through purchases on the stock exchange and/or multilateral trading facilities, directly and/or otherwise, for a period of 18 months from the date of the AGM, i.e. up to and including October 13, 2024, in one or more transactions, subject to market and business conditions and in compliance with applicable rules and regulations. The Board's authority is limited to a maximum of up to 10,000,000 Common Shares, with a maximum total allocation to this end of €130,000,000. With due respect of applicable rules and regulations, purchases will take place for a price per Common Share (excluding expenses) no less than its nominal value (minimum price) and no more than 10% above the opening price as shown in the Official Price List of Euronext Milan on the day of acquisition (maximum price). The authority granted to the Board to repurchase Common Shares in the share capital of the Company intended, inter alia, to allow the Board to cover the Company's obligations related to share-based remuneration, under existing and/or future equity incentive plans.

On 14 April 2023, implementing the authorisation granted by the AGM, the Company announced the launch of an initial tranche (up to €55,000,000) of its share buyback program. The initial tranche of the buyback will end on 20 December 2023 (subject to suspension or early termination), and will be carried out pursuant to the terms and conditions of the authorisation granted at the AGM and in compliance with applicable rules and regulations.

Moreover, as of 30 June 2023, the Company held 71,549 Special Voting Shares in treasury surrendered to the Company following the deregistration of the corresponding Qualifying Common Shares from the Loyalty Register in accordance with the Special Voting Shares - Terms and Conditions. For more complete information on Loyalty Voting Program and Special Voting Shares, see Note 21 "Equity" to the Iveco Group Consolidated Financial Statements at 31 December 2022.

Other comprehensive income/(loss)

Other comprehensive income/(loss) consisted of the following:

	Three months ended 30 June			Six months ended 30 June
(€ million)	2023	2022	2023	2022
Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss:
Net change in fair value of equity investments measured at fair value through other comprehensive income(1)	—	(130)	(23)	(106)
Total Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss (A)	—	(130)	(23)	(106)
Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedging instruments arising during the period	(19)	(12)	(28)	(43)
(Gains)/losses on cash flow hedging instruments reclassified to profit or loss	5	3	13	8
Gains/(losses) on cash flow hedging instruments	(14)	(9)	(15)	(35)
Exchange gains/(losses) on translating foreign operations arising during the period	(58)	14	(101)	63
Exchange (gains)/losses on translating foreign operations reclassified to profit or loss	—	—	—	—
Exchange gains/(losses) on translating foreign operations	(58)	14	(101)	63
Share of Other comprehensive income/(loss) of entities accounted for using the equity method arising during the period	—	7	—	7
Reclassification adjustment for the share of Other comprehensive income/(loss) of entities accounted for using the equity method	—	—	—	—
Share of Other comprehensive income/(loss) of entities accounted for using the equity method	—	7	—	7
Total Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss (B)	(72)	12	(116)	35
Tax effect (C)	1	5	1	4
Total Other comprehensive income/(loss), net of tax (A) + (B) + (C)	(71)	(113)	(138)	(67)

(1) In the three and six months ended 30 June 2023 and 2022, Net change in fair value of equity investments at fair value through other comprehensive income includes the remeasurement at fair value of the investment in Nikola Corporation. Refer to Note 13 for additional information on this investment.

The income tax effect for each component of Other comprehensive income/(loss) consisted of the following:

					Three months ended 30 June						Six months ended 30 June
			2023			2022			2023			2022
(€ million)	Before tax amount	Tax (expense)/ benefit	Net-of tax amount	Before tax amount	Tax (expense)/ benefit	Net-of tax amount	Before tax amount	Tax (expense)/ benefit	Net-of tax amount	Before tax amount	Tax (expense)/ benefit	Net-of tax amount
Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss:
Net change in fair value of equity investments measured at fair value through other comprehensive income(1)	—	—	—	(130)	—	(130)	(23)	—	(23)	(106)	—	(106)
Total Other comprehensive income/(loss) that will not be reclassified subsequently to profit
or loss	—	—	—	(130)	—	(130)	(23)	—	(23)	(106)	—	(106)
Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedging instruments	(14)	1	(13)	(9)	5	(4)	(15)	1	(14)	(35)	4	(31)
Exchange gains/ (losses) on translating foreign operations	(58)	—	(58)	14	—	14	(101)	—	(101)	63	—	63
Share of Other comprehensive income/(loss) of entities accounted for using the equity method	—	—	—	7	—	7	—	—	—	7	—	7
Total Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss	(72)	1	(71)	12	5	17	(116)	1	(115)	35	4	39
Total Other comprehensive income/(loss)	(72)	1	(71)	(118)	5	(113)	(139)	1	(138)	(71)	4	(67)

Share-based compensation

Iveco Group recognised total share-based compensation expense of €5 million and €8 million for the three and six months ended 30 June 2023, respectively (€4 million and €8 million for the three and six months ended 30 June 2022, respectively).

