Good morning, and afternoon, ladies and gentlemen, and welcome to today's CNH Industrial 2020 Second Quarter and First Half-Year Results Conference Call. For your information, today's conference is being recorded. After the speakers’ remarks, there will be a question-and-answer session. Operator provided instructions. At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.

Thank you, Andrea. Good morning, and afternoon, everyone. We would like to welcome you to the webcast and conference call for CNH Industrial second quarter of 2020 results for the period ending June 30. This call is being broadcast live on our website and is copyrighted by CNH Industrial. Any other use, recording or transmission of any portion of this broadcast without the express written consent of CNH Industrial is strictly forbidden. We are pleased to have here with us today our chair and acting Chief Executive Officer, Suzanne Heywood; and our CFO, Oddone Rocchetta who will be hosting today's call. They will use the material available for download from the CNH Industrial website. After the presentation, we'll be holding a Q&A session. As a final comment, please note that any forward-looking statements we might be making during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included in the presentation material. Additional information pertaining to factors that could cause actual results to differ materially is contained in the company's most recent Form 20-F and annual report as well as other periodic reports and filings with the U.S. Securities and Exchange Commission and the equivalent authorities in the Netherlands and Italy. The company presentation may include certain non-GAAP financial measures. Additional information including reconciliation to the most directly comparable GAAP financial measures is included in the presentation material. One final remark, once again our team is connecting from different countries. So please forgive us, if there are moments of silence during the call, while we manage the transition between speakers. I will now turn the call over to Suzanne.

