ivg-2022-12-31-en

CONTENTS


BOARD OF DIRECTORS AND AUDITOR ................................................................................................................................	2
LETTER FROM THE CHAIR AND THE CHIEF EXECUTIVE OFFICER .......................................................................................	4
BOARD REPORT ...................................................................................................................................................................	8
INTRODUCTION ............................................................................................................................................................	8
PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION .........................................................................	8
OUR COMMITMENT TO SUSTAINABILITY ......................................................................................................................	9
REPORT ON OPERATIONS ............................................................................................................................................	34
SELECTED FINANCIAL DATA .....................................................................................................................................	34
RISK FACTORS .........................................................................................................................................................	35
BUSINESS OVERVIEW ..............................................................................................................................................	43
RESEARCH AND DEVELOPMENT ..............................................................................................................................	54
HUMAN RESOURCES ................................................................................................................................................	55
OPERATING AND FINANCIAL REVIEW .......................................................................................................................	56
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM .........................................................................................	76
CORPORATE GOVERNANCE .....................................................................................................................................	80
REMUNERATION REPORT ........................................................................................................................................	96
MAJOR SHAREHOLDERS ..........................................................................................................................................	120
SUBSEQUENT EVENTS AND OUTLOOK ....................................................................................................................	121
IVECO GROUP CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2022 .............................................................	123
CONSOLIDATED INCOME STATEMENT .....................................................................................................................	124
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ..................................................................................	125
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ...........................................................................................	126
CONSOLIDATED STATEMENT OF CASH FLOWS .......................................................................................................	128
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...........................................................................................	129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................................................................	130
COMPANY FINANCIAL STATEMENTS AT 31 DECEMBER 2022 ...............................................................................................	201
INCOME STATEMENT ................................................................................................................................................	202
STATEMENT OF FINANCIAL POSITION ......................................................................................................................	203
NOTES TO THE COMPANY FINANCIAL STATEMENTS ...............................................................................................	204
OTHER INFORMATION ..........................................................................................................................................................	223
INDEPENDENT AUDITOR’S REPORT .....................................................................................................................................	224

Iveco Group N.V.

Corporate Seat: Amsterdam, the Netherlands

Principal Office and Business Address: Via Puglia n. 35, Turin, Italy

Share Capital: €3,454,589.70 (as of 31 December 2022)

Chamber of Commerce of the Netherlands: reg. no. 83102701

Contents 1

BOARD OF DIRECTORS

AND AUDITOR


BOARD OF DIRECTORS (a)	INDEPENDENT AUDITOR(b)
Executive Directors Suzanne Heywood - Chairperson	Ernst & Young Accountants LLP
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

(a) As of 1 January 2022, upon completion of the demerger pursuant to which CNH Industrial N.V. has hived-off its On-Highway Business to the Company (the "Demerger"), two

Executive Directors and six Non-Executive Directors were appointed for an initial term ending at the Annual General Meeting of the Company to be held in 2023. Subsequently, on

13 April 2022, the Annual General Meeting of Shareholders appointed Mr. Benoît Ribadeau-Dumas as the seventh Non-Executive Director.

(b) On 13 April 2022, the Annual General Meeting of Shareholders confirmed Ernst & Young Accountants LLP as Company’s independent auditor for the financial year ending

31 December 2022, and appointed Deloitte Accountants B.V. as Iveco Group’s independent auditor for the 2023 financial year.

(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

All statements other than statements of historical fact contained in this document, 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 forward-looking 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 and the global COVID-19 pandemic and the actions taken or contemplated by governmental

authorities or others in connection with the war and/or the pandemic on our business, our employees, customers and suppliers; supply chain

disruptions, including delays caused by mandated shutdowns, industry capacity constraints, material availability, and global logistics delays and

constraints; disruption caused by business responses to COVID-19, including remote working arrangements, which may create increased

vulnerability to cybersecurity or data privacy incidents; the many interrelated factors that affect consumer confidence and worldwide demand for

capital goods and capital goods-related products, including demand uncertainty caused by the carry-over effects of COVID-19 and the Russia/

Ukraine war; general economic conditions in each of our markets, including the significant economic uncertainty and volatility caused by

COVID-19 and the Russia/Ukraine war; travel bans, border closures, other free movement restrictions, and the introduction of social distancing

measures in our facilities, that may affect in the future our ability to operate as well as the ability of our suppliers and distributors to operate;

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

Board of Directors and Auditor 2

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 19 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; our pension plans and other post-

employment obligations; further developments of the COVID-19 pandemic on 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 realize the

anticipated benefits from our business initiatives as part of our strategic plan; our failure to realize, or a delay in realizing, 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.

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

document 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.

Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking

statements are included in the section “Risk Factors” of this Report.

All forward-looking statements by Iveco Group or persons acting on the behalf of Iveco Group are expressly qualified in their entirety by the

cautionary statements contained herein or referred to above.

Board of Directors and Auditor 3

LETTER FROM THE CHAIR AND THE CHIEF

EXECUTIVE OFFICER

Dear Shareholders,

Iveco Group began trading on 3rd January 2022, starting our journey as an independent Company to design, produce, sell and serve innovative

products for more sustainable mobility worldwide. Quarter after quarter, during this, our foundational year, everyone at Iveco Group worked

together to renew and bolster our focus on delivering excellence. We did this amid the global geopolitical challenges impacting our businesses,

our industry and the world, including supply chain issues, component shortages, raw material price increases and the ongoing war in Ukraine.

Because we are lean and agile, we were able to react promptly to these challenges and deal with their consequences. Our efforts paid off and we

closed the year with results that exceeded market expectations. This was possible because our brands and functions worked hard and humbly to

deliver what we promised to our customers, showing convincing performance throughout the year and demonstrating the power of teamwork, and

we sincerely thank all Iveco Group employees and you, our valued shareholders, for contributing to this achievement.

Financial Highlights

Iveco Group concluded its first year as an independent Company with strong results. Profitability improvements were driven by higher volume and

mix and, most importantly, by positive price realisation, all of which more than offset higher production costs on Group level. Consolidated

Revenues came in at €14.4 billion, up 13.5% vs last year with an Adjusted Operating Margin at 3.7%. Our Industrial Activities Adjusted EBIT

Margin was also up 60 bps to 3%. The full year Adjusted Diluted EPS was €0.78 per common share, up €0.35 vs last year. Our order books

remained healthy, above pre-COVID 19 levels, with between 30 and 35 weeks of production already sold in light, medium and heavy-duty trucks.

We ended the year with a Net Industrial Cash Position of €1.7 billion, up from €1.1 billion at the end of 2021. Our Free Cash Flow was positive at

€690 million, a figure that includes two one-off items (for a total amount of €160 million) related to the fleet depletion which started in August 2022,

on the back of improved component availability and predictability compared to the first half of the year, and the gain made on the disposal of

certain fixed assets in Australia.

The Board of Directors is recommending to the shareholders a first share buy-back programme to repurchase up to 10 million common shares, for

a total amount of up to €130 million, subject to market and business conditions, which will support the Company’s Long-Term Incentive Plan. The

proposal is subject to the approval of the Company’s General Meeting of Shareholders to be held on 14th April 2023. The programme will be

funded by the Company’s liquidity and its details will be disclosed in accordance with applicable laws and regulations.

Our ‘Foundational Year 1’

One of our priorities during our foundational year was to define our Group’s new culture. We took this challenge seriously since we knew this

would shape how our Company is perceived both by external stakeholders and our global employees. To define it we conducted interviews with

past and present leaders, held focus groups across our businesses and geographies with dealers, customers and suppliers, and talked to our

employees in all our different regions. We also ran an employee engagement survey across our entire workforce. Of our around 34,000

employees, 86% responded to this and their input was critical to our thinking. Based on all these inputs we defined our purpose as being the

‘‘home of unique people and brands that power your business and mission to advance a more sustainable society”. We also defined the five core

values that guide the way in which we work: “We go beyond the obvious, We contribute diverse strengths, We take ownership, We do what is

right, We collaborate to win”.

Our diversified business portfolio, strong presence across the full range of commercial and specialty vehicles, complete powertrain offering,

innovative financing options, and focus on advanced sustainable solutions remain at the base of our business. Building on these strengths, we

identified three priorities that underpin strategic actions across the Company: innovation, sustainability, and partnership and we describe our work

on each of these below.

Innovation

Technological innovation is a cornerstone of our strategy to gain market share in all our segments and keep pace with market trends. In our

landmark ‘BEYOND’ event held in Turin last July, we spent five days showcasing our latest alternative-fuel trucks and buses, advanced specialty

vehicles, and relevant financial services to propel dealers and end users into the mobility of tomorrow. We put the spotlight on our new powertrain

developments, which range from the most efficient traditional engines, including those powered by methane and biomethane, to internal

combustion powertrains running on hydrogen and hythane (a blend of hydrogen and methane), to fuel cell applications and battery electric

solutions. Industry experts joined our leaders to discuss the factors impacting our businesses now and what we can expect in the near future, and

we sat side-by-side with our partners to present viable options for high-tech, sustainable transport.

Further along in the year, to crown the launch of our new eDAILY in September, hundreds of stakeholders - representing customers, dealers,

Letter from the Chair and the Chief Executive Officer 4

media and partners from around the world - joined us at our eDOME in Turin, Italy, to explore the ecosystem dedicated to our new electric light

commercial vehicle. The eDAILY Experience was an interactive programme that involved test drives and deep dives on vehicle, infrastructure,

financial services, and maintenance & repair aspects, enabled by connectivity and digital services to support customers in the energy transition.

These technological advances have been supported by significant steps forward in digitalisation in our Financial Services offering. In 2022 we

announced the formation of our Green & Advanced Transport Ecosystem or GATE, our all-inclusive rental model for electric trucks and vans.

Through GATE we will design, develop and implement revolutionary ways to bundle services, including a pay-per-use concept where customers

will be able to lease vehicles from our battery electric and fuel cell electric line-up. This work is industry leading – Iveco Group is one of the first

companies to combine an end-to-end business model with electrification for commercial transport in Europe – all through a fully digital process

and a servitization strategy that enable us to meet the current and future needs of customers.

We have also applied this mindset of technological innovation to our operations. This year we launched a new programme called DOT – Driving

Operations Together – which is focused on increasing margins, improving quality, reducing waste, and boosting performance. Through this

programme we identified and acted on over 1,400 improvement actions, almost 6,000 people received technical training and a new assessment

model was rolled out to define benchmarks. We have also accelerated our manufacturing digitalisation with the launch of our Factory of the Future

programme. We intend to become a data-driven Company by 2025 and to set up a Smart Manufacturing Ecosystem by 2030 – a unique digital

environment where Iveco Group, suppliers and customers can communicate and collaborate more efficiently and effectively, to develop innovative

products and services faster and ensure their utmost quality. We began building the Smart Manufacturing Ecosystem last year in Valladolid,

Spain, where we are outfitting our plant in both the production and logistic flows: we are connecting all our machines to leverage predictive

maintenance, with the aim of anticipating all unplanned stops; and we are tracking all engines in arrival from Foggia, starting from their initial

manufacturing stage, in order to achieve 100% traceability through the latest blockchain technology. Finally, to optimise Supply Chain and

Manufacturing and better focus on these key areas, we created two distinct functions and assigned dedicated leadership at the head of each.