At 30 June 2023, the Company granted approximately 1.3 million Performance Share Units ("PSUs") and 0.7 million Restricted Share Units ("RSUs"). The PSUs will vest on 28 February 2026, with financial performance goals covering the three-year period from 1 January 2023 to 31 December 2025. The RSUs will vest in full on 28 February 2026.

21. Provisions

A summary of Provisions at 30 June 2023 and 31 December 2022 is as follows:

(€ million)	At 30 June 2023	At 31 December 2022
Employee benefits	444	510
Other provisions:
Warranty and technical assistance provision	451	430
Restructuring provision	26	35
Investment provision	5	5
Other risks:
Commercial risks	406	384
Marketing and sales incentives programs	429	368
Legal proceedings and other disputes	68	91
Other reserves for risks and charges	282	285
Total Other risks	1,185	1,128
Total Other provisions	1,667	1,598
Total Provisions	2,111	2,108

Provisions for Employee benefits include provisions for health care plans, pension plans and other post-employment benefits, as well as other provisions for employees and provisions for other long-term employee benefits.

Provisions for Other risks include primarily provisions for contractual and commercial risks and disputes. In particular, the item "Other reserves for risks and charges" includes other provisions of smaller amounts for miscellaneous risks and charges in connection with risks which cannot be specifically attributed to the other provision categories of "Other risks".

22. Debt

An analysis of debt by nature is as follows:

(€ million)	At 30 June 2023	At 31 December 2022
Asset-backed financing	3,301	3,149
Other debt:
Borrowings from banks	875	721
Payables represented by securities	10	66
Lease liabilities	196	185
Other	241	312
Total Other debt	1,322	1,284
Total Debt	4,623	4,433

Total Debt was €4,623 million at 30 June 2023, an increase of €190 million compared to 31 December 2022, primarily as a result of an increase of Financial Services' third party debt driven by higher portfolio.

The item Asset-backed financing represents the financing received through both asset-backed securitization and factoring transactions which do not meet IFRS 9 derecognition requirements and are recognised as assets in the statement of financial position.

During the six months ended 30 June 2023, €32 million for the principal portion of Lease liabilities and €3 million for interest expenses related to lease liabilities, respectively, were paid (€33 million and €2 million, respectively, were paid during the six months ended 30 June 2022).

The following table sets out a maturity analysis of Lease liabilities at 30 June 2023 and 31 December 2022:

(€ million)	At 30 June 2023	At 31 December 2022
Less than one year	60	57
One to two years	44	41
Two to three years	31	30
Three to four years	20	21
Four to five years	14	13
More than five years	55	46
Total undiscounted lease payments	224	208
Less: Interest	(28)	(23)
Total Lease liabilities	196	185

At 30 June 2023, the weighted average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted average discount rate for leases were 6.5 years and 3.2%, respectively (6.3 years and 2.8%, respectively, at 31 December 2022).

23. Trade payables

Trade payables were €4,117 million at 30 June 2023 and increased by €427 million from the amount at 31 December 2022.

24. Other current liabilities

At 30 June 2023, Other current liabilities mainly included €941 million of amounts payable to customers relating to the repurchase price on buyback agreements (€995 million at 31 December 2022), and €1,284 million of contract liabilities (€1,280 million at 31 December 2022), of which €592 million for future rents related to buy-back agreements (€619 million at 31 December 2022). Other current liabilities also included accrued expenses and deferred income of €155 million (€137 million at 31 December 2022).

25. Commitments and contingencies

As a global company with a diverse business portfolio, the Iveco Group in the ordinary course of business is exposed to numerous legal risks, including, without limitation, dealer and supplier litigation, intellectual property right disputes, product warranty and defective product claims, product performance, asbestos, personal injury, regulatory and contractual issues, competition law, anti-corruption and other investigations, environmental claims. All significant matters are described below.