Thank you, Federico, and good morning, good afternoon everyone. I would like to begin today with a short update on how we're responding to the current pandemic and our priorities as conditions start to improve. After that, I will outline our Q2 results and then share some of our thinking on how we see the second half of the year playing out, assuming of course that there are no further unexpected events. This second quarter has been one in which the end market conditions have changed very rapidly. However, we have navigated this, I believe, with some success. By May, we had all our plants and depots back up and running with all our new COVID health and safety protocols fully implemented. This meant that we were well positioned to supply products into end markets that strengthened ahead of expectations, enabling us to deliver business performance that was better than we had expected at the end of the first quarter. Overall, in this quarter, we are reporting consolidated net revenues of $5.6 billion. Net sales of Industrial Activities were $5.2 billion, down 24% on a constant currency basis. This is a lower decline than we had anticipated at the end of Q1 with some markets coming back relatively strongly, including low horsepower tractors in North America and rest of world combined in North and South America and light commercial vehicles in Europe towards the end of the quarter. Industrial Activities adjusted EBIT was a loss of $58 million. Within this, our Agriculture division showed a profit and returned to an 8% margin on sales and our Powertrain division reported very strong performance in China. These performances were, however, offset by losses in the Commercial and Specialty Vehicles and Construction segments. All our industrial segments continued to be impacted by industry demand disruptions, negative absorption caused by plant shutdowns and actions that we have taken to lower our inventory levels. These were partially offset by reduced SG&A expenses, which were down $101 million or 20% compared to last year, and by the deferral of $70 million or 26% of our R&D expenses that were unrelated to new product launches. Net income was $361 million. This includes the positive fair value remeasurement of our stake in Nikola Corporation, which amounted to almost $1.5 billion. This was, however, partially offset by a number of other charges that we have taken to reflect the impact of the pandemic on our business including Construction goodwill and other asset impairment and asset optimization charges. We held the net debt of our Industrial Activities steady between the first and the second quarter ends at $2.3 billion and we generated positive free cash flow of $97 million. These were both helped by strengthening end market demand and the actions we have taken to reduce cost and preserve cash. These cost and cash measures in combination delivered almost $500 million of cash benefit in the first six months of the year. And one-third of these savings—almost one-third of these savings—will remain in the years to come. These results have all contributed to the strong available liquidity that we are reporting of $11.5 billion as of June 30, 2020. This liquidity, the highest in our history, gives us a solid foundation from which we can continue to navigate this uncertain and challenging period. As we do this, we will continue to prioritize the three things that we highlighted at the start of the pandemic: keeping our people safe, ensuring business continuity and supporting our dealers and our suppliers. Alongside this work, we are now however working on a number of other issues. First of all, we are gradually restarting our preparation for the spin-off of our on-road business and we will keep you updated on the progress and the timeline for this as it becomes clearer. We have also already taken some actions to strengthen our Construction business, but we are continuing to work on plans to reposition it for profitable growth. And again, we will share these with you as they are completed. And finally, I wanted to highlight the ongoing focus that we are putting on our investments in digital and alternative fuel technologies across all our business segments, which we know are critical to customers. I will share more on all of this later in the presentation including the significant progress that we are making in precision farming and how we are using our AGXTEND concept to bring the best new technologies to our farmers. But upfront, I also wanted to say something briefly about our partnership with Nikola Corporation, as I know this has created a fair bit of interest. For us, our partnership with Nikola Corporation is an important enabler and catalyst of IVECO's future technology roadmap. We are therefore very excited that our JV will be producing the first modular battery and fuel cell heavy-duty trucks for both Europe and, until they are localized in Nikola's own U.S. site, also for North America. I will explain later how the approach that we are taking with Nikola is distinctive in particular because we have reimagined how an electric or fuel cell electric truck should work from the bottom up, rather than simply replacing the internal combustion engine in a truck with batteries or fuel cells. This approach is going to give us a vehicle with very substantial range and power. However, while we are excited about and strongly committed to this future, we are also delighted by the way in which the market has responded to our newly launched heavy-duty truck the S-Way in its combustion engine configurations. We also remain strongly committed to our LNG truck lineup, which we believe is a critical and lasting transition technology between diesel and electric vehicles. We are one of the leading players in this market, which has gained further relevance in Europe since the beginning of the year. Finally, I wanted to let you know that the search for our new CEO is continuing, with a number of candidates having now been interviewed. I will, of course, let you know as soon as we have news on this topic and in the meantime, will continue in my role as acting CEO and Chair. I also want to take this opportunity to thank all my colleagues across CNH Industrial, as well as our dealers, for their huge efforts to keep our people safe during the first half of this very challenging year, while still meeting the needs of our customers who operate in so many essential industries. Moving on to slide four. I would like to share with you some of our Q2 industry