Sustainability

In 2022, we strengthen the governance around our sustainability ambitions. Sustainability Representatives were named to serve as a direct link to

the different operating areas, and to play a pivotal role in collecting information and compiling the Sustainability Report.

Our sustainability strategy is based on four priorities: reducing our carbon footprint, improving workforce & product safety, incorporating lifecycle

thinking, and increasing inclusion & engagement. We set ambitious targets in all these areas and implemented multiple initiatives to make

progress towards achieving them. In addition, executive compensation was linked, among other things, to the achievement of two of our critical

sustainability targets (carbon footprint and inclusion & engagement).

In November 2021, we signed The Climate Pledge with the aim of helping to solve the climate crisis by reaching Net Zero Carbon by 2040, ten

years ahead of the Paris Agreement framework. In keeping with our commitments, 98% of the energy we consume now comes from renewable

sources, and we have set ambitious targets to reduce our CO2 emissions deriving from manufacturing, product use, logistics and suppliers. A

recognition of these efforts came when our IVECO BUS brand won ‘Sustainable Bus of the Year 2023’ for the Crossway Low Entry Hybrid Natural

Gas. Our winning bus powered by FPT Industrial emits up to 82% less CO2 through the use of renewable fuels, including biomethane, while

delivering up to 15% fuel savings compared to the diesel variant.

As part of our sustainability journey, we joined Open-es this year, a free open platform to increase our suppliers’ awareness and engagement in

sustainability topics, while monitoring their adoption of ESG practices. Willingness on the part of suppliers to collaborate proactively with our

Company and the Open-es community is crucial to continuously improving our mutual sustainability performance.

We have also implemented critical sustainability changes within our manufacturing sites. For example, this year we inaugurated our new

ePowertrain Plant in Turin, Italy, Iveco Group’s first totally carbon-neutral plant. It fully offsets its CO2 emissions in many ways, including through

the generation of its own energy with solar panels, photovoltaic and wind power technologies, purchasing additional energy when needed from

renewable sources. And our plants in Spain enrolled in the Lean & Green programme, the largest European platform specifically aimed at

reducing emissions throughout the supply chain, reaffirmed their aggressive action plan to reduce CO2 emissions, minimise the impact of logistic

processes, and reduce their carbon footprint by 20% within five years.

The war in Ukraine impacted our people, our businesses and society in general in 2022. We took steps to protect our employees and their

families in the conflict area throughout the year. We also supported three non-profit organisations who are helping many of the other people who

have been affected by the war, matching employee donations 3 to 1 for a total of €570,000, so that together we could make a difference for the

most vulnerable. And our brands contributed vehicles, apparel and equipment to help first responders and victims.

We remain committed to registering zero serious injuries in our workplace and making our roads safer for everyone, progressing steadily on our

targets of 40% less in employee injury frequency rate by 2026 versus 2019, and of 100% of new EU vehicles equipped with Advanced Driver

Assistance Systems (Level 2) and additional advanced functions by 2026.

We are also dedicated to furthering diversity, equity and inclusion and we have set up our Diversity Council with key internal workstreams: talent

mobility, career development, gender pay gap, work-life balance, employer branding, and communications. We are pleased that the number of

women in management positions increased to 21.7% in 2022, although we know there is much more we need to do to increase the diversity of

our workforce. We also teamed up with ActionAid - an international organisation that works to end violence and poverty - supporting two projects

to combat gender stereotypes and help vulnerable women. And we sponsored Women’s International Networking (WIN), which helps to inspire

conscious, value-driven leaders.

Letter from the Chair and the Chief Executive Officer 5

Partnerships

We strongly believe in the mutual benefit of well-structured partnerships with likeminded organisations and have spent time this year identifying

potential partners in multiple areas while deepening our relationships with existing partners.

In March this year we were delighted to sign a Memorandum of Understanding with Hyundai Motor Company to explore possible collaborations on

shared vehicle technology, joint sourcing and mutual supply. In July we were then able to make a joint announcement about our work to develop

hydrogen-powered IVECO BUS vehicles equipped with fuel cell systems produced by HTWO, a Hyundai hydrogen business brand, that boast

advantages in terms of both performance and emissions. And in September at IAA, the eDAILY Fuel Cell Electric Vehicle (FCEV) prototype was

unveiled, revealing the future potential of IVECO’s bestselling large van equipped with Hyundai’s fuel cell technology and FPT Industrial’s battery

pack.

Our partnership with Nikola Corporation has enabled us to lead the industry in delivering heavy-duty trucks fuelled by alternative propulsion. At

the IAA truck trade fair in Hannover in 2022, we opened our order books for the European version of the Nikola Tre Battery Electric Vehicle (BEV)

and we unveiled the beta version of the European Nikola Tre Fuel Cell Electric Vehicle (FCEV). IAA was also an opportunity for us to highlight our

collaboration with Amazon Web Services, showcasing the connected services we offer our customers through Driver Pal. As a result of this

partnership, IVECO is the OEM with the highest level of integration of Amazon Alexa in its vehicles.

In addition to its partnership with Hyundai, IVECO BUS has created a strong ecosystem of alliances to support the development of new bus

technologies and business models. In October, for example, we launched a collaboration with transit tech company Via to offer customers in Italy

the opportunity to purchase tailored software for on-demand transport solutions through our dealer network.

Throughout 2022 we also continued to intercept megatrends through targeted partnerships with companies such as Microvast, a market leader in

the design, development and manufacturing of ultra-fast charging, long-life battery power systems with superior safety for electric vehicles. Our

collaboration began in 2019 when FPT Industrial signed a Memorandum of Understanding to design and assemble high-voltage battery packs in

house. For the IVECO BUS Crossway Low Entry Electric, Microvast designed and FPT Industrial industrialised, validated, and certified a high

energy density battery pack. This project complements that of IVECO’s eDAILY, another joint project between Microvast and FPT Industrial in this

first application that aims to set the zero-emission standard in the cab-chassis segment.

FPT Industrial, our powertrain business, entered into a number of other collaborations during the year. In July, our brand and Blue Energy Motors

‒ a zero-emission truck technology company headquartered in Pune, India ‒ signed an agreement to introduce the first Liquified Natural Gas

trucks on Indian roads. Subsequently, FPT Industrial announced a minority investment in Blue Energy Motors, to reiterate its intention to play a

key role in India’s decarbonisation transition. With Bennamann Ltd., a fast-growing British agricultural technology company in the field of clean

energy, the brand showcased the Smart Hybrid Hub, a world first power generation concept, where fugitive methane from farming by-products is

captured and converted into clean energy, that in turn propels agricultural machinery and vehicles. And our brand presented the first concept

application of its new XC13 hydrogen combustion engine together with a partner of excellence, PRINOTH, a world leader for the production of

snow groomers and tracked vehicles.

Our ‘Transformational Year 2’

The financial performance that we achieved in 2022 resulted from our focus on fulfilling commitments and generating cash. It also set the stage

for our ‘Transformational Year 2’ during which we will continue to transform our organisation, while working to tackle challenging geopolitical and

supply chain factors.

In 2023 our focus will remain on delivering long-term profitability, optimising processes, and increasing performance across our business units.

Our Platform Business Model will continue to increase visibility on our light, medium and heavy vehicles, bus and powertrain lines. To do this,

Platform Managers will lead their cross-functional teams in a structured, innovative approach to designing our products, bringing together all the

business elements that go into developing quality products, whilst ensuring better communication and out-of-the-box alternatives to manufacturing

vehicles and engines.

For trucks and vans we plan to complete the renewal of the entire IVECO product range, setting up the full Model Year ’24 line-up, which will

include all the light, medium and heavy-duty ranges. We also intend to solidify our market share in the cab-chassis sub segment, confirming and

increasing our leading position in the light commercial vehicle space. In Europe, we will start delivering our electric DAILYs and continue taking

orders for the battery electric Nikola Tre. Supporting our customers in the transition to electric and hydrogen vehicles, Financial Services’ GATE

will debut this year in Italy and further develop plans to take this new pay-per-use rental model to other countries in the months and years to

come.

Our Bus business is well positioned to win tenders submitted to European cities and entities in an effort to help transition society to more

sustainable people-moving solutions. Our market share is poised to grow and production of our electric bus range will increase, driving greater

volumes in our plants, including the new lines that will be inaugurated in April in Foggia, Italy.

Powertrain will continue to benefit from our DRIVE Transformation Programme, a company-wide initiative designed to unlock potential and

creativity within our organisation and boost our market positioning. We have already seen significant results from the workstreams that focus on

the five pillars of our Strategic Business Plan (product range and positioning, operational performance, alternative powertrain, collaboration and

partnerships, lifecycle services), carrying out activities such as strengthening the sales team and improving the customer experience. Further, the

all-new multi-energy XC13 engine is performing well and shows promise for this year as it is able to work on various fuels, including methane and

hydrogen. This front runner can be used on a wide range of applications, which means diversified customers and good potential for solid

performance throughout the year.

Letter from the Chair and the Chief Executive Officer 6

2023 Outlook

Our current outlook for 2023 calls for maintaining a certain level of prudence, especially with regards to the second half of the year. On

10th February, based on the industry outlook, solid order backlogs, and no signs of unusual levels of order cancellations at that time, the Company

presented its preliminary financial outlook for 2023, expecting:

At a consolidated level,

▪Group Adjusted EBIT at between €550 and €590 million

For the Industrial Activities,

▪Net Revenues (including currency effects) to be up between 2% and 3%

▪Adjusted EBIT from Industrial Activities at between €460 and €500 million

▪SG&A over Net Revenues at around 6%

▪Net Cash (excluding any share buy-back or extraordinary transactions) at around €2 billion

▪Investments in property, plants and equipment, and intangible assets up between 10% and 15% from €775 million in FY 2022, mainly due to

the energy transition and Model Year ’24 launches across all ranges.

We are proud of what we accomplished in 2022, but we are well aware that this is just the beginning. Our second year has just begun and we

remain focused on pursuing the profitability path embedded in our five-year Strategic Business Plan while reacting promptly to the challenges and

opportunities we encounter along the way. Our six industrial businesses are each transforming themselves and we are strongly committed to

providing them the optimal paths and partnerships to compete in their respective industries.

Throughout 2023, we will build on our achievements in 2022, doubling down on our efforts to maintain the positive trend in medium and heavy

trucks, accelerating in our core lines for light commercial vehicles, holding our leading position in the bus market particularly with our electric

range, growing our powertrain business quarter after quarter, and continuing to innovate our financial services offering. We will count on the

support of technological advancements and strong, loyal partners to achieve our ambitious targets for the year, which are aligned with our

unwavering commitment to advance a more sustainable society.