The outcome of any current or future proceedings, claims, or investigations cannot be predicted with certainty. Adverse decisions in some of these proceedings, claims or investigations could require the Iveco Group to pay substantial damages or fines or undertake service actions, recall campaigns or other costly actions. It is therefore possible that legal judgments could give rise to expenses that are not covered, or not fully covered, by insurers' compensation payments and could affect the Iveco Group's financial position and results.

When it is probable that an outflow of resources embodying economic benefits will be required to settle obligations and this amount can be reliably estimated, the Iveco Group recognises specific provisions for this purpose.

Although the ultimate outcome of legal matters pending against the Iveco Group and its subsidiaries cannot be predicted, Iveco Group believes the reasonable possible range of losses for these unresolved legal matters in addition to the amounts accrued would not have a material effect on its Semi-Annual Condensed Consolidated Financial Statements, except for the following cases.

Other litigation and investigation

Follow on Damages Claims: in 2011 Iveco S.p.A. and Iveco Magirus AG (together "Iveco"), which, following the Demerger, are now part of Iveco Group N.V., and their competitors in the European Union were subject to an investigation by the European Commission (the "Commission") into certain business practices in the European Union (in the period 1997-2011) in relation to Medium & Heavy trucks. On 19 July 2016, the Commission announced a settlement with CNH Industrial ("the Decision") including a settlement with Iveco. In particular, Iveco received a reduction in its fine for cooperating with the European Commission throughout the investigation, and received a fine of €494.6 million. Similar decisions were taken, by the Commission, with reference to the other competitors. Following the Decision, Iveco S.p.A. and Iveco Magirus AG ("IMAG") have been named as defendants in many proceedings across Europe and Israel. These damage claims could result in substantial liabilities for the Group as well as incurring in significant defense costs, which may have a material adverse effect on its operations and financial condition. The extent and outcome of these claims, in the absence of any final judgement, cannot be reliably predicted at this time and, therefore, the Group did not recognise any specific provision for these claims. In the first half of 2023, Iveco Group recognised a cost of €12 million related to certain claims for which it was possible to make a reliable estimate. This current position will be reassessed from time to time and updated as necessary. In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets (paragraph 92), no further information is disclosed so as not to prejudice the Group's position.

FPT Emissions Investigation: on 22 July 2020, a number of CNH Industrial's offices in Europe were visited by investigators in the context of a request for assistance by the public prosecutors of Frankfurt am Main, Germany and Turin, Italy in relation to alleged noncompliance of two engine models produced by FPT Industrial S.p.A. ("FPT"), which is now part of the Iveco Group N.V., installed in certain Ducato (a vehicle manufactured and distributed by Stellantis) and Iveco Daily vehicles. FPT is providing its full cooperation to properly address the requests received. FPT, other companies of Iveco Group, and in certain instances CNH Industrial and other third parties have received various requests for compensation by German and Austrian customers on various contractual and tort grounds, including requests for damages resulting out of the termination of the purchase contracts, or in the form of requests for an alleged lower residual value of their vehicles as a consequence of the alleged non-compliance with type approval regulations regarding emissions. In certain instances, other customers have brought judicial claims on the same legal and factual bases. Although, at the date hereof, Iveco Group has no evidence of any wrongdoing, it cannot predict at this time the extent and outcome of these requests and directly or indirectly related legal proceedings, including customer claims or potential class actions alleging emissions noncompliance. Therefore, Iveco Group did not recognise any specific provision in relation to this investigation.

Commitments and guarantees

Iveco Group provided guarantees on the debt or commitments of third parties and performance guarantees, mainly in the interest of an associate providing financing solutions to customers and a joint venture related to commercial commitments of defense vehicles, totaling €441 million at 30 June 2023 and €409 million at 31 December 2022.

26. Segment reporting

The segment information disclosed in these Semi-Annual Condensed Consolidated Financial Statements reflects the identifiable reporting segments of the Company and the financial information that the Chief Operating Decision Maker ("CODM") reviewed to assess performance and make decisions about resource allocation. The segments are organized based on products and services provided by Iveco Group.