volumes, as these should help put our results into context. First, let's look at the Ag segment. Worldwide agriculture industry demand was somewhat muted during the second quarter, with global demand for tractors down 1%, although demand for combines was up by 12% compared to last year. In North America, tractor demand was up 20% for the lower horsepower segment, although high horsepower tractors were down by 22% versus last year. The recovery that we've been seeing in the dairy and livestock end markets is not yet visible in row crop farming. If we look at the monthly industry performance figures on the right-hand side of the page, you can see the progressive ramp-up in demand for tractors in May and June, which demonstrates the industry's resilience and is a positive indication for the second part of the year. Meanwhile, combines were up by 3% in North America in the quarter, mainly driven by the strong North American sales in June, which were up 31% year-on-year. Turning to Europe, the picture is a little different, as the market has remained challenged during the entire quarter with the relative performance in each month being down double digits versus the previous year, in both tractors and combines. In South America, we see a different story again. Here we saw depressed demand for both tractors and combines in April, but then saw signs of recovery in May and June. In the rest of the world, demand decreased by 3% for tractors and increased by 21% for combines, mainly driven by very strong performance in the first two months of the quarter. Moving on to the construction segment. Demand in all subsegments of the construction segment was showing double-digit decline in all geographies, except for rest of the world, where general construction equipment was up by 28%, mainly driven by China. As you can see from the monthly figures, while the recovery is not as steep as we've been seeing in tractors, there has still been a clear positive trend during the quarter that will hopefully continue through the remainder of the year. Lastly, I want to turn to the truck and bus markets. The European truck market was down by 39% year-over-year in the quarter, with light-duty trucks down 29% and medium and heavy trucks down 57%. In the light commercial vehicle segment, we have again seen relative positive progression month by month, with June market performance in Europe actually up 1% compared to last year. While for medium and heavy duty, the market demand remained depressed for the entire quarter. If we look at South America, the market demand remained challenging for the first two months of the quarter, while showing an encouraging double-digit ramp-up in the month of June for both light commercial vehicles and medium and heavy-duty trucks. Turning now to buses. In Europe, the market decreased by 57% in the quarter, while the South American market decreased by 62%, with each month of the quarter considerably down compared to last year. I will now move on to slide five, which shows the data that we have for retail sales, deliveries and production in the second quarter of this year compared to the same period last year. Before going into the detail, it's worth remembering that beginning in the last month of Q1 and rolling into Q2 we had a cascading effect of plant closures, as the pandemic made its way around the world. For all of April and half of May, we essentially had our global production shut down. However, despite these plant closures, we managed to keep most of our parts depots, service facilities and dealerships operational. Our salespeople are also able in many cases to match existing inventory with customer demand, which has both helped our customers and improved our inventory management. All our plants are now back up and running. However, most are not operating at full production levels, since we are still managing our production to reflect end market demand. This slide then shows our quarterly performance. In our agriculture division, worldwide tractor and combine underproduction compared to retail sales was 44% and 40% respectively for the second quarter, with North American row crop underproduction at 10%. We have also been gaining retail market share in Europe and South America in both tractors and combines. In our construction division, our worldwide underproduction compared to retail sales was 62%, with North America at 74%. This has enabled us to reduce that channel inventory significantly, as you will see on the next slide. For our trucks business, worldwide light-duty truck production was down 59%, while medium and heavy-duty truck production was down 50%, which meant that we had underproduction of 27% compared to retail sales for trucks worldwide. If we focus on the European portion of IVECO specifically, since this accounts for approximately 80% of the sub-segment's revenues, production of light trucks was down 62% and production of medium and heavy trucks was down 52%. Our market share of the European truck market was 9.6%, down 80 basis points, although our share of medium and heavy-duty market was up by 200 basis points to 8.3% on the back of the positive response, as I mentioned earlier, to the launch of our new S-Way truck. Our market share in heavy semi-trucks in Europe actually doubled within this figure, from the low level in the prior year. Truck book-to-bill in Europe was 1.12, while South America ended the quarter at 1.05. We can also see from our telemetric data the truck usage increased through the quarter and this trend has continued in the first weeks of the third quarter. Finally, in buses, our market share in Europe was up 550 basis points, as our product line is geared to public transportation and intercity transportation, while our exposure in the coach segment, which has been far more impacted by the crisis, is minimal. Slide six summarizes channel inventories by segment. I won't go through them all, but I'm pleased to report that across the board we have had double-digit reductions in inventories. Indeed, in some categories, like North American row crop, we have reduced overall inventory by 25% and our company-specific industry inventory by almost half. Our team, in conjunction with our dealers, has done a fantastic job of managing our inventory levels, so that as markets recover, we can continue to build to meet retail demand and help our dealers selectively refurnish their inventories. I will now turn the call over to Oddone, to take you through some of the key financial details.