We are grateful for the continued support of our shareholders and we confirm our promise to deliver innovative solutions for sustainable mobility

that will benefit all our stakeholders.

Best regards,

Suzanne Heywood Gerrit Marx

Chair, Iveco GroupChief Executive Officer, Iveco Group

Letter from the Chair and the Chief Executive Officer 7

BOARD REPORT

INTRODUCTION

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, 100% owned by CNH Industrial N.V. (“CNH Industrial” and together with its subsidiaries the “CNH Industrial Group”) upon

incorporation, 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 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.

PRESENTATION OF FINANCIAL AND CERTAIN

OTHER INFORMATION

Iveco Group reports quarterly and annual consolidated financial results prepared 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”), and with the euro

as the presentation currency. The tables and discussion related to the financial results of the Company and its segments shown in this Report are

prepared in accordance with EU-IFRS and, unless otherwise indicated, all financial data set forth in this Report are expressed in euro.

Iveco Group reports its operations under three segments: Commercial and Specialty Vehicles, Powertrain, and Financial Services. 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 region. Our geographic 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.

Certain industry and market share information in this report has been presented on a worldwide basis which includes all countries. In this Report,

management estimates of past market-share information are generally based on retail unit sales data in North America, on registrations of

equipment in most of Europe, Brazil, and various Rest of World markets, and on retail and shipment unit data collected by a central information

bureau appointed by equipment manufacturers associations, including the ANFAVEA in Brazil, as well as on other shipment data collected by an

independent service bureau. For Commercial Vehicles regions are defined as follows: Europe (the 27 EU countries where Commercial Vehicles

competes, excluding the United Kingdom and Ireland, for market share and total industry volume (“TIV”) reporting purposes), South America

(Brazil, Argentina) and Rest of World (Russia, Türkiye, South-East Asia, Australia, New Zealand). Iveco Group Light Commercial Vehicles ("LCV")

Professional Cab-Chassis only considers the major 16 European markets (including Norway from Q4 2022). In addition, there may be a period of

time between the shipment, delivery, sale and/or registration of a unit, which must be estimated, in making any adjustments to the shipment,

delivery, sale, or registration data to determine our estimates of retail unit data in any period.

Board Report Presentation of Financial and Certain Other Information 8

OUR COMMITMENT TO SUSTAINABILITY

Iveco Group has made it its mission to put sustainability at the heart of strategy, so becoming an integral part of its day-to-day activities to ensure

business is run in an economically sound, environmentally friendly, and socially beneficial way.

By fully integrating environmental and social considerations with economic objectives, the Company is able to identify potential risks and seize

additional development opportunities, creating a process of continuous – and above all sustainable – improvement that creates value over the

long-term.

This integrated approach allows Iveco Group to meet the demands and expectations of its stakeholders, from customers and employees, to

investors, suppliers, NGOs, and society as a whole.

For details on commitments, processes, projects, and results, please refer to the 2022 Iveco Group Sustainability Report.

STRATEGY

Iveco Group has defined and fine-tuned its sustainability priorities so as to ensure better alignment with its core business. The 4 strategic

sustainability priorities that underpin its sustainability strategy are:

▪Carbon Footprint: to reduce CO2 emissions from manufacturing processes along its entire value chain (supply and logistics) and from its

product range, aiming at net zero carbon emissions by 2040;

▪Workplace and Product Safety: to minimise the risk of workplace injuries through effective preventive and protective measures, and to

ensure Company products have the highest safety standards;

▪Life Cycle Thinking: to implement solutions that efficiently minimise the impact of products and processes through a circular product life

cycle approach;

▪Inclusion and Engagement: to build ever-stronger relationships with stakeholders, continuing to work proactively and effectively to create

an inclusive work environment.

To strengthen efforts on its journey towards a sustainable future, the Company has mapped out the path to achieving these 4 strategic priorities

by setting clear objectives, with specific reference to its people, direct operations, products and services, and valued partners. These targets are

part of Iveco Group’s Strategic Business Plan, and progress is regularly reported to both the ESG Committee and Senior Leadership Team

(“SLT”) Sustainability Committee. They are also incorporated into the Sustainability Plan, which includes both short- and long-term targets and

reflects the Company’s commitment to contributing to development, in harmony with people and the environment. Clear responsibilities are

defined for each target to ensure they are consistently monitored and achieved.

In this regard, executive compensation is linked, among other things, to the achievement of 2 strategic sustainability targets: specifically, the long-

term incentive plan is linked to the reduction in CO2 (scope 1 and 2) emissions vs 2019, and the short-term incentives to the increase in women in

management positions (see Remuneration Report).

Board Report Our Commitment to Sustainability 9


		CARBON FOOTPRINT		WORKPLACE AND PRODUCT SAFETY		LIFE CYCLE THINKING		INCLUSION AND ENGAGEMENT
	•	2040: Net Zero Carbon
Our People & Operations	•	2030: -50% vs 2019 in absolute CO2 emissions (Scope 1-2)	•	2026: -40% vs 2019 in employee injury frequency rate (manufacturing and non-manufacturing perimeter)	•	2026: 75% of water recycled at Company plants worldwide	•	2026: 23% of women in management positions
	•	2030: 100% of total electricity consumption derived from renewable sources
Our Products & Services	•	2030: -38% vs 2022 in Scope 3 CO2 emissions from the use of sold vehicles per vehicle/km	•	2026: 100% of new vehicles in Europe equipped with Advanced Driver Assistance Systems and additional advanced functions, such as Adaptive Cruise Control ("ACC"), Stop & Go, Corrective Steering Function ("CSF"), and Lane Centering ("LC")	•	2026: 100% of new products developed using sustainability/ recyclability design criteria	•	2026: partnership with 100% of key customers to improve working conditions and work-life balance for drivers
							•	2026: +20% vs 2021 in Net Promoter Score (IVECO Trucks)
Our Valued Partners	•	2026: -7% vs 2022 in kg of CO2 emissions per ton of goods shipped	•	2026: 100% of dealership staff involved in safety training on product portfolio	•	2030: 100% recovery of the cores of spare parts sold	•	2026: 100% of Tier 1 suppliers involved in sustainability self- evaluations
	•	2026: -20% vs 2022 in key suppliers’ absolute CO2 emissions from purchased goods and services and from capital goods			•	2026: 15% of net sales from spare parts generated by remanufactured components	•	2026: +100% vs 2021 in number of collaboration projects with suppliers to improve products’ sustainability performance
							•	2026: +50% vs 2019 in number of students involved in educational activities, focusing on the jobs of the future

BUSINESS MODEL

Iveco Group is the home of unique people and brands. The Company’s business model focuses on product and service design, production, sale,

and after-sale support, delivering sustainable and technologically innovative mobility solutions, so as to meet the ever-changing needs of end

customers.

Each of Iveco Group’s 8 brands is a major force in its own specific line of business: IVECO, a pioneering commercial vehicles brand that designs,

manufactures, and markets heavy, medium, and light-duty trucks; FPT Industrial, a global leader in advanced powertrain technologies offering a

vast array of solutions in the agriculture, construction, marine, power generation, and commercial vehicles sectors; IVECO BUS and HEULIEZ,

both premium mass-transit bus and coach brands; IDV, for highly-specialised defence and civil protection equipment; ASTRA, a leader in large-

scale heavy-duty quarry and construction vehicles; MAGIRUS, industry-renowned firefighting vehicle and equipment manufacturer; and IVECO

CAPITAL, the finance arm supporting them all.

Through its VOICE engagement survey, Iveco Group involved every employee in defining its purpose and its 5 new Company values that truly

reflect the way Iveco Group wants to do business.

The Company's purpose and values are applied every day and in everything it does, with the support of:

▪a system of principles, rules, and procedures in which roles and responsibilities are clearly defined (see Corporate Governance section);

▪a process that anticipates and manages current and future economic, environmental, and social risks and opportunities (see Risk

Management and Internal Control System section);

▪a set of strategic business and sustainability priorities that help steer everyone’s efforts.

Iveco Group believes that innovation and the design of products and services tailored to its customers’ needs are fundamental aspects of its

competitive advantage, integral to all its activities and processes in the creation of value, enabling the Company to compete with other market

players and to be seen by its customers as a true partner.

The main purpose of Iveco Group’s business is to create value for stakeholders, which are classified based on the pillars identified by the World

Economic Forum ("WEF"):

▪Planet: representing the commitment to not underestimate the risks the planet is facing. Building a safer and more sustainable world

requires the balance between humanity and nature, and pursuing the necessary targets can no longer be postponed;

▪People: representing the commitment to consider the different perspectives of those who are impacted by our business, while actively

encouraging them to join us on our path towards a positive change;

▪Prosperity: representing the commitment to ensure more prosperity for all, through the adoption of new technologies and the transition

Board Report Our Commitment to Sustainability 10

towards a more inclusive and digital society.

The key points of Iveco Group’s value chain can be summarised as follows:

▪People & Operations: representing the people who apply their skills to develop products and services with the utmost dedication in all

Company areas, supported by production processes that are efficient, technologically innovative, and environmentally friendly;

▪Product & Services: representing the Company’s product offering ensuring customers enjoy lower operating and maintenance costs,

superior performance, maximum profitability, lower total cost of ownership ("TCO"), and technological innovation;

▪Our Valued Partners: representing those who make up Iveco Group’s ecosystem (mainly the dealerships, service network, and suppliers),

with whom the Company shares a common understanding and works to map out a path through the current challenging transition; and who

make Iveco Group an efficient Company able to give its utmost to customers, the ultimate and most valued partners.

Iveco Group believes that long-term success is achieved by pairing innovation with resource efficiency, and financial prosperity with ESG

performance. For this reason, the organisational model implemented at Iveco Group was designed to strengthen:

▪the entrepreneurial agility of business units;

▪the focus on new technologies and digital solutions;

▪customer centricity;

▪clear accountability;

▪synergies between business units to achieve global consistency;

▪the Company’s efficiency and effectiveness;

▪Governance.

SUSTAINABILITY GOVERNANCE

Iveco Group’s organisational structure comprises global and regional sustainability committees as well as the Sustainability Team, so as to

optimise the management of sustainability aspects within the Company.

The highest responsibility for sustainability matters lies with the Board of Directors’ ESG Committee, which is responsible, among other things, for

assisting the Board in: overseeing the Company’s significant environmental, social, and governance risks, strategies, policies, programmes, and

practices to further its business purpose, strategy, culture, values, and reputation in the best interest of all Iveco Group stakeholders; overseeing

the Company’s ongoing commitment to environmental stewardship and corporate social responsibility; overseeing and evaluating the policies,

Board Report Our Commitment to Sustainability 11

procedures, and practices related to the health and safety of Company employees; and globally monitoring, evaluating, and reporting on the

sustainability strategy, governance, policies, procedures, practices, management standards, and performance of the Company and its

subsidiaries. The ESG Committee helps the Board develop its collective knowledge on sustainability, and provides guidance on key global

environmental, social, and governance issues (see the Governance section).