Iveco Group has three operating segments:

▪ Commercial and Specialty Vehicles designs, manufactures and distributes a full range of light, medium, and heavy vehicles for the transportation and distribution of goods under the IVECO brand, minibuses, city-buses, intercity buses and coaches under the IVECO BUS (previously Iveco Irisbus) and HEULIEZ brands, large-scale heavy-duty quarry and construction vehicles under the ASTRA brand, firefighting vehicles under the MAGIRUS brand, and vehicles for civil defense and peace-keeping missions under the IDV brand.
Powertrain designs, manufactures and distributes, under the FPT Industrial brand, a range of combustion engines, alternative propulsion systems, transmission systems and axles for on- and off-road applications, as well as for marine and power generation.
▪ Financial Services offers a range of financial products and services to dealers and customers. Financial Services provides and administers retail financing to customers for the purchase or lease of new and used vehicles sold by brand dealers and distributors of the Group or directly by subsidiaries of the Group. In addition, Financial Services provides wholesale financing to brand dealers and distributors of the Group. Wholesale financing consists primarily of floor plan financing and allows the dealers to purchase and maintain a representative inventory of products. Financial Services also provides trade receivables factoring services to Iveco Group Industrial Activities legal entities. Additionally, Financial Services grants support to CNH Industrial, by providing financial services for their European brands, dealers and customers under a vendor and service agreement, receiving a fee for the services rendered.

The activities carried out by the two industrial segments Commercial and Specialty Vehicles and Powertrain, as well as by the holding company Iveco Group N.V., are collectively referred to as "Industrial Activities".

Revenues for each reported segment are those directly generated by or attributable to the segment as a result of its business activities and include revenues from transactions with third parties as well as those deriving from transactions with other segments, recognised at normal market prices. Segment expenses represent expenses deriving from each segment's business activities both with third parties and other operating segments or which may otherwise be directly attributable to it. Expenses deriving from business activities with other segments are recognised at normal market prices.

The CODM assesses the segment performance and make decisions about resource allocation based upon Adjusted EBIT, which is deemed to more fully reflect Industrial Activities and Financial Services segments' profitability. Adjusted EBIT is defined as EBIT before restructuring costs and non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.

The following table summarizes Adjusted EBIT by reportable segment:

		Three months ended 30 June		Six months ended 30 June
(€ million)	2023	2022	2023	2022
Commercial and Specialty Vehicles	252	78	379	171
Powertrain	66	47	127	92
Unallocated items, eliminations and other	(52)	(34)	(106)	(90)
Adjusted EBIT of Industrial Activities	266	91	400	173
Financial Services	35	27	63	47
Eliminations and other	—	—	—	—
Total Adjusted EBIT	301	118	463	220

A reconciliation from Adjusted EBIT to Iveco Group's consolidated Profit/(loss) before taxes for the three and six months ended 30 June 2023 and 2022 is provided below:

		Three months ended 30 June		Six months ended 30 June
(€ million)	2023	2022	2023	2022
Adjusted EBIT of Industrial Activities	266	91	400	173
Adjusted EBIT of Financial Services	35	27	63	47
Adjusted EBIT	301	118	463	220
Restructuring costs	(6)	(3)	(8)	(4)
Other discrete items(1)	(1)	(22)	(53)	(82)
Financial income/(expenses)	(83)	(28)	(157)	(62)
Profit/(loss) before taxes	211	65	245	72

(1) In the three months ended 30 June 2023, this item mainly includes €5 million costs related to certain claims arising from the EU Commission's 2016 antitrust settlement decision and €5 million positive impact from the release of provisions related to the Russia and Ukraine conflict. In the three months ended 30 June 2022, this item mainly included €14 million related to the first-time adoption of hyperinflationary accounting in Türkiye and €6 million separation costs related to the spin-off of the Iveco Group business. In the six months ended 30 June 2023, this item mainly includes €43 million from the acquisition of full ownership of Nikola Iveco Europe GmbH, €12 million costs related to certain claims arising from the EU Commission's 2016 antitrust settlement decision, as well as €5 million positive impact from the release of provisions related to the Russia and Ukraine conflict. In the six months ended 30 June 2022, this item primarily included €53 million in connection with our Russian and Ukrainian operations, primarily due to the impairment of certain assets, €14 million related to the first time adoption of hyperinflationary accounting in Türkiye, €10 million separation costs related to the spin-off of the Iveco Group business, and €3 million related to the impairment of certain assets held for sale.