Thank you, Suzanne. And good morning and afternoon to everyone. The second quarter and, for the matter of this, the first six months of 2020, have been extremely challenging. That being said, while we have yet to see a full recovery on our end markets, there are promising signs that we are in a less pronounced downturn environment than initially expected and that we are not facing our original worst-case scenarios for 2020. It has taken exemplary cooperation and coordination from employees, dealers, customers and other stakeholders to make the tough decisions in March and April that helped us to get in a more secure position today. And for that, I would like to thank them all. Moving now to the key figures for the second quarter: consolidated revenues were $5.6 billion, down 23% on a constant currency basis. Net income was $361 million and includes a pre-tax gain of $1.475 billion, due to the re-measurement of fair value of the investment in Nikola Corporation, upon the listing of Nikola on NASDAQ, after the completion of the business combination with VectoIQ. When Nikola went public, on June 4, CNH Industrial held 25.7 million shares of Nikola Corporation, corresponding to approximately 7% of Nikola outstanding share capital. As a reminder, while we plan to exclude any fair value re-measurement of this investment from the calculation of non-GAAP adjusted measures and in particular from our adjusted diluted EPS, the investment will be valued at fair value through profit or loss, with any changes in fair value recorded in profit or loss in our U.S. GAAP consolidated financial statements going forward. Net income also includes a non-cash one-time goodwill impairment charge of $585 million, related to construction, other assets pre-tax impairment charges of $255 million as well as asset optimization pre-tax charges of $282 million. We took these charges based on our assessment of the future recoverability of our assets, also considering the impacts of the pandemic in our businesses around the world. To be more specific about the asset optimization charge, we identified new actions to dispose of used trucks in deteriorated end market conditions due to COVID-19. We have been selling in the last few weeks a higher number of used trucks at now prevailing lower market prices, quickly responding to the current exceptional circumstances. As a consequence, we have reassessed the residual value of our portfolio of trucks sold with buyback commitments. However, given our strict discipline to manage sales with buyback over the last couple of years, we now have the lowest portfolio to be bought back since 2013. Looking now at our non-GAAP measures, net sales in our industrial segments were down 24% in constant currency. Adjusted EBIT of Industrial Activities was a loss of $58 million in the quarter, compared to an adjusted EBIT of $527 million last year, strongly impacted by industry demand disruptions, negative absorption caused by plant shutdowns and costs associated with the pandemic, partially offset by reduced SG&A and deferral of certain R&D expenses not related to new product launches. Our adjusted income tax expense for the quarter was $30 million, compared to $130 million last year. The adjusted effective tax rate was negative 45% primarily due to the impact of pre-tax losses in jurisdictions where tax benefits are not recognized. Adjusted net loss was $85 million and adjusted diluted EPS was a loss of $0.07. We finished the quarter with net debt of Industrial Activities of $2.3 billion, steady with the level we had at the end of the previous quarter, as a result of positive free cash flow despite the adverse impacts of COVID-19. Turning to slide 8, we focus now on Industrial Activities net sales. Foreign exchange translation had a negative impact of 3.3% in Q2. The net sales split by region was directionally in line with last year, but with slightly greater share of rest of the world as the western hemisphere was more affected by the pandemic in the second quarter. Agriculture's net sales totaled $2.5 billion in the second quarter, down 14% on a constant currency basis versus last year. The decrease was driven by lower industry volumes linked to the COVID-19 pandemic, primarily in Europe, partially offset by positive price realization. Construction net sales totaled $420 million in the quarter, down 41% on a constant currency basis, as a result of weaker market conditions due to the COVID-19 pandemic, continued channel inventory destocking actions and negative price realization. We allocated significant resources in the quarter to support our entire dealer network with commercial incentives to liquidate inventory and provided payment extensions and product quality upgrades. Year-to-date, we have reduced almost $300 million of channel inventory mainly in dealer inventory in North America, which is a demonstration of the efforts spent in establishing a healthier condition for our Construction segment among unprecedented market headwinds. Commercial and Specialty Vehicles net sales totaled $1.7 billion in the quarter, down 33% on a constant currency basis, driven by decreased volumes across all geographies also due to the COVID-19 pandemic. Finally, Powertrain net sales totaled $763 million in the quarter, down 31% on a constant currency basis with the volume reduction particularly for light and medium engines in Europe, coming from lower demand from our internal and external customers. Sales to external customers accounted for 63% of total sales; in the second quarter of 2019 they were 48% of total sales. Strong sales were recorded in China in the quarter, as the country started to recover earlier from the impacts of the pandemic. Turning now to slide 9 with a look at the adjusted EBIT by segment and driver, consolidated adjusted EBIT including results of our Financial Services operations was $15 million for the second quarter with a margin of 0.3%. At a high level the majority of the decrease on a year-over-year basis was again due to negative volume and mix of $600 million, which includes negative fixed cost absorption of more than $180 million. Higher product costs, mainly linked to the plant shutdown and lower pricing in construction, were partially offset by aggressive cost containment actions. If we take a closer look at each segment: adjusted EBIT for Agriculture was $203 million with a decremental margin of approximately 25%. Positive price realization, disciplined cost management and continued prioritization of research and development spend were more than offset by lower volume and mix and negative fixed cost absorption, only partially mitigated by lower purchasing costs. For Construction, adjusted EBIT was a loss of $87 million. The loss was driven by lower volumes and negative fixed cost absorption due to lower production levels, stocking actions and unfavorable price realization. Also here, cost containment action only partially offset the headwinds of lower demand. Pricing was negatively impacted by strong commercial action mainly in North America. We expect a normalization of pricing in the second half of the year. Commercial and Specialty Vehicle adjusted EBIT was a loss of $156 million and was primarily driven by lower volumes and the negative impact on product costs from plant shutdowns, partially offset by lower SG&A, positive price realization and containment action in R&D spend. Lastly, Powertrain second quarter adjusted EBIT was $32 million, a reduction of $70 million versus last year mainly due to lower volume, partially offset by purchasing and quality efficiencies, cost containment actions and lower spending on regulatory programs, which were higher in the previous year. Adjusted EBIT margin was 4.2%. Moving to slide 10 in our Financial Services business: net income was $53 million, down from $91 million last year, primarily due to lower average receivable portfolio in North America and Europe, higher risk cost as we expect deteriorating credit conditions in some segments and geographies, partially offset by higher average portfolio in South America and by lower income taxes. In the quarter, retail originations were $2.4 billion. The managed portfolio at the end of the period was $24.6 billion including the portfolio of non-consolidated JVs. Delinquencies were slightly up sequentially with an increase of 20 basis points, but they remain below the historical norm for the second quarter. Delinquency at the end of the quarter does not reflect the payment holidays and moratoria afforded to some of our customers and dealers to support those most affected by the lockdown measures. Next on slide 11, I'd like to discuss the net debt and free cash flow performance of our Industrial Activities. Net debt of industrial activities was $2.3 billion at June 30, 2020, flat versus March 31st as a result of positive free cash flow of $97 million supported by the continuous implementation of cash preservation measures. The slightly positive free cash flow versus our preliminary estimate of cash absorption was mainly driven by higher industrial profit and lower working capital, predominantly coming from the Ag segment. Change in working capital resulted in a cash inflow of $369 million versus a cash outflow of $135 million in the second quarter of last year with a cash generation mainly driven by lower inventories, partially offset by decrease in trade payables as a consequence of the lower production. Turning to the next slide. We have consolidated available liquidity and debt maturities. We ended the second quarter of 2020 with available liquidity of $11.5 billion, up $1.6 billion versus March 2020 with a solid liquidity to last 12 months revenue ratio of 46%. In the second quarter, we once again actively worked on various additional planning opportunities to secure and improve our liquidity. As part of these actions in the month of April 2020 the company issued £600 million commercial paper to the Joint Treasury and Bank of England Covid facility. On July 2nd, CNH Industrial Capital LLC issued $600 million in aggregate principal amount of 1.95% notes due 2023. On June 15th, Fitch Ratings affirmed CNH Industrial N.V. and CNH Industrial Capital LLC long-term issuer default rating of BBB- and changed the outlook to stable from positive. While we also obviously cannot be happy with the change in outlook, we think that the confirmation of the rating level with a stable outlook is a good recognition of the company's resilience in this environment and our continuous efforts to defend investment grade with a target to restart the long-term rating improvement trajectory when the environment will allow for it. The company's long-term credit ratings remain unchanged at BBB for Standard & Poor's and at Baa3 for Moody's with stable outlooks. Looking out at the remainder of 2020, we will remain with a strong liquidity position. We'll limit the near-term maturities of capital market debt to support the company's strength even in case of a sudden worsening in the pandemic. At the same time, the high level of liquidity will provide us with the flexibility to assess all opportunities to keep improving our capital structure, including the medium-term target to deleverage the industrial side as well as looking into investment opportunities in case they present. So I will now turn it back over to Suzanne and I will be back for the Q&A.