The Sustainability Committee is made up of the members of the Senior Leadership Team ("SLT"), and is responsible for providing visionary

leadership, identifying the sustainability strategy, integrating that strategy with business needs, adopting a medium- to long-term vision, and

facilitating continuous improvement by identifying and supporting global actions and initiatives. It meets once a month to ensure regular updates

on Iveco Group’s sustainability performance while maintaining its focus on shared priorities and targets. It is also in charge of approving major

local community development projects.

The Company has also appointed specific Sustainability Regional Committees to better manage local initiatives. They include representatives

from the Sustainability Department, Institutional Relations, HR, and Legal and Business, as well as the Local Initiative Representatives.

The Sustainability Team is a network of experts responsible for incorporating sustainability criteria more effectively into Company strategy and

ensuring the necessary support for sustainability planning and reporting. The Team comprises the Sustainability Department, the Sustainability

Representatives, and the Local Initiative Representatives.

The Sustainability Department is responsible for:

▪monitoring external trends and incorporating them into the Company’s activities in line with stakeholder requirements;

▪proposing projects and promoting the adoption of good practices to encourage their integration into Company processes, supporting and

stimulating the corporate functions worldwide;

▪managing sustainability planning and reporting;

▪completing questionnaires required by sustainability rating agencies and interacting with ESG investors;

▪promoting a culture of sustainability throughout the Company;

▪interacting regularly with executive teams and the Board of Directors, providing updates on sustainability performance;

▪managing initiatives in support of local communities.

The Sustainability Representatives represent all of Iveco Group’s operating areas. They are responsible for:

▪ensuring the support and alignment required across the Company;

▪bringing expertise to specific issues relating to the Company’s reporting process;

▪formulating proposals for continuous improvement.

They provide a direct link between the Sustainability Department and the various operating areas, ensuring both technical and organisational

support.

Lastly, the Local Initiative Representatives are responsible for the local operational aspects of community projects and for implementing them in

accordance with country-specific requirements.

Board Report Our Commitment to Sustainability 12

SUSTAINABILITY MANAGEMENT SYSTEM

Iveco Group’s sustainability management system consists of the following tools:

▪the Code of Conduct, approved by the Board of Directors, and related policies that set out the Company’s approach to key issues;

▪a set of policies to manage specific issues, and the Supplier Code of Conduct;

▪stakeholder engagement on material topics;

▪the materiality analysis, which defines social and environmental priorities;

▪a set of approximately 200 sustainability related KPIs, designed to provide maximum coverage of all the key environmental, social, and

governance aspects, in line with the GRI Sustainability Reporting Standards ("GRI Standards"), the Sustainability Accounting Standards

("SASB Standards"), and those of the major sustainability rating agencies;

▪the Sustainability Plan, also including the strategic sustainability targets, which identifies action priorities and tracks the commitments

undertaken;

▪the annual Sustainability Report, which discloses the Company’s sustainability performance;

▪this sustainability summary in the Annual Report, supplementing the financial data as per the requirement of the Dutch Decree on Non-

Financial Information, which incorporated Directive 2014/95/EU into Dutch law. It also reports on the Company’s climate change mitigation

actions as per both the framework and recommendations of the Taskforce on Climate-related Financial Disclosures ("TCFD")(1) and the

requirements of the EU Taxonomy Regulation, which establishes a list of environmentally sustainable economic activities in support of the

EU Green Deal objectives.

(1) Task force of 32 international members (including providers of capital, insurers, large non-financial companies, accounting and consulting firms, and credit rating agencies) established

by the Financial Stability Board ("FSB") in 2015 to develop recommendations for more efficient and effective climate-related disclosures.

MATERIALITY ANALYSIS

In 2022, Iveco Group carried out a materiality analysis applying the revised approach to materiality introduced by the new GRI Universal

Standards(2) published in 2021. This new approach focuses on the identification of topics that are likely to be material for an organisation based on

the latter’s most significant impacts (whether positive or negative, actual or potential) on the economy, the environment, and people, including

impacts on human rights. This inside-out perspective, which considers the impacts that are or could be generated by a company, was adopted

when performing Iveco Group’s impact materiality analysis, as per the new GRI requirements.

Acting proactively and anticipating the requirements of the EU’s Corporate Sustainability Reporting Directive ("CSRD"), the Company also

performed a second materiality analysis, implementing, for the first time, a double-materiality approach, which integrates a financial materiality

perspective with the aforementioned impact materiality perspective. The former entails an outside-in approach, identifying topics that are likely to

be material for an organisation due to the sustainability risks and opportunities associated therewith that have or could have a significant impact

on future cash flows, with potential financial repercussions for company development, performance, and positioning in the short, medium, and

long term.

(2) The Global Reporting Initiative ("GRI") is a multi-stakeholder association for the development and disclosure of standards for reporting on an organisation’s economic, environmental,

and/or social impacts.

Board Report Our Commitment to Sustainability 13

The following are the main steps involved in identifying Iveco Group’s material topics:

1.Analysis and understanding of the organisational and business context

Understanding Iveco Group’s activities, business relationships, and stakeholders, as well as the sustainability context in which it operates,

was the first step towards identifying the Company’s impacts, risks, and opportunities. To this end, a benchmark analysis was performed

against comparable sector enterprises and according to the requirements of the main international sustainability standards. An analysis of

the external context was performed as well, to identify the main sustainability-related trends and aspects of the industry in which the

Company operates.

2.Identification of impacts, risks, and opportunities

To obtain an exhaustive list of Iveco Group’s main impacts, risks, and opportunities according to both impact and financial materiality

perspectives, the analysis performed in Step 1 also took into consideration the risks identified through the Company’s Enterprise Risk

Management ("ERM") risk assessment process, which is conducted on a regular basis.

3.Assessment of the significance of impacts, risks, and opportunities

The significance of the identified impacts was assessed based on their severity, extent, irreparable nature (only for negative impacts), and

probability. The significance of the identified risks and opportunities, on the other hand, was assessed based on the severity and probability

parameters employed by the ERM system, and on their extent in terms of potential to create or diminish corporate value – and therefore to

impact the Company’s development, performance, and positioning in the short, medium, and long term.

The above impacts, risks, and opportunities were duly assessed (on a scale of 1-4) by the members of Iveco Group’s Sustainability

Leadership Team ("SLT") during a day-long workshop, after in-depth discussions on emerging ESG trends led by external experts attending

the event. The assessment process also involved online interviews with sustainability experts and some of the Company’s main

stakeholders.

4.Definition and prioritisation of the material topics based on the significance of impacts, risks, and opportunities

As per the requirements of the new 2021 GRI Universal Standards, the outcomes of Iveco Group’s impacts assessment was used to create

a priority list of material topics (14 in total), classified according to the 4 priorities(3) of the Company’s sustainability strategy. This list was

submitted to and approved by the ESG Committee of Iveco Group’s Board of Directors.

(3) Iveco Group’s 4 strategic sustainability priorities are: carbon footprint, workplace and product safety, life cycle thinking, and inclusion and engagement.

Board Report Our Commitment to Sustainability 14

2022 IMPACT MATERIALITY ANALYSIS


Position	Material Topic	Strategic Sustainability Priority
1	Product quality and safety	Workplace and product safety
2	CO2 emissions from vehicles	Carbon footprint
3	Human rights	Inclusion and engagement
4	Occupational health and safety	Workplace and product safety
5	Diversity, equity, and inclusion	Inclusion and engagement
6	Sustainable supply chain	Life cycle thinking
7	Dealer and customer management	Inclusion and engagement
8	Circular product life cycle	Life cycle thinking
9	CO2 emissions from logistics	Carbon footprint
10	Employee development and training	Inclusion and engagement
11	CO2 emissions from operations	Carbon footprint
12	Responsible management of natural resources	Life cycle thinking
13	Digitalisation and connectivity	Workplace and product safety
14	Local communities	Inclusion and engagement

All topics submitted for assessment within the impact materiality analysis were found to be material to Iveco Group. It should be noted that,

within the scope of the analysis, aspects related to Corporate Governance, business ethics, and regulatory compliance were considered

prerequisites, and therefore were not examined individually.

The two most material topics, product quality and safety and CO2 emissions from vehicles, reflect the importance to Iveco Group’s brands of

offering customers products that have low environmental impact, are safe and reliable, and comply with high quality standards.

By integrating the outcomes of the two assessments (risks and opportunities with impacts), the material topics were positioned on a materiality

matrix to provide a visual representation of both impact materiality and financial materiality perspectives.

IVECO GROUP MATERIALITY MATRIX

Board Report Our Commitment to Sustainability 15

RELEVANT ENVIRONMENTAL MATTERS

CO2 emissions from operations

This material topic is related to the implementation of measures to reduce CO2 emissions, through the use of renewable sources and energy

efficiency initiatives within Iveco Group’s operational processes.

As stated in its Environmental Policy, which provides the framework for the management of this material topic, Iveco Group is committed to

reducing: the use of fossil fuels in favour of renewable energy sources; energy consumption through more efficient products and processes; and

GHG emissions by cutting energy consumption while adopting both conventional and innovative technical solutions. The Company’s aim is to

reduce the energy impact of manufacturing processes and the risks associated with new legislation and rising energy costs through: the

development and implementation of an energy management system; the ongoing promotion of employee involvement in energy resource

conservation and awareness of its importance; and the realisation of technical and management improvement projects.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Risk related to compliance with product, process and supply chain’s regulations (for further details, refer to section “Risk Factors” of this

report);

▪opportunity: public incentives to promote decarbonisation strategies may support Iveco Group’s commitment to fighting climate change.

In 2022, Iveco Group implemented numerous short- to medium-term initiatives involving the redesign of processes, equipment conversion and

retrofitting, operational changes to new installations, and increased employee awareness. The Company invested €2.1 million in efficiency

projects, generating more than €1.4 million in savings.

The use of electricity from renewable sources was 98% of the Company’s total electricity consumption.

As of 31 December 2022, 23 plants were ISO 50001 certified.

Direct and indirect CO2 emissionsa

IVECO GROUP WORLDWIDE


	2022	2021	2020
Plants (no.)	23	25	26
Direct emissions (Scope 1) (tons)	60,712	66,229	56,377
Indirect emissions (Scope 2) – market-based (tons)	41,024	46,851	48,897
Indirect emissions (Scope 2) – location-based (tons)	132,064	145,537	133,290
Total CO2 emissionsb (tons)	101,736	113,080	105,274
Direct and indirect CO2 emissions per production unit (tons of CO2/hour of productionc)	0.00306	0.00348	0.00395

(a) CO2 is the only significant greenhouse gas within Iveco Group’s processes. Greenhouse Gases (“GHG”) emissions were consolidated and reported using an operational control

approach. Performance relates to 23 fully consolidated plants.

(b) Total CO2 emissions are calculated as per the market-based methodology of the GHG Protocol, and do not include landfill gas emissions.

CO2 emissions from vehicles

This material topic is related to the development of innovative solutions to reduce the carbon footprint of vehicles, through the implementation of

the most advanced technologies and the use of renewable fuels.