There are no segment assets or liabilities reported to the CODM for assessing performance and allocating resources.

Additional reportable segment information

Net Revenues by reportable segment for the three and six months ended 30 June 2023 and 2022 are provided in Note 1.

27. Fair value measurement

Fair value measurements are categorized within the fair value hierarchy, described as follows, based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the entire measurement:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
Level 3 Unobservable inputs for the asset or liability.

This hierarchy requires the use of observable market data when available.

Assets and liabilities measured at fair value on a recurring basis

The following table presents, for each of the fair value hierarchy levels, the assets and liabilities that are measured at fair value on a recurring basis at 30 June 2023 and 31 December 2022:

	At 30 June 2023							At 31 December 2022
(€ million)	Note	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Equity investments measured at fair value through other comprehensive income	(13)	14	—	11	25	52	—	10	62
Other investments	(13)	—	—	11	11	—	—	11	11
Derivative assets	(17)	—	43	—	43	—	50	—	50
Total Assets		14	43	22	79	52	50	21	123
Derivative liabilities	(17)	—	75	—	75	—	46	—	46
Total Liabilities		—	75	—	75	—	46	—	46

The following table provides a reconciliation from the opening balance to the closing balance for fair value measurements categorized in Level 3 of fair value in the six months ended 30 June 2023 and 2022:

(€ million)	Six months ended 30 June 2023	Six months ended 30 June 2022
At 1 January	21	13
Acquisitions/(disposals)	1	—
Gains/(Losses) recognised in Other comprehensive income/(loss)	—	—
Transfer from Level 3 to Level 1	—	—
Other changes	—	—
At 30 June	22	13

A description of the valuation techniques used to determine the fair value of derivative financial instruments is included in Note 17 "Derivative assets and Derivative liabilities".

Assets and liabilities not measured at fair value

The estimated fair values for financial assets and liabilities that are not measured at fair value in the condensed statement of financial position at 30 June 2023 and 31 December 2022 are as follows:

					At 30 June 2023
(€ million)	Note	Level 1	Level 2	Level 3	Total Fair Value	Carrying amount
Total Financial receivables from CNH Industrial	(16)	—	—	54	54	54
Retail financing	(16)	—	—	14	14	14
Dealer financing	(16)	—	—	4,472	4,472	4,474
Finance leases	(16)	—	—	54	54	60
Other receivables from financing activities	(16)	—	—	120	120	120
Total Receivables from financing activities		—	—	4,660	4,660	4,668
Asset-backed financing	(22)	—	3,301	—	3,301	3,301
Borrowings from banks	(22)	—	874	—	874	875
Payables represented by securities	(22)	—	10	—	10	10
Lease liabilities	(22)	—	—	196	196	196
Other debt(1)	(22)	—	9	232	241	241
Total Debt		—	4,194	428	4,622	4,623

(1) At 30 June 2023, Other debt includes €232 million of financial payables to CNH Industrial classified as Level 3.

					At 31 December 2022
(€ million)	Note	Level 1	Level 2	Level 3	Total Fair Value	Carrying amount
Total Financial receivables from CNH Industrial	(16)	—	—	146	146	146
Retail financing	(16)	—	—	10	10	10
Dealer financing	(16)	—	—	4,154	4,154	4,156
Finance leases	(16)	—	—	54	54	57
Other receivables from financing activities	(16)	—	—	154	154	155
Total Receivables from financing activities		—	—	4,372	4,372	4,378
Asset-backed financing	(22)	—	3,149	—	3,149	3,149
Borrowings from banks	(22)	—	711	—	711	721
Payables represented by securities	(22)	—	66	—	66	66
Lease liabilities	(22)	—	—	185	185	185
Other debt(1)	(22)	—	35	277	312	312
Total Debt		—	3,961	462	4,423	4,433

(1) At 31 December 2022, Other debt included €277 million of financial payables to CNH Industrial classified as Level 3.

Receivables from financing activities

The fair value of Receivables from financing activities is based on the discounted values of their related cash flows at market discount rates that reflect conditions applied in various reference markets on receivables with similar characteristic, adjusted to take into account the credit risk of the counterparties.

Debt

The fair value of Asset-backed financing, Borrowings from banks, Payable represented by securities and Other debt are included in the Level 2 and has been estimated based on discounted cash flows analysis using the current market interest rates at period-end adjusted for the Group nonperformance risk over the remaining term of the financial liability.