Thank you, Oddone. Before sharing some of our thoughts about the rest of the year, I would like to give you an update on the work that we've been doing in this last quarter to protect our people and our network while also supporting our customers through the pandemic. The safety and well-being of our workforce has been, as I noted earlier, our priority throughout the pandemic. We have now implemented our new health and safety protocol across our entire company and have been in regular contact with medical professionals and scientists to update our practices to reflect the evolving understanding of how this virus is transmitted. While the majority of our dealers remained open through the quarter, some were forced to scale back their operations. However, all our dealers are now fully operational. We are, however, continuing to review on a daily basis the situation across our dealers, as well as for our suppliers—not only our Tier 1 suppliers but also our Tier 2 and Tier 3 suppliers—stepping in to provide support and advice where we need to do so to ensure the resilience of our supply network. As a company we've always tried to support the communities in which we operate. This is why early on in the pandemic we set up a solidarity fund. This fund has now allocated money to 76 initiatives around the globe that are helping people and communities on projects supplying food, supporting education and improving health. This has included, for example, in South America providing food to 2,400 families and to 20 food distribution institutions. In Thailand, we have delivered 5,000 kilograms of rice and 120 food packs to 1,500 people, as well as 12,000 units of medical equipment to four hospitals. In Brazil, we have distributed medical equipment to 10,000 truck drivers. And in Italy we have donated $100,000 to research activities and supported technician training. We will continue to do what we can to support local communities as they start to recover from the pandemic. Turning to the company. I am pleased to report that we are on track to realize the benefits of the cash and cost containment actions that we announced last quarter. And wherever we can, we will make these savings permanent through structural changes in the business. This includes, for example, maintaining remote working where it makes sense and reviewing the whole of our corporate footprint to see where we can consolidate and reduce cost. The pandemic has forced us to change our working practices and we are determined to capture the best of that innovation even when we return to a more normal working environment particularly where it improves working practices and reduces costs. We've also been inspired as a company to put new emphasis this quarter into something that has long been one of our priorities: creating a more diverse workforce. I strongly believe that workforce diversity is important both from a moral point of view and from a business point of view as there is considerable evidence that more diverse teams produce and implement better ideas. We think about diversity across multiple dimensions, including ethnicity of course but also things like gender and educational background. This quarter, we have recommitted as a leadership team to our diversity program, which looks at how we can better recruit, train and promote a diverse workforce. We have said we will look for diverse candidates for all senior appointments. We recognize that it will take time to develop the talent base that we need. And to underline our commitment to diversity, we have for the first time included diversity and inclusion objectives in the annual performance targets for all our senior leaders. Next on slide 15 and I would like to tell you about the work that we have been doing on digitalization and precision farming. As I said earlier, this is a major priority for the company and we are proud to offer solutions that cover each element of the crop cycle: field, fleet and farm, together with our AGXTEND concept. Let me take you through each of these. Field refers to solutions that can enhance field productivity. Taken together, they can have an impact of almost 20% by increasing yield and reducing input cost. We are now shipping our next-generation Case IH Magnum Connect and New Holland T8, which include a reimagined in-cab customer experience. And in 2020, we are seeing combine and planting automation solutions become the new normal for customers buying both these and other vehicles, with them asking for them to be included during production. Fleet, the second part, refers to solutions that can enhance the productivity of machines within the farm. The number of machines that we have connected continues to increase. This means that we can now measure up to a 30% reduction in downtime for those machines that have implemented fleet solutions, with those solutions often enabling us, for example, to determine when a machine needs a part replacing before that part actually fails. In Brazil, where until last year connectivity was available in less than 10% of farming areas, we are driving something called Connect Our Agro, which is an initiative focused on expanding open 4G to remote areas. This initiative is a result of collaboration between eight major players and has extended coverage to a further 5.1 million hectares or 13 million acres since its launch in May 2019. Despite the challenges posed by COVID, we plan to expand this initiative to cover a total of 13 million hectares or 32 million acres by the end of this year. Thirdly, we have Farm. Farm refers to software that farms can use to harness agronomic and financial data in real time—i.e., while they are farming—as well as data both before and after the season to support them in their decision-making. This data is very important to many of our customers given the increasing sophistication of many farm operations. In April, we launched our new farm solution based on the AgDNA acquisition that we completed in September 2019. We have seen very positive customer feedback from this and we have been significantly increasing the number of engaged acres. Because we can fit many of these field, fleet and farm products in both our factories and through our aftermarket network and because we can fit them on both our own and on mixed fleets, our customers have a very wide range of options for customizing their equipment to meet the precise needs of their businesses. Finally, I also wanted to mention our AGXTEND incubator, the fourth element if you like of our digital and precision farming offer. Under this brand, we work in a very open way with a wide range of innovative start-ups, agricultural technology companies and leading-edge technology