As stated in its Environmental Policy, Iveco Group is committed to minimising the environmental impact of vehicles, hence to developing products

that deliver industry-leading performance in terms of fuel efficiency, noise and polluting emissions, and recoverability rates.

Iveco Group is working hard to reduce the CO2 emissions associated with product use. To reach this objective, the Company is gradually shifting

towards battery-electric and fuel cell-electric vehicles. To reduce vehicle CO2 emissions from product use, the Company is mainly aiming at

offering: a full portfolio of natural gas engines, all compatible with biomethane; a wide range of battery electric vehicles ("BEV"); and fuel cell

electric vehicles ("FCEV") for long-haul.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: non-compliance with emissions regulations, impacting product mix (for further details, refer to section “Risk Factors” of this report);

▪opportunity: an increase in the demand for low-carbon vehicles may create new business opportunities.

As regards BEVs, in 2022, Iveco Group launched the new IVECO eDaily, the first-generation, full-electric version of the best-selling IVECO Daily

van. Offered in a range of models – van, cab, and minibus from 3.5 to 7.2 tons – the IVECO eDaily has all of the Daily’s celebrated signature

features. It is equipped with a 37 kWh fully modular battery pack that allows range optimisation and adaptability to all missions. The IVECO BUS

Board Report Our Commitment to Sustainability 16

portfolio, on the other hand, features the E-WAY, a full-electric 12-metre overnight charging e-bus equipped with a 350 kWh battery pack that

delivers up to 543 kilometres on a single charge.

As regards FCEVs, at the IAA 2022 trade show, the Company presented the Nikola Tre FCEV heavy-duty truck beta version (for European

markets), the result of a joint venture established in 2019 between IVECO, FPT Industrial, and Nikola Corporation. The truck has a range of up to

approximately 800 kilometres. This first-generation vehicle is competing favourably in the toughest heavy-duty missions against very well-

established fossil diesel engines, despite the latter having powered many generations of vehicles over the course of more than a century.

Within the light-duty range, IVECO and Hyundai unveiled a working prototype of the eDaily FCEV, featuring Hyundai’s 90 kW hydrogen fuel cell

system and 140 kW e-motor, and a battery pack designed by FPT Industrial, Iveco Group’s powertrain brand. The prototype has a 7.2-ton gross

vehicle weight ("GVW"). It has been tested in Europe, confirming a range of 350 kilometres, a 3-ton maximum payload, and a refuelling time of 15

minutes or less. The Company also advocates publicly for a quick implementation of the enabling conditions, such as refueling and recharging

stations, for the deployment of zero-emission vehicles.

CO2 emissions from logistics

This material topic is related to initiatives that promote sustainable logistics processes, focusing on increasing low-emission transport, adopting

intermodal solutions, and optimising transport capacity.

As stated in its Environmental Policy, Iveco Group also addresses the low-impact logistics chain as part of its commitment to minimising

environmental impact and contributing to the reduction of traffic congestion in urban areas. The Company implements numerous initiatives to

promote ever-more sustainable logistics processes. These focus on technologies, procedures, and activities aimed at reducing the environmental

impact of logistics processes without compromising service quality or profitability, while taking account of the social impact of the activity itself.

The aspects considered in defining technical solutions include type of transport, intermodality, and long-haul transport.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Risk related to compliance with product, process and supply chain’s regulations (for further details, refer to section “Risk Factors” of this

report);

▪opportunity: boost of logistic infrastructure in the Countries where Iveco Group operates to reduce the carbon footprint of the transport

sector.

In 2022, Iveco Group implemented several improvement projects, which reduced CO2 emissions by 8% compared to the mid-year result of 2022,

in terms of kilos of CO2 emissions per ton of goods shipped.

Responsible management of natural resources

This material topic is related to the responsible and efficient management of resources across all operations, with the aim to reduce Iveco Group’s

environmental footprint.

As stated in its Environmental Policy, which provides the framework for the management of this material topic, the Company is committed to

reducing: the use of raw materials by promoting the use of renewable and recycled materials in production processes; the consumption of fresh

water in production processes, especially in areas where its availability is critical to the surrounding environment and population; the discharges of

hazardous substances from manufacturing that may affect water supplies; the production of waste in manufacturing processes, in particular

hazardous waste; and the use of potentially hazardous substances while also promoting their substitution wherever possible. The Company is

also committed to minimising impacts on natural habitats and their biodiversity in areas surrounding production plants.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Risk related to compliance with product, process and supply chain’s regulations (for further details, refer to section “Risk Factors” of this

report);

▪opportunity: public incentives aimed at promoting circular economy initiatives may support Iveco Group’s commitment to preserving the

environment.

In 2022, the overall expenditure on environmental protection was approximately €29.7 million, broken down as follows: about €17.7 million on

waste disposal and emissions treatment, and almost €12 million on prevention and environmental management. A total of €1.2 million was

invested in initiatives to reduce Iveco Group’s environmental impact, while improvement projects and measures generated €0.8 million in cost

savings.

As of 31 December 2022, 23 plants were ISO 14001 certified.

As further evidence of the Company’s commitment to protecting the environment, 2022 performance improved compared to the previous year.

This was due to the numerous projects implemented during the year to optimise environmental management.

Board Report Our Commitment to Sustainability 17

MAIN ENVIRONMENTAL INDICATORS

IVECO GROUP WORLDWIDE


	2022	2021	2020
Volatile organic compounds ("VOC") emissions (g/m2)	33.7	39.6	41.6
Water recycled (%)	60.1	55.3	54.3
Water withdrawals (m3 per hour of productiona)	0.103	0.108	0.116
Waste generated (kg per hour of productiona)	2.49	2.54	2.62
Hazardous waste generated (kg per hour of productiona)	0.20	0.24	0.25
Waste recovered (%)	96.7	96.5	95.7

(a) Total manufacturing hours are used to calculate the indicator per hour of production.

Environmental performance relates to 23 fully consolidated plants.

Circular product life cycle

This material topic is related to the integration of circular economy principles in product development, promoting the responsible use of resources

throughout the entire life cycle of the product.

As stated in its Environmental Policy, Iveco Group is committed to minimising the environmental impact of its products, developing them so as to

deliver industry-leading performance in terms of fuel efficiency, noise and polluting emissions, and recoverability rate.

Iveco Group duly assesses the impact of the materials used in its products at all stages, from definition to the design phase. In particular,

significant effort goes into:

▪using an eco-design approach to boost innovation and reduce the consumption and environmental impact of materials;

▪selecting and/or designing components that:

◦have a lower environmental footprint

◦are easy to dismantle

◦can easily be repaired or remanufactured

▪eliminating the presence of regulated substances;

▪aiming at greater efficiency during use;

▪aiming at longer intervals between maintenance cycles;

▪offering customers a portfolio that reflects a circular economy mindset, including sustainable parts and services that increase the lifespan of

vehicles, certified pre-owned vehicles, and remanufactured components.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Risk related to compliance with product, process and supply chain’s regulations (for further details, refer to section “Risk Factors” of this

report);

▪opportunity: a greater availability of reused and/or recycled materials may reduce the supply costs.

In 2022, new studies on the Life Cycle Assessment (“LCA”) were performed on the NEF engine, the diesel-powered Daily van, and eDaily battery

pack, respectively. The Company also created 2 cross-functional working groups: one responsible for identifying best standards for performing the

assessments, and one for developing the guidelines for defining sustainability/recyclability design criteria.

Sustainable Supply Chain

This material topic is related to the promotion of responsible practices among suppliers, with the aim to improve their reliability and safety levels

while supporting them in minimising their environmental footprint.

The Supplier Code of Conduct and the Iveco Group Code of Conduct provide a framework for responsible supply chain management. In addition

to compliance with local legislation, the Supplier Code of Conduct stipulates respect for: labour and human rights, environmental protection, trade

restrictions/export controls, and business ethics. It applies to the entire supply chain and requires suppliers to work with the Company to enforce

the Code itself, and to pass on its principles to their respective employees, subsidiaries, affiliates, and subcontractors.

Selecting and codifying new suppliers is an operational phase of the procurement process that is regulated by specific internal procedures.

Selection is based not only on the quality and competitiveness of supplier products and services, but also on compliance with Iveco Group’s

social, ethical, and environmental principles. New suppliers are required to sign a formal Commitment Declaration through which they agree to

comply with both the Iveco Group Code of Conduct and Supplier Code of Conduct. Specific contractual clauses require them to provide

references and demonstrate abilities in relation to: fighting corruption, safeguarding the environment, promoting health and safety at work,

ensuring non-discrimination, prohibiting forced and/or child labour, and recognising freedom of association.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

Board Report Our Commitment to Sustainability 18

▪risk: Risk related to compliance with product, process and supply chain’s regulations (for further details, refer to section “Risk Factors” of this

report);

▪opportunity: suppliers willing to implement social and environmental improvements may lead to synergies and new business opportunities.

In 2022, Iveco Group joined the community-based digital platform Open-es to increase its suppliers’ engagement and awareness of sustainability

topics, while monitoring their sustainability performance. This interactive ecosystem, combined with the Company’s ongoing dialogue and

collaboration with suppliers, is a means to share experiences and find increasingly innovative solutions to reduce the environmental footprint of

both.

RELEVANT SOCIAL AND PERSONNEL MATTERS

Occupational Health and Safety

This material topic is related to the protection of workers’ and third parties’ health and safety through the adoption of management systems and

initiatives that promote a safety culture.

As stated in its Health and Safety Policy, which provides the framework for the management of this material topic, Iveco Group is committed to

protecting and promoting the health and safety of its employees and customers. Iveco Group aims to prevent incidents and occupational disease,

while minimising other risks related to occupational health and safety ("OH&S"), by adopting a preventive approach in all significant activities, from

the choice of materials, tools, and machinery to the selection of production processes. The Company also promotes health and safety by raising

awareness among employees, through training and communications on accident prevention and OH&S and, at certain facilities, through medical

check-up programmes.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: infectious diseases or pandemics may threaten the workers’ health, affecting business continuity;

▪opportunity: initiatives implemented with business partners to improve workplace health and safety may strengthen the spread of a safety

culture within the organisation, contributing to safeguarding business continuity.

In 2022, approximately €50.3 million was spent on improving health and safety protection, of which almost €45 million on improvements to

occupational safety and working conditions (worker protection, structural improvements, inspections of plants and working environments), and

approximately €5.3 million on employee health care costs.

As of 31 December 2022, 23 plants were ISO 45001 certified.

EMPLOYEE INJURY RATES

IVECO GROUP WORLDWIDE


	2022	2021	2020
Injury frequency ratea (injuries per 1,000,000 hours worked)	1,942	1,995	2,039
Rate of high-consequence work-related injuriesb (high- consequence work-related injuries per 1,000,000 hours worked, excluding fatalities)	—	—	—
Rate of recordable work-related injuriesc (recordable work- related injuries per 1,000,000 hours worked)	2,199	1,832	1,599

(a) The frequency rate is the number of injuries (work-related and non-work related, resulting in more than 3 days of absence) divided by the number of hours worked, multiplied by

1,000,000.