The fair value of Lease liabilities classified within Level 3 of the fair value hierarchy has been estimated using discounted cash flow models that require significant adjustments using unobservable inputs.

Other financial assets and liabilities

The carrying amount of Cash at banks, Restricted cash, Other cash equivalents, Trade receivables, Other current receivables and financial assets, Trade payables and Other current liabilities included in the condensed consolidated statement of financial position approximates their fair value, due to the short maturity of these items.

28. Related party transactions

In accordance with IAS 24 – Related Party Disclosures, Iveco Group's related parties are companies and persons capable of exercising control, joint control or significant influence over the Group. As of 30 June 2023 and 31 December 2022, related parties included Iveco Group's parent company Exor N.V. and its subsidiaries and affiliates, including CNH Industrial, Stellantis N.V. (formerly Fiat Chrysler Automobiles N.V. which, effective 16 January 2021, merged with Peugeot S.A. by means of a cross-border legal merger) and its subsidiaries and affiliates ("Stellantis"), and Iveco Group's unconsolidated subsidiaries, associates or joint ventures. In addition, the members of the Board of Directors and managers of Iveco Group with strategic responsibility and members of their families were also considered related parties.

As of 30 June 2023, based on public information available and in reference to Company's files, Exor N.V. held 42.7% of Iveco Group's voting power and had the ability to significantly influence the decisions submitted to a vote of Iveco Group's shareholders, including approval of annual dividends, the election and removal of directors, mergers or other business combinations, the acquisition or disposition of assets, and issuances of equity and the incurrence of indebtedness. The percentage above has been calculated as the ratio of (i) the aggregate number of Common Shares and Special Voting Shares owned by Exor N.V. to (ii) the aggregate number of outstanding Common Shares and Special Voting Shares of Iveco Group N.V. as of 30 June 2023.

In addition, Iveco Group engages in transactions with its unconsolidated subsidiaries, joint ventures, associates and other related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved. The Company's Audit Committee reviews and evaluates related party transactions pursuant to the specific Policy posted on the Company's website.

Transactions with Exor N.V. and its subsidiaries and affiliates

Iveco Group did not enter into any significant transactions with Exor N.V. during the three and six months ended 30 June 2023 and 2022.

In connection with the establishment of Fiat Industrial (now CNH Industrial) through the demerger from Fiat (which was subsequently merged into Fiat Chrysler Automobiles N.V. which is now Stellantis), the two companies entered into a Master Services Agreement ("Stellantis MSA") which sets forth the primary terms and conditions pursuant to which the service provider subsidiaries of CNH Industrial and Stellantis provide services to the service receiving subsidiaries. As structured, the applicable service provider and service receiver subsidiaries become parties to the Stellantis MSA through the execution of an Opt-in letter that may contain additional terms and conditions. Pursuant to the Stellantis MSA, service receivers are required to pay to service providers the actual cost of the services plus a negotiated margin. After the Demerger, the Stellantis MSA has been duplicated at the same terms and conditions between Iveco Group and Stellantis. During the six months ended 30 June 2023 and 2022, Stellantis subsidiaries provided Iveco Group with services such as certain accounting and other administrative activities, maintenance of plant and equipment, security, and information systems under the terms and conditions of the Stellantis MSA and the applicable Opt-in letters.

Furthermore, Iveco Group and Stellantis might engage in other minor transactions in the ordinary course of business.

These transactions with Stellantis are reflected in these Semi-Annual Condensed Consolidated Financial Statements as follows:

	Six months ended 30 June
(€ million)	2023	2022
Net revenues	11	16
Cost of sales	95	76
Selling, general and administrative costs	25	24
(€ million)	At 30 June 2023	At 31 December 2022
Trade receivables	7	4
Trade payables	37	40

Starting from 1 July 2023, Stellantis ceased to provide Iveco Group with certain services (mainly accounting and other administrative activities), which have been partially insourced and partially transferred to other external providers.

Transactions with CNH Industrial

Iveco Group and CNH Industrial entered into agreements, primarily of commercial nature, but also covering general administrative and specific technical matters as well as services provided by CNH Industrial N.V., as follows:

Master Service Agreements: in relation to certain services provided by either Iveco Group to CNH Industrial and vice versa, in connection with the execution of the Demerger Deed, Iveco Group and CNH Industrial entered into a two-year Master Services Agreement ("MSA") whereby each Party (and its subsidiaries) may provide services to the other (and its subsidiaries). Services provided under the MSA relate mainly to lease of premises and depots and IT services.