companies from other industries. The AGXTEND portfolio now, for example, provides a wide range of sensing and control solutions that enable farmers to diminish, often very dramatically, the amount of chemicals that they use on their fields. This both increases the sustainability of their farms and reduces their costs. Among the new products due to be launched in 2020 within the AGXTEND network is the next-generation of XPower, a completely chemical-free weed control solution. We are very proud of the work that we've been doing on digital and precision farming. And this has contributed at least in part to the continuing recognition that we receive for our work on ESG. Earlier this week, for the seventh consecutive year, MSCI gave us an AAA rating, the highest possible rating for our work on ESG. However, we're also conscious that this is an area where there is far more that we can both do and that we should do and we will continue to prioritize it in the future. Turning now to slide 16. As we have previously announced the Nikola TRE will be assembled by the recently established European 50-50 JV between IVECO and Nikola in our plant in Ulm, Germany. The backbone of the Nikola TRE, both the battery power version and the coming fuel cell version, will be the IVECO S-Way. We have, however, completely redesigned from the ground up how the inside of this truck will work, basing it around the needs of an electric powertrain. This technology is centered on a highly innovative E-Axle that has been developed by FPT. This is a highly efficient electromechanical propulsion system. And thanks to the efficient inverters that transform the battery power so that it can drive the electric motors, the Nikola TRE battery electric vehicle will be able to go 400 kilometers before needing to be recharged, which is substantially more than the range that we understand is currently envisaged for many of our competitors' vehicles. Our partnership with Nikola however involves far more than just the production of zero-emission trucks because our intention is to create a complete turnkey offering for any customer wanting to eliminate their emissions or to generate credits to offset their manufacturing emissions. While we are of course pleased with the success of Nikola's IPO back in June, we are therefore far more focused on the value that we can create together through this joint venture. By 2021, we will be producing electric vehicles through the joint venture. And by 2023, we will be producing fuel cell electric vehicles. The JV will sell finished vehicles to IVECO for distribution into the European market and to Nikola for distribution in the North American market. IVECO and its dealers across Europe will also service and provide parts for the Nikola TRE trucks. However, as I mentioned earlier, while our partnership with Nikola is providing a plan for the future and a very important plan, we are also delighted about the more immediate success of the S-Way that we launched in the fourth quarter of last year. With this new heavy-duty truck, IVECO has started to regain market share in the EU. And of course IVECO also remains very well positioned with its LNG trucks, which we still see as a very important bridging technology through to electric vehicles. Moving to slide 17, you can see our preliminary view of the industry end markets by segments for the full year. I wanted to share these with you to give you an idea of what we are anticipating internally, although I do want to emphasize that there is still considerable uncertainty in the market and these are based on an assumption of a continued recovery from the position today. They do not for example build in the potential impact of a significant second wave of the virus. Despite this, I hope you'll find them helpful. I'll pick out a few of the numbers here that I find interesting. If we look at the ag industry for example, while tractors and combines have come back from very low levels, you can see that we believe these trends will slow in the second half of the year, with tractors flattening out versus the previous year on a global basis. This means that we expect the year as a whole to be relatively flat to slightly down for both combines and tractors compared to where we concluded last year. For construction equipment, we think the second half of the year will continue to be challenging with double-digit industry decreases in almost all regions, except for rest of the world, where the full year market decline is expected to be less steep. For trucks and buses, we think we've seen the worst during the first half of the year—at least we hope we have—and anticipate markets to rebound in the second half but still be significantly down from the peak industry levels at the end of 2019. While some of this downturn was expected, the speed with which the markets have come off since March means that it is likely to take time for them to recover to more normalized levels. Looking now at Slide 18. While uncertainties regarding the evolution of the COVID-19 pandemic remain, we will continue to focus our efforts on managing the very rapidly evolving end markets. However, we are also completely committed to thriving and driving profitable growth as we emerge from this crisis. And assuming as I said before no further widespread activation of lockdown policies or other major unforeseen events in our main jurisdictions, we wanted to share with you the following outlook for the year. First of all, we expect net sales of Industrial Activities to be down between 15% and 20%, including currency translation effects, due to COVID-19 impact on market conditions across all regions and segments. We also expect free cash flow of Industrial Activities to remain negative for the full year, despite an expected cash generation in the second half of the year, resulting from continued cash preservation measures and a normalized seasonality of sales. And finally, we expect our solid available liquidity level to be maintained throughout the year with opportunistic allocation of resources to respond to the current evolving scenario. We will of course continue to communicate with financial markets and with other stakeholders if changes in the business environment change the likelihood of our performance, which of course will again depend on the duration and extent of the pandemic. In concluding my remarks, I'd like to thank each and every member of our workforce for the huge efforts that they have made together with our dealers, our customers, our suppliers and the communities in which we work to help us all get through this crisis together. This concludes our prepared remarks and I will now hand back to Federico.