(b) The rate of high-consequence work-related injuries is the number of such injuries reported divided by the number of hours worked, multiplied by 1,000,000.

(c) The rate of recordable work-related injuries is the number of such injuries reported divided by the number of hours worked, multiplied by 1,000,000.

Product quality and safety

This material topic is related to the delivery of safe, high-quality vehicles to customers by adopting the highest standards to maximise road user

safety. Providing customers with safe products is a fundamental objective at Iveco Group and a key responsibility as described in the Code of

Conduct. Every effort is made to deliver extremely safe, reliable, and high-quality products and services. Employees are expected to comply with

the safety standards implemented, taking appropriate steps to prevent, identify, and correct any non-compliance. Any vehicle safety issues must

be immediately reported to supervisors, the Compliance or Legal departments, or via the Company’s Whistleblowing System. This commitment is

stated in the Health and Safety Policy and applies to all products and Iveco Group brands. As a result, each brand aims to achieve the highest

standards of preventive, active, and passive product safety, so as to safeguard the health of drivers/operators, passengers, and pedestrians.

Iveco Group also implements a Cybersecurity Management System, certified as per the UNECE R155 regulation, which ensures the safety of

embedded vehicle software and data over the entire life cycle of products, thus minimising the risk of cyberattacks on vehicles.

The Company achieves these goals by: researching, developing, and adopting functional and technical solutions that contribute to enhancing the

product’s safety performance, as well as ergonomic solutions; conducting studies and research to find and develop safer and more sustainable

materials and chemical compounds; providing information on a product’s safe use in its Operator’s Manual; and offering training programmes on

the safe and correct use of products.

▪risk: Product quality impacted by process design and production issues (for further details, refer to section “Risk Factors” of this report);

Board Report Our Commitment to Sustainability 19

▪opportunity: an increase in customer demand for high-quality vehicles may create new business opportunities.

Iveco Group offers active (primary) and passive (secondary) safety features, as well as tertiary safety tools (rescue sheets and emergency

response guides in case of accident).

Digitalisation and connectivity

This material topic is related to the development of digital technologies and use of big data analysis aimed at establishing a direct connection

between vehicles and their surrounding environment, so as to support users’ real-time decision making while safeguarding data and

cybersecurity.

The Company has adopted the Iveco Group Data Privacy Policy and various cybersecurity solutions to maximise protection against cyberattacks.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Information technology risks, including cybercrimes (for further details, refer to section “Risk Factors” of this report);

▪opportunity: an increase in demand for innovative vehicles and digital solutions may create new business opportunities.

In Europe, Iveco Group’s Customer Uptime Centre oversees the connection of vehicles, assisting drivers in avoiding breakdowns through

predictive diagnosis, and in optimising route navigation and fuel consumption by offering real-time driving recommendations.

Diversity, equity, and inclusion

This material topic is related to the promotion of an inclusive work environment, enhancing diversity and challenging all discriminatory behaviour.

As stated in its Human Rights Policy, the framework for managing this material topic, Iveco Group does not accept discrimination against

employees in any form whatsoever, including on the basis of: ethnicity, race, gender, sexual orientation, personal or social status, health, physical

condition, disability, age, nationality, religious or personal beliefs, political opinion, or any other protected status.

The Company recruits and hires on the basis of experience, knowledge, and skills and is committed to providing equal opportunities to all

employees, both on the job and in their career advancement.

The head of Human Resources for each business unit/function, in collaboration with all personnel managers, shall ensure that in every aspect of

the employment relationship, such as recruitment, training, compensation, promotion, transfer, and termination, employees are treated according

to their abilities to meet job requirements and all decisions are free from any form of discrimination.

Furthermore, as stated in the Iveco Group Code of Conduct, the Company is committed to providing equal opportunities to all employees, both on

the job and in their career advancement, and to complying with all applicable laws that prohibit discrimination.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Risks associated to employment relationships (for further details, refer to section “Risk Factors” of this report);

▪opportunity: increased social awareness and the inclusion of minority groups may expand labour market opportunities.

In 2022, Iveco Group implemented many Company initiatives, including various local programmes aimed at attracting diverse candidates while

raising awareness and understanding of gender topics. One example is the Disability Awareness Day held in France in November, engaging all

site employees in conversations around the topic.

Gender equity is a focal point for the Company. Women at Iveco Group constitute 18.4% of the global workforce and 21.7% of management

positions are held by women.

Employee development and training

This material topic is related to ensuring employees’ professional and personal growth and promoting adequate welfare plans to enhance their

value and wellbeing.

As stated in the Code of Conduct, Iveco Group recognizes that motivated, engaged and highly professional people are an essential factor in

maintaining competitiveness, creating long-term value for stakeholders and ensuring customer satisfaction.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: risks associated to employment relationships (for further details, refer to section “Risk Factors” of this report);

▪opportunity: collaborations with universities and the academic community may increase the pool of potential new hires.

In 2022, Iveco Group invested approximately €1.8 million in training, delivering a total of 402,131 training hours to 21,888 individuals.

Local communities

This material topic pertains to the promotion of initiatives aimed at supporting and developing local communities in the regions in which Iveco

Group operates.

As set forth in the Code of Conduct, the Company’s approach to community engagement is reflected in its commitment to playing an active role in

local communities by contributing to their social, economic, and institutional development through specific programmes.

In addition, the Community Investment Policy ensures that activities are managed consistently, defining areas of application at global level.

To maximise the positive impact on local people, the Company has implemented a group-wide strategy, identifying 3 main areas of intervention

Board Report Our Commitment to Sustainability 20

related to its business and to the connection of people and communities:

▪preserve biodiversity;

▪reduce inequality, protect diversity and vulnerable groups;

▪foster health and wellbeing.

The strategy goes hand in hand with a sound governance structure, which consists of a participatory process, led by the Sustainability

Department, involving the Sustainability Committee ("SLT"), the Legal and Finance departments, dedicated local initiative representatives, and 5

regional committees. This structure optimises the identification and management of differentiation opportunities and ensures the execution of

operational aspects in alignment with country-specific requirements.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: hostility by local communities towards activities conducted by Iveco Group in the regions in which it operates may cause reputational

damage or affect business continuity;

▪opportunity: an increase in the Company’s business development thanks to synergies with local partners.

In 2022, approximately €2.81 million in resources were allocated to local communities.

Initiatives supported during the year include:

▪restoring native vegetation and the local ecosystem;

▪promoting equitable and inclusive access to resources and to learning opportunities;

▪addressing a supportive environment for health and wellbeing.

Dealer and Customer Management

This material topic is related to active engagement with dealers and customers, by behaving with correctness, transparency, and promptness, in

order to satisfy their expectations and respond to their requests.

As stated in Iveco Group’s Code of Conduct, the Company aspires to fully meet and exceed the expectations of its customers, and to

continuously improve the quality of products and services and the ease with which customers do business with Iveco Group. This objective is

achieved by developing and maintaining profitable and lasting relationships with customers, and by delivering safety, service, quality, and value

supported by continuous innovation.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: Dealers related Risk (for further details, refer to section “Risk Factors” of this report);

▪opportunity: an increase in dealers’ and customers’ interest in Company products may create new business opportunities.

In 2022, Iveco Group announced the launch of GATE, a new entity with an independent business structure dedicated to meeting the needs of

commercial electric vehicle customers. With operations expected to begin in 2023, it will initially serve both the IVECO and Nikola brands. It will

offer a comprehensive service based on a pay-per-use formula giving customers access to the propulsion of tomorrow. GATE is a full ecosystem

focused on a variety of zero-emission vehicles, from last mile delivery to long haulage.

RELEVANT MATTERS WITH RESPECT TO HUMAN RIGHTS

This material topic is related to ensuring respect for fundamental human and labour rights throughout the entire the value chain.

Iveco Group has adopted and implemented a specific Human Rights Policy, its commitment already stated in its Code of Conduct and in its

Supplier Code of Conduct. These documents are available on the Company’s website. While it is the responsibility of all covered persons to

ensure respect for human rights, the Senior Leadership Team (SLT) retains executive oversight and has responsibility for the implementation of

the Human Rights Policy.

The Company seeks to promote respect for human rights principles by others where it has an influence, particularly among contractors, suppliers,

and other entities and individuals with whom it has a business relationship. The Company will not establish or continue a relationship with an

entity or individual that refuses to respect the principles of its Code of Conduct.

Iveco Group respects and promotes human rights in line with national laws, the fundamental Conventions of the International Labour Organization

("ILO"), the UN’s Universal Declaration of Human Rights, and the OECD Guidelines for Multinational Enterprises.

Moreover, the Company implements specific procedures to monitor respect for human rights within its operations, assessing the latter’s potential

impact on human rights and implementing mitigating and preventative measures where needed.

Risks and opportunities related to this material topic, as considered in the materiality analysis, are:

▪risk: the violation of human rights across the value chain may cause reputational damage to Iveco Group;

▪opportunity: an increase in stakeholders’ awareness of human rights may enhance the Company’s reputation.

The Company monitors respect for human rights both internally, through the Internal Audit function, and across the supply chain, through an

annual assessment process. In 2022, this task involved 25,768 Company employees located in 7 countries in Europe, as well as 75 suppliers

worldwide representing 11% of direct material purchases.

Iveco Group seeks to implement a variety of measures (e.g., training activities) to help employees understand and address human rights issues in

Board Report Our Commitment to Sustainability 21

the course of their work. In 2022, online training on human rights and other Code of Conduct aspects was delivered to approximately 11,357

employees (salaried and above).

RELEVANT MATTERS WITH RESPECT TO ANTI-CORRUPTION AND BRIBERY

Iveco Group’s commitment to doing business with integrity means a zero tolerance approach to corruption, in any form that is deployed, among

other, by preventing corruption in any form, including bribery, and complying with the anti-corruption laws of all countries in which it operates.

The Company has adopted and implemented an Anti-Corruption Policy, which is distributed to all employees and senior management across the

globe and is available on the Company’s website in 7 languages. The Company’s Anti-Corruption Policy establishes procedures designed to

ensure full compliance with applicable anti-corruption legislation. Oversight of the Policy lies with the corporate Compliance function.

Iveco Group’s Internal Audit function verifies, among other things, corruption prevention processes and controls. The results of such internal

audits are submitted to both the Company’s Audit Committee and senior management to enable them to improve internal controls when

appropriate. In 2022, no substantiated reports of bribery or corruption were reported to the Company through the Compliance Helpline or

otherwise. In addition, Internal Audit activities did not identify bribery or corruption problems or issues. The Company also investigates and tracks,

among other things, all corruption allegations to evaluate the need for additional controls and training, and surveys all employees annually,

reminding them of their obligation to report compliance issues.

Corruption has a corrosive and detrimental impact on society, and Iveco Group is strongly committed to reducing the risk of potential violations,

operating in compliance with anti-corruption law.