Engine Supply Agreement: in relation to the design and supply of off-road engines from Iveco Group to CNH Industrial, in connection with the execution of the Demerger Deed, Iveco Group and CNH Industrial entered into a ten-year Engine Supply Agreement ("ESA") whereby Iveco Group will sell to CNH Industrial diesel, CNG and LNG engines and provide post-sale services.

Financial Service Agreement: in relation to certain financial services activities carried out by either Iveco Group to CNH Industrial or vice versa, in connection with the execution of the Demerger Deed, Iveco Group and CNH Industrial entered into a three-year Master Services Agreement ("FS MSA"), whereby each Party (and its subsidiaries) may provide services and/or financial services activities to the other (and its subsidiaries). Services provided under the FS MSA relate mainly to wholesale and retail financing activities to suppliers, distribution network and customers.

The transactions with CNH Industrial are reflected in these Semi-Annual Condensed Financial Statements as follows:

	Six months ended 30 June
(€ million)	2023	2022
Net revenues	548	487
Cost of sales	53	19

(€ million)	At 30 June 2023	At 31 December 2022
Trade receivables	47	34
Financial receivables	102	146
Debt	232	277
Trade payables	17	15

Transactions with joint ventures

Iveco Group sells commercial vehicles and provides technical services to joint ventures such as IVECO - OTO MELARA Società Consortile a responsabilità limitata.

Net revenues from joint ventures totalled €116 million in six months ended 30 June 2023 (€89 million in the comparable period of 2022) and trade receivables from joint ventures totalled €1 million at 30 June 2023 (€14 million at 31 December 2022).

At 30 June 2023 and 31 December 2022, Iveco Group had provided guarantees on commitments of its joint ventures for an amount of €183 million and €161 million, respectively, mainly related to IVECO - OTO MELARA Società Consortile a responsabilità limitata.

Transactions with associates

Iveco Group sells trucks and commercial vehicles and provides services to associates. In the six months ended 30 June 2023, revenues from associates totalled €43 million (€55 million in the comparable period of 2022) and cost of sales from associates totalled €9 million (€7 million in the comparable period of 2022). At 30 June 2023, receivables from associates amounted to €15 million (€12 million at 31 December 2022). Trade payables to associates amounted to €13 million at 30 June 2023 (€13 million at 31 December 2022). At 30 June 2023, Iveco Group had provided guarantees on commitments of its associates for an amount of €252 million related to CNH Industrial Capital Europe S.a.S. (€244 million at 31 December 2022).

Transactions with unconsolidated subsidiaries

In the six months ended 30 June 2023 and 2022, there were no material transactions with unconsolidated subsidiaries.

Compensation to Directors and Key Management

The fees of the Directors of Iveco Group N.V. for carrying out their respective functions, including those in other consolidated legal entities, and the notional compensation cost arising from stock grants awarded to certain Executive Directors and Officers, amounted to an expense of approximately €3 million in the six months ended 30 June 2023 and 2022.

The aggregate expense incurred for the compensation of Executives with strategic responsibilities of the Group amounted to approximately €6 million in the six months ended 30 June 2023 and €5 million in the comparable period of 2022. These amounts included the notional compensation cost for share-based payments.

29. Translation of financial statements denominated in a currency other than the euro

The principal exchange rates used to translate into euros the financial statements prepared in currencies other than the euro were as follows:

		Six months ended 30 June 2023			Six months ended 30 June 2022
	Average	At 30 June		Average	At 30 June
U.S. dollar	1.081	1.087	1.067	1.093	1.039
Pound sterling	0.876	0.858	0.887	0.842	0.858
Swiss franc	0.986	0.979	0.985	1.032	0.996
Brazilian real	5.482	5.262	5.568	5.556	5.484
Polish Zloty	4.627	4.450	4.690	4.635	4.681
Czech Koruna	23.682	23.742	24.116	24.648	24.739
Argentine peso(1)	278.876	278.876	188.906	130.056	130.056
Turkish lira(2)	28.179	28.179	19.953	17.386	17.386

(1) From 1 July 2018, Argentina's economy was considered to be hyperinflationary. After the same date, transactions for entities with the Argentine peso as the functional currency were translated using the closing spot rate.