Thank you very much, Suzanne. This concludes our prepared remarks and we can now open up for questions. Operator, over to you.

Thank you. Operator provided instructions. We are now taking our first question from the line of Rob Wertheimer from Melius Research. Please ask your question.

Support levels, et cetera. Can you give us any hint on current order trends and just your general view on sentiment? It seems to us used pricing is holding well and it's not a disaster. And then if I may, just the strategic one: will be your commitment to 80/20. You've had a lot to manage through in a crisis. Is that remaining unchanged? Is that on hold as you sort of think about what incoming management might think to do? Thank you.

Thank you very much. I'm sorry, I missed the first part of your question because you only came in on my line just at the end of it. I've got the second one on 80/20. Could you just repeat the first one?

Yes, sure Suzanne. Sorry. Just your view on large farmer sentiment on current order trends. Used pricing seems okay. There's obviously a lot of headwinds. So I just wanted to have that sense in the U.S. and Europe. Thank you.

Thank you so much. As you've probably seen in the numbers, we're seeing the kind of smaller vehicles, particularly in North America, coming back a little bit faster than the larger vehicles. Partly we think because dairy farmers and others are recovering a little bit faster than others. But we are seeing across the piece improvement in our agricultural order book, particularly actually looking in July, where they did come up. They're actually up year-on-year in July across the piece apart from right at the top end. So there's quite encouraging news on the Ag side. On the 80/20 point, we remain absolutely committed to 80/20. And I think it's been important in all our segments. We have actually made quite a lot of progress on 80/20 already because we started the work on 80/20 following the Capital Markets Day last year. That work we suspended to some extent during the crisis. And as we're now kind of ramping back up again on that you'll continue to see us making progress on it. And I think it's very important for our business.

Okay. Perfect. Thank you. And then I'm sorry, you said except on the very top end on tractors you've seen strong order trends given up in July just to clarify?

Yes. If I look particularly in North America, tractors have come back very strongly particularly in July. We're seeing quite a big uplift. That tends to be stronger on the smaller side and it's a little bit weaker at the very top end. We just think that's reflecting the sorts of farmers that are currently out buying. But actually we're seeing overall July orders up year-on-year across tractors, as I say more oriented towards the smaller tractors than to the larger ones.

Great. Thank you.

Thank you. We are now taking our next question from the line of Martino de Ambroggi from Equita. Please ask your question.

Thank you. Good morning, good afternoon, everybody. The first is on the cost-cutting measures. If I remember correctly in your last call you mentioned $1 billion of savings. And during the speech today, Oddone talked about $500 million. So if you could elaborate a bit more in order to understand what measures are structural cuts and the time frame to finalize the intervention? And after these cost-cutting measures, you provided a guidance for the top line. I don't know if it's possible to have just a very wide range of the profitability if you achieved a minus 15% to 20% top line for the full year. Thank you.

Thank you very much. On the cash savings the $1 billion number was for the full year. So as we look at the first half, we've reduced expenses and cash outlays by about $500 million. And that's really a combination, as we said, of cash measures and cost measures. What we're now looking to do is to convert as much of that as we can into permanent savings although you'll appreciate that some of those are one-off savings—things like reduction in travel and some of the benefits from furlough schemes. However, we think more than a third of what we've reduced in the first half we'll be able to carry over into 2021. And a good chunk of that we've actually taken via divestiture. Then the rest of the reduction in the cash savings we're looking to achieve in the second half of the year. So I hope that gives a little bit of clarification on that. On the guidance, we're not really comfortable with giving any further guidance over what we've given. We are conscious that we're operating in very uncertain circumstances. We wanted to try and give the market a sense of where we see things at the moment despite the uncertainty. But you'll appreciate that given how rapidly things are changing we're cautious about going too far.

If I may, the second question is on the cash burn that you projected during the last call. It was a radically different outcome. I understand better volumes than initially expected. Is there any change in net working capital, payment terms or anything else which could be also, in this case, structural?

Oddone here. No, there's no change in any payment terms or anything. Actually the better working capital came from lower inventory at the end of the period, better results and frankly higher speed of sales recovery in the last part of the quarter.

Okay. Thank you.

Thank you. We now take our next question from the line of Joe O'Dea from Vertical Research. Please ask your question.

Hi. Good morning, everyone. Thanks very much for all the end market and operational details, it's very helpful. I wanted to ask on channel inventory. If you think about that at a segment level what your comfort level is with current channel inventory relative to end market demand expectations and if you think you're now sort of fully passed any kind of destock you had to do?

Thank you. As I mentioned in the prepared notes, we've actually reduced channel inventory across all of our different business lines in this quarter, which was something that we very much aimed to do. And as I also mentioned, as we've ramped up production, we've done so cautiously and carefully to try and make sure that we were producing appropriately into end market demand. So the overall impact of that is we've reduced company inventory this quarter by about $600 million which is quite considerable. However, and in terms of order coverage at the moment, we're well covered for Q3 and partly into Q4. But we also think that we're well-positioned to supply into the end markets given the recovery that we're expecting from the forecast that we shared with you. We think we're well-positioned to supply into that and that we will actually come out of this period given what we've done on the inventory side much stronger because, as I think I've said in the last quarter results, we did go into the first quarter this year with quite a lot of inventory. And so we have used this as an opportunity to take that out both at company level and at dealer level.

And so does that mean that in the back half of the year you expect to produce to retail demand? Is there any need to actually produce beyond retail to try to refill some of the channel inventory, and how your production aligns with end market demand in the back half of the year based on current understanding?