Such risks include sharing agents’ fees, bribery, corruption resulting from extraordinary business opportunities or partnerships, or gift-giving

violations. The Company's relations with government also present a potential risk to the Company’s reputation and finances.

The Company provides both online and classroom-based anti-corruption training. In 2022, it delivered an online course to all salaried and above

personnel (approximately 11,321 employees). Moreover, specific anti-corruption training was provided to all members of the Senior Leadership

Team (SLT).

In addition, the Company’s Supplier Code of Conduct sets forth the Company’s expectations with respect to all suppliers, prohibiting any form of

bribery, inducement, or any other improper payment (of cash or anything of value) to a third party to obtain an unfair or improper advantage.

INSIGHT INTO DIVERSITY (EXECUTIVE BOARD AND SUPERVISORY BOARD)

The pursuit of a fully inclusive working environment, where diversity – in all its forms – is truly valued and everyone is encouraged to fulfil their

potential, is the basis of a more effective, appealing, and resilient organisation. As set forth in the Regulations of the Board of Directors, an

appropriate and diversified mix of skills, professional backgrounds, and diversity factors are fundamental to the proper functioning of the Board as

a collegial body. It is generally recognised that a diverse board is more effective in performing its monitoring and advisory activities, due to the

variety of professional experience, perspectives, insights, skills, and connections to the outside world that diversity can bring to the table. Indeed,

pursuant to the recommendations of the Dutch Corporate Governance Code, a formal statement by the Board is available on the Profile page of

the corporate website, acknowledging that the Board of Directors should be composed of individuals who bring the appropriate skills and

experience needed for a company of Iveco Group’s size, geographic distribution, and business focus. To this end, when assessing candidates for

appointment as directors, the Board also considers several diversity factors including, but not limited to, gender, ethnicity, schooling, and

nationality, believing that bringing different perspectives into the Boardroom creates more effective discussions. In light of the attributes of its

individual directors, and based on a self-assessment performed at the end of 2022 under the oversight of the ESG Committee, the Board

considers itself a diverse body, well suited to fulfilling its duties vis-à-vis the Company’s existing and prospective challenges, and will continue to

consider genuine diversity as a priority.

EU TAXONOMY ON SUSTAINABLE ACTIVITIES

The EU taxonomy classification system provides a list of environmentally sustainable economic activities that support the EU Green Deal

objectives. The Taxonomy Regulation defines which economic activities can be considered environmentally sustainable; it also establishes six

environmental objectives, two of which have been regulated while the remaining four are expected to be regulated in 2023.

Climate Change Mitigation ("CCM") and Climate Change Adaptation ("CCA") are the two objectives that the EU has already regulated by adopting

the Commission Delegated Regulation (EU) 2021/2139, which provides for two lists of economic activities (referred to as subsections) that can

potentially contribute to achieving the CCM and CCA objectives. For each subsection identified, the Delegated Regulation provides a description

and specific Technical Screening Criteria ("TSC"); the latter are subdivided in Substantial Contribution criteria ("SCC") and Do Not Significant

Harm criteria ("DNSH").

To be environmentally sustainable under the EU Taxonomy, an economic activity shall:

▪be eligible, i.e., fall under the description of one of the subsections;

▪(only if eligible) be aligned, i.e., meet the TSC. Indeed, an economic activity must meet the SCC in order to substantially contribute to an

environmental objective of the Taxonomy Regulation, and the DNSH criteria to ensure it does not cause significant harm to any of the other

Taxonomy objectives.

Companies are required to disclose the proportion of turnover, capital expenditure ("CapEx"), and operating expenditure ("OpEx") of taxonomy

eligible and non-eligible activities, as well as of aligned and not-aligned activities. 2022 was the first year of reporting for which companies were

Board Report Our Commitment to Sustainability 22

required to assess and disclose the actual alignment of their activities with technical screening criteria.

Eligibility assessment of Iveco Group’s economic activities

Iveco Group conducted an eligibility assessment of its core business activities and operations, comparing the latter against the subsections of

Annexes I and II of the Commission Delegated Regulation (EU) 2021/2139. The economic activities found to be eligible fell within the scope of

one of the following activity categories:

▪3.3 ‘Manufacture of low carbon technologies for transport’, which represents most of Iveco Group’s core activities and operations;

▪6.5 ‘Transport by motorbikes, passenger cars, and light commercial vehicles’, which represents in particular Iveco Group’s financial services

activities.

Climate Change Mitigation was identified as the environmental objective most consistent with Iveco Group’s business.

Alignment assessment of Iveco Group’s economic activities – Substantial Contribution criteria

For the economic activities identified as eligible, a further assessment was conducted to verify if they met the relevant SCC, so as to identify those

among them that are aligned with Delegated Regulation requirements and determine their proportion of turnover, CapEx, and OpEx. The analysis

performed confirmed that all technical screening criteria for substantial contribution to the CCM objective were met.

Particularly with regard to the Substantial Contribution criteria, the economic activities falling under the two subsections 3.3 ‘Manufacture of low

carbon technologies for transport’ and 6.5 ‘Transport by motorbikes, passenger cars, and light commercial vehicles’ consist in the manufacture,

repair, maintenance, retrofitting, repurposing, and upgrade of category M1 and N1 vehicles that meet the GHG emissions threshold (less than 50 g

CO2/km).

Alignment assessment of Iveco Group’s economic activities – Do Not Significant Harm criteria

The economic activities previously assessed in relation to Substantial Contribution criteria were further analysed to verify whether they also met

Do Not Significant Harm ("DNSH").

Keeping in mind that our activities are mainly related to the Climate Change Mitigation environmental objective, the results of the aforementioned

analysis showed that all economic activities falling under subsection 3.3 met the DNSH criteria with regard to the other five environmental

objectives as follows:

▪Climate Change Adaptation: for each plant where economic activities took place, a climate risk and vulnerability assessment was conducted

to identify the physical climate risks material to the activities themselves, as well as the adaptation solutions to reduce such risks

accordingly;

▪Sustainable Use and Protection of Water and Marine Resources: degradation risks related to preserving water quality and avoiding water

stress were identified and addressed through Iveco Group’s environmental management system, with the aim of achieving good water

status and good ecological potential. The WRI Aqueduct Water Risk Atlas was used to identify the Company’s plants in water-stressed

areas;

▪Transition to a Circular Economy: the circular economy criteria were met in relation to manufacturing processes;

▪Pollution Prevention and Control regarding Use and Presence of Chemicals: the requirements related to the use of certain substances, as

set out in Appendix C to Annex I of Delegated Regulation (EU) 2021/2139, were met. Compliance with regulations such as REACH and

RoHS is guaranteed through the collection of information from suppliers (IMDS - International Material Data System), the verification of the

absence of dangerous substances and the related communications required;

▪Protection and Restoration of Biodiversity and Ecosystems: two methodologies were implemented at the manufacturing sites adjacent to

protected areas of particular environmental interest where the economic activities took place, so as to assess their impact on biodiversity

and ecosystems.

With regard to the economic activities falling under subsection 6.5, they met the DNSH criteria with regard to the other five environmental

objectives as follows:

▪Climate Change Adaptation: for each plant where economic activities take place, a climate risk and vulnerability assessment was conducted

to identify the physical climate risks material to the activities themselves, as well as adaptation solutions to reduce such risks accordingly;

▪Transition to a Circular Economy: the circular economy criteria were met in relation to M1 and N1 vehicles;

▪Pollution Prevention and Control regarding Use and Presence of Chemicals: both vehicles M1 and N1 complied with the requirements of the

most recent applicable stage of the Euro 6 light-duty emission type-approval, as well as with external rolling noise requirements related to

tyres.

Minimum Safeguard Assessment

The EU Taxonomy Regulation sets a further requirement for economic activities to be considered sustainable: they must be not only

environmentally sustainable by meeting the TSC, but also socially sustainable by meeting certain Minimum Safeguards.

More specifically, in conducting the economic activity, an entity shall also implement measures to ensure its alignment with the OECD Guidelines

for Multinational Enterprises, with the UN Guiding Principles on Business and Human Rights, with the principles and rights set out in the eight

fundamental conventions identified in the Declaration of the International Labour Organisation (ILO) on Fundamental Principles and Rights at

Work, and with the International Bill of Human Rights.

Iveco Group conducted a specific assessment to verify the compliance of its activities with Minimum Safeguards.

Board Report Our Commitment to Sustainability 23

Iveco Group upholds respect for human rights through its Code of Conduct, Supplier Code of Conduct, and Human Rights Policy. Human rights

are monitored across the Company’s internal operations and throughout its supply chain and customer base by means of dedicated processes for

each area. To ensure full compliance with applicable anti-corruption and bribery laws, an Anti-Corruption Policy and specific procedures are in

place. The Company’s tax risk management strategy focuses on managing and minimising the possibility of operating in violation of tax

regulations or in a way that is contrary to the principles or purposes of the tax system. As regards grievances, a Compliance Helpline is available

to all Iveco Group employees, customers, suppliers, and other third parties to report potential violations of applicable laws, Company policies, or

the Code of Conduct. Lastly, Iveco Group safeguards consumer interest through its Code of Conduct and Supplier Code of Conduct, which

stipulate, among other things, respect for the principles of fair competition and antitrust regulations.

Accounting Policy (1.2.1)

In order to identify the values related to the three KPIs, the Group's Sustainability Department and the Finance Department were involved. These

departments, according to the criteria set out in Annex 1 to EU Commission Delegated Act 2178/2021, identified which values to be included in

the KPIs from the balance sheet items, as described in the next paragraph.

As for the calculation of the numerator, only the balance sheet items related to the identified activities (subsections 3.3 and 6.5) were considered.

As for the calculation of the denominator, all the items provided for by the regulations at a consolidated Iveco Group N.V. level were included (as it

will be furtherly specified in the contextual information paragraph).

About Capex, calculation is based on the additions related to tangible and intangible assets sourced from Company reports that constitutes the

base of assets changes on the disclosure.

About Turnover, information is officially reported on the consolidated financial statement, that consists in revenue that is the value of all sales of

goods and services recognized over the period. In order to avoid double counting, revenues are excluding all intercompany flows.

About Opex, in order to match the taxonomy criteria, the calculation is the sum of operating expenses of the capital investments projects (view by

nature) and the costs related to maintenance and cleaning (view by destination).

Assessment of compliance with Regulation (EU) 2020/852 (1.2.2)

Iveco Group identified two taxonomy eligible activities:

▪Manufacture of low carbon technologies for transport (3.3), considering the sales from the vehicles manufactured by the Group and vehicle

maintenance and repair. Revenues from the sale of spare parts and individual components are excluded from the numerator. As per

Strategic Business Plan 2023 - 2026, investments belonging to Manufacture of low carbon technologies for transport (3.3) will increase over

the next year s by changing industry landscape with focus on zero carbon footprint and carbon neutrality and expanding vehicle line-up by

tailoring Zero Electric Vehicle Offering

▪Transport by motorbikes, passenger cars, and light commercial vehicles (6.5), considering active leasings for CV vehicles.