(2) As of 30 June 2022, the Company applied the hyperinflationary accounting in Türkiye, with effect from 1 January 2022. After 1 January 2022, transactions for entities with the Turkish lira as the functional currency were translated using the closing spot rate.

30. Subsequent events

Iveco Group has evaluated subsequent events through 1 August 2023, which is the date the condensed consolidated financial statements were authorized for issuance. No significant events have occurred.

RESPONSIBILITY STATEMENT

The Board of Directors is responsible for preparing the 2023 Semi-Annual Report, inclusive of the Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 and the Semi-Annual Management Report, in accordance with the Dutch Financial Supervision Act and IAS 34 - Interim Financial Reporting as endorsed by the European Union.

In accordance with Section 5:25d, paragraph 2 of the Dutch Financial Supervision Act, the Board of Directors states that, to the best of its knowledge, the Semi-Annual Condensed Consolidated Financial Statements at 30 June 2023 prepared in accordance with applicable accounting standards provide a true and fair view of the assets, liabilities, financial position and profit or loss of Iveco Group N.V. and its subsidiaries, and the undertakings included in the consolidation as a whole, and the Semi-Annual Management Report provides a fair review of the information required pursuant to Section 5:25d, paragraphs 8 and 9 of the Dutch Financial Supervision Act.

1 August 2023

The Board of Directors Suzanne Heywood Gerrit Andreas Marx Lorenzo Simonelli Tufan Erginbilgic Essimari Kairisto Linda Knoll Alessandro Nasi Olof Persson Benoît Ribadeau-Dumas

AI Terminal

Iveco Group N.V.

7333_ir_2023-08-03-161141_069e4484-9e56-443b-9b37-9a7c04bbfae5.pdf

2023 Semi-Annual Report

CONTENTS

Iveco Group N.V.

BOARD OF DIRECTORS AND AUDITOR

Non-Executive Directors

(1) Member of the Audit Committee

Disclaimer

BOARD OF DIRECTORS INDEPENDENT AUDITOR

SEMI-ANNUAL MANAGEMENT REPORT

GENERAL

ALTERNATIVE PERFORMANCE MEASURES (OR "NON EU-IFRS FINANCIAL MEASURES")

RESULTS OF OPERATIONS

Introduction

Russia-Ukraine conflict

Three months ended 30 June 2023 compared to three months ended 30 June 2022

Consolidated Results of Operations

Net revenues

Cost of sales

Selling, general and administrative costs

Research and development costs

Result from investments

Gains/(losses) on disposal of investments

Restructuring costs

Other income/(expenses)

Financial income/(expenses)

Income tax (expense) benefit

Profit/(loss) for the period

Reconciliation of Profit/(loss) to Adjusted net profit/(loss)

Industrial Activities Performance

Net revenues by segment

Adjusted EBIT by segment

Reconciliation of EBIT and Adjusted EBIT

Commercial and Specialty Vehicles

Net revenues

Commercial and Specialty Vehicles Net revenues – by geographic region:

Adjusted EBIT

Powertrain

Net revenues

Adjusted EBIT

Financial Services Performance

Net revenues

Adjusted EBIT

Six months ended 30 June 2023 compared to six months ended 30 June 2022

Consolidated Results of Operations

Net revenues

Cost of sales

Selling, general and administrative costs

Research and development costs

Result from investments

Gains/(losses) on disposal of investments

Restructuring costs

Other income/(expenses)

Financial income/(expenses)

Income tax (expense) benefit

Profit/(loss) for the period

Reconciliation of Profit/(loss) to Adjusted net profit/(loss)

Industrial Activities and Business Segment

Net revenues by segment

Adjusted EBIT by segment

Reconciliation of EBIT to Adjusted EBIT

Six months ended 30 June 2022

Industrial Activities Performance

Commercial and Specialty Vehicles

Net revenues

Commercial and Specialty Vehicles Net revenues – by geographic region:

Adjusted EBIT

Powertrain

Net revenues

Adjusted EBIT

Financial Services Performance

Net revenues

Adjusted EBIT

CONDENSED STATEMENT OF FINANCIAL POSITION BY ACTIVITY

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Analysis

Net Cash from Operating Activities

Net Cash from Investing Activities