Our expectation as we go through is we will—where we can—produce to retail demand. We think that's a healthy way to operate. However, we do expect there will be some need for dealer restocking as we go into the last quarter, but it will be quite selective where they need that. We think that there will be some of that going on as well given that we've had this opportunity to run down inventories. We're building that into our plans. But we don't intend to go back to the same inventory levels that we've had in the recent past.

And then a clarification on the cost and cash measures you've taken: of the one-third plus that you're talking about, can you talk about how much of that is on the expense side and how that compares to the 2019 Capital Markets Day and what you've talked about in terms of cost out? Is that all incremental or does it include some of those plans?

Some of that includes elements from the Capital Markets Day. We accelerated elements of the plan that reduce costs because that would both help us to deliver the plan, which we remain committed to, and help us weather the pandemic. So some of those were in that plan. However, in addition we initiated other actions. We've been rigorous around SG&A reductions and we've undertaken a thorough footprint review—our entire footprint, not just the industrial footprint. We're looking at opportunities around home working. We did a thorough bottoms-up review of our R&D spend prioritizing everything important for new products and for customers. When you do look at these things you do find opportunities to prioritize R&D spend, some of which of course will come back in. As I said, of the cost and cash containment actions that we took in the first half, some of that will come back in; it's postponed costs that we thought sensible to do during the pandemic. But a good chunk of it—at least one-third—we're aiming to keep out.

One-third of the $1 billion or one-third of the $500 million that you think stays out?

I was referring to one-third of the $500 million, but we will take exactly the same attitude to the cash and containment actions that we're taking in the second half of the year. We will aim to keep as much of them permanent as we can.

Perfect. Thank you very much.

Thank you. We take our next question from the line of Alexandre Raverdy from Kepler. Please ask your question.

Thank you very much for taking my question. I have a question on incremental margins. I understand you don't want to give us any guidance on profitability, but is it fair to assume the same level of incremental margins for the second half as it was in the first half—so around in the 30s?

We're still seeing the market evolving in the second half. But assuming recovery conditions remain broadly in place, we think Ag will have a slight incremental margin in the second half of the year. Construction equipment and commercial vehicles will probably improve from the first half but still have a decremental margin given their lower volumes. That will give you a sense of what we're seeing although we don't want to put precise numbers against that.

Thank you. We are now taking our next question from the line of Steven Fisher from UBS. Please ask your question.

Hi, thanks. Good morning, good afternoon. Can you just talk about what the order book looks like for the IVECO electric truck in Europe? And I know there's a plan for 2021 delivery of that truck. I'm just wondering when we could start to see that JV making a material contribution to earnings?

Our plan is to start producing the electric vehicles from 2021 and the fuel cell vehicles from 2023. Material earnings—we're not yet releasing projections on what that will look like over time. We haven't actually opened the order books on those yet, although given the amount of interest and excitement about those vehicles we're reasonably confident there'll be a lot of interest. But we're not yet projecting how those figures will play out over the following years.

Fair enough. And then in terms of the spin-off maybe I'm reading into the comments too much. But do I sense that there's a little less uncertainty now in your view of the timing compared to last quarter when you raised the possibility they could be beyond 2021?

No, that's not changed. What we said last quarter was that it would be 2021 or beyond and that remains our position. It depends very much on the conditions in the end market. We want to be sure that at the point at which we do the spin we are spinning two strong companies. We continue to watch the market very closely and we'll update you as soon as we have a firm view on timing. In the meantime we are gradually restarting all of the work needed to separate those different elements, but we haven't yet taken a decision on timing. Our view remains 2021 or beyond depending on how the markets come back.

Thank you. Our final question comes from the line of Gungun Verma. Please proceed with your question.

Hi, good afternoon. Congratulations on a great set of results. I have two questions please. One is on precision farming. Can you remind us what the current share is of precision farming in overall Ag? And as you look three to five years out with increased penetration where do you expect this to be? And associated with that, the R&D profile—have you already taken a large chunk of the cost upfront, or would you be required to step up the investment there? Second, if we think about your cycle, I remember you did some Capital Markets Day targets in September. The market evolution has been weak but you're taking costs out. Can you give us any idea on normalized margin profile in Ag and commercial vehicles or at the broader business level please? Thank you.

On precision farming, we don't release separate data on precision farming share of Ag. But across field, fleet and farm, we're seeing significant take-up in demand from farmers who are excited about what we're able to offer. We're putting together an open set of initiatives and products that can be fitted on mixed fleets and on our vehicles. We can see significant impacts on fleet downtime, field productivity and farm economics. Investment here is continuous; we've been investing for several years and will continue. It will occasionally be lumpy—last year we made the AgDNA acquisition which was significant. So we will see some chunkier investments, but this is now business as usual for us and a fundamental priority. On normalized margins, we're not releasing detailed targets today. Over time we expect to return to margins seen in the past and hopefully improve in some areas, but we're not providing further detail beyond what we've said before. Thank you very much for your question.

Thank you and have a nice summer.

This concludes the question-and-answer session. I would now like to turn the call back over to Federico Donati for any additional or closing remarks.

Thank you very much everybody and have a nice day. Bye-bye.

This concludes the conference for today. Thank you for participating. You may all disconnect.