To avoid any double counting in the calculation of the KPIs, the values were determined directly from the items included in the financial statement

of Iveco Group N.V.

Contextual information (1.2.3)

Turnover KPI:

▪The denominator was identified based on Group’s consolidated net turnover from industrial activities.

▪The numerator was identified including net sales from sales of Trucks and Buses (New and Used) and Services, revenues from repair and

maintenance, and leasing fees. Revenues related to Specialty Vehicles (Defence and Fire Fighting), from the remaining segments of the

industrial activities, and revenues from Spare Parts are excluded.

CapEx KPI:

▪The denominator consists of additions to tangible and intangible fixed assets during the financial year, before depreciation, amortization, and

any re-measurements, including those resulting from revaluations and impairments, as well as excluding changes in fair value.

▪The numerator equals capital expenditures, that are part of the denominator, referred to buses, light, medium, and heavy trucks.

OpEx KPI:

▪The denominator includes all direct non-capitalized costs related to maintenance, building renovation measures, research and development,

short-term lease, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant, and equipment.

▪The numerator equals the direct non-capitalized costs that are part of the denominator referred to buses, light, medium, and heavy trucks.

There are no amounts in the reported values related to economic activities included in the taxonomy conducted for the internal consumption of the

Group.

Within the CapEx and OpEx items, there are no items related to a plan to expand the economic activities aligned to the taxonomy.

The CapEx and OpEx allocated to numerator were calculated using the Tool Semplice (specific for Initiatives Mngt system) aggregating on the

basis of dedicated field for tracking project on the basis of their motivation/aim.

After investigating and consulting on EU Taxonomy’s list of activities, the KPIs related are included in the table below.

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Board Report Our Commitment to Sustainability 27

TASKFORCE ON CLIMATE-RELATED DISCLOSURES

Iveco Group is committed to climate change mitigation and aims for full transparency in its management of climate-related risks and opportunities

through the disclosures provided in this section, in accordance with the recommendations of the Task Force on Climate-related Financial

Disclosures ("TCFD"). The following section contains 4 thematic areas showing how the Company is addressing climate-change risks and

opportunities: Governance, Strategy, Risk Management, and Metrics and Targets. For further details, please see the ‘TCFD Correspondence’

table at the end of this section.

Governance

The highest responsibility for defining and implementing Iveco Group’s strategy lies with the Board of Directors. The ESG Committee of the

Board of Directors is responsible, among other things, for assisting the Board in reviewing and guiding the strategy and risk management

policies related to climate change. It is also responsible for monitoring the implementation of the measures to meet climate change targets. The

ESG Committee meets quarterly and, at least twice per year, it is updated by the Institutional Relations & Sustainability senior vice president on

the progress of CO2 emissions reduction and energy efficiency with regards to manufacturing, logistic processes, and suppliers based on

assessments received by the Business Units, Operating and Corporate functions.

At management level, the highest responsibility for initiatives focusing on energy efficiency and on the management of CO2 emissions at Iveco

Group lies with the Senior Leadership Team ("SLT"). The SLT members are also members of the Sustainability Committee, which meets

monthly and is responsible for defining sustainability strategy and integrating sustainability aspects into operating processes. It is chaired by the

Institutional Relations & Sustainability senior vice president.

The Company’s business units are fully responsible for the global growth and performance of their respective businesses, thereby increasing

focus and accountability. Climate change issues are regularly discussed by these committees to ensure responsible management of climate risks

and to identify trends and opportunities, including potential impacts of new products under development and new market considerations.

Strategy

Conscious of the urgency of the climate change challenges and the major role that decarbonisation will play, Iveco Group has set the ambitious

goal of achieving net zero carbon by 2040 – ten years ahead of the deadline set by the Paris Agreement – in accordance with The Climate Pledge

that Iveco Group signed. To further address the potential impacts of climate change, Iveco Group has implemented relevant projects to improve

the environmental performance of its manufacturing processes, logistics, and product portfolio. To ensure the timely delivery of its strategy, the

Company has defined specific strategic sustainability targets for Scope 1, 2 and 3 emissions. The Company also advocates publicly for a quick

implementation of the enabling conditions, such as refueling and recharging stations, for the deployment of zero emission vehicles.

The Company monitors the relevant emerging policies and regulatory developments at local and global level and it has established specific

functions and structures within its respective business units and Technology and Digital function to comply with the new regulation. The resulting

analyses are incorporated into Company strategy to ensure full compliance with applicable laws. The shifts in consumer preferences and demand

towards sustainable transport solutions, driven by both an increase in climate-related awareness and more stringent regulations, may result in

potential risks for manufacturers that must adapt to the evolving market. To counter this, Iveco Group applies these shifts to the development of

its product portfolio to steer R&D focus towards sustainable technologies (e.g., biofuels, electric and hydrogen propulsion technologies) and

ensure the resilience of its business model.

The Company also takes advantage of collaborations with strategic business partners, start-ups, and external expertise in the emerging

technology sector.

To ensure the timely delivery of its strategy, the Company has established specific targets linked to the environmental performance of its

manufacturing processes, logistics, and product portfolio, as outlined in the section "Metrics and Targets" below.

Iveco Group developed a scenario analysis which led to the identification of the Internal Price of Carbon ("IPoC"), an indicator that enables it to

prioritise energy-saving projects based on their ability to generate the greatest reduction in CO2 emissions. The IPoC is used as a decision-

making tool whenever an initiative is presented to the Company’s Investment Committee.

In particular, considering the financial statements information are presented through historical values which, by their nature, do not fully capture

future events, all significant assumptions and estimates underlying the preparation of the following items were subject to an analysis in order to

identify and address the new uncertainties related to climate changes which could affect the business: going concern, inventory management,

property, plant and equipment, goodwill, brands, intangible assets with a finite life, tax reliefs, revenue recognition, provisions and onerous

contracts.

The analysis conducted were based on the Group strategy outlined in the context of the global supply chain environmental targets and did not

highlight any critical situations that cannot be attributable to, and addressed, in the ordinary course of the business.

Risk Management

Enterprise Risk Management

Risk management is an important component of Iveco Group’s overall culture and is integral to the achievement of its long-term business plan.

Accordingly, the Company’s Enterprise Risk Management ("ERM") process has been designed to assist in the identification, evaluation, and

prioritisation of business risks, followed by a coordinated and balanced application of resources to minimise, monitor, and control the probability or

Board Report Our Commitment to Sustainability 28

impact of adverse events or to maximise the realisation of opportunities. The ERM process is linked to the Company’s Sustainability Programme

and its strategic sustainability targets and priorities, including those related to climate change, which are articulated in the Company’s Strategic

Business Plan.

More details on Iveco Group’s ERM process, including its risk appetite for individual risk categories, can be found in the "Risk Management and

Internal Control System" section of this Report.

Pure Risk Management

In order to strengthen sustainability and resilience within the organisation, the Company also works to develop and launch forward-looking

solutions to better understand the impacts of natural hazards and to respond accordingly. The ability to assess the losses and costs associated

with natural hazards is essential for better decision making on hazard mitigation investments and planning. This methodology has enabled Iveco

Group to: (i) obtain objective, quantified knowledge of insurable environmental exposures; (ii) improve risk profiles according to the business units’

EHS strategies; (iii) identify and clearly communicate priorities and benefits; (iv) effectively inform the insurance market about the loss prevention

activities in place to prevent or mitigate potential environmental losses; (v) obtain adequate environmental insurance coverage, commensurate

with risk exposures and current loss prevention activities; (vi) and carry out prevention activities in line with Company strategies. These activities

provided the basis for the development of the Iveco Group’s first environmental maps, which quantify the overall level of risk using a certified,

scientific, self-assessment tool. The results were presented to the insurance market as evidence that the Company’s environmental risks are

known, well-quantified, and properly managed. The results also led to comprehensive global insurance coverage. A similar approach is being

followed for earthquake and flood risks.

Metrics and Targets

Iveco Group has developed various indicators and tools to assess its contribution, exposure, and resilience to climate change. Annually, the

Company reports its climate change impacts and performance in its Sustainability Report, according to the requirements of the GRI Standards.

CO2 emissions are calculated according to the Greenhouse Gas Protocol ("GHG Protocol"), incorporated into Company Guidelines.


METRICS	2022	2021	2020
Plants in scope	23	25	26
Direct energy consumption from renewable sources (GJ)	1,256	83	4
Direct energy consumption from non-renewable sources (GJ)	1,043,148	1,137,398	968,336
Total direct energy consumption (GJ)	1,044,404	1,137,481	968,340
Total indirect energy consumption from renewable sources (GJ)	1,340,289	1,381,882	1,129,567
Total indirect energy consumption from non-renewable sources (GJ)	667,348	730,583	635,902
Total indirect energy consumption (GJ)	2,007,637	2,112,465	1,765,469
Total energy consumption (GJ)	3,052,041	3,249,946	2,733,809
Direct CO2 emissions (Scope 1) (tons)	60,712	66,229	56,377
Indirect CO2 emissions (Scope 2 – market-based) (tons)	41,024	46,851	48,897
Indirect CO2 emissions (Scope 2 – location-based) (tons)	132,064	145,537	133,290
Total CO2 emissions (Scope 1 and Scope 2 – market-based) (tons)	101,736	113,080	105,274
CO2 emissions from the use of sold vehicles per vehicle/km (Scope 3) (grammes per vehicle/km)	681	—	—

Based on the climate-related risks and opportunities identified, Iveco Group sets targets to reduce emissions and increase energy efficiency:

Board Report Our Commitment to Sustainability 29


TARGETS	REFERENCE PERIOD	2022 RESULTS
'-50% vs.2019 in absolute CO2 emissions (Scope 1-2)	2030	(16)%
100% of total electricity consumption derived from renewable sources	2030	98%
'-38% vs.2022 in Scope 3 CO2 emissions from the use of sold vehicles per vehicle/km	2030	(a)
'-7% vs. 2022 in kg of CO2 emissions per ton of goods transported (including spare parts)	2026	(a)
'-20% vs. 2022 in absolute CO2 emissions derived from key suppliers of purchased goods and services and from capital goods	2026	(a)
(a) Revised target: 2022 as new baseline.

Board Report Our Commitment to Sustainability 30

TCFD correspondence table


THEMATIC AREA	RECOMMENDED TCFD DISCLOSURES	REFERENCE
Governance Disclose the organisation’s governance around climate-related risks and opportunities.	a) Describe the board’s oversight of climate- related risks and opportunities	Annual Report: Our Commitment to Sustainability; Corporate Governance /Board Committees: ESG Committee
	b) Describe management’s role in assessing and managing climate-related risks and opportunities	Annual Report: Our Commitment to Sustainability
Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such information is material	a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.	Annual Report: Our Commitment to Sustainability; Risks Factors; Industry Overview; Risk Management and Internal
	b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.	Annual Report: Our Commitment to Sustainability; Risks Factors; Industry Overview; Risk Management and Internal
	c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.	Annual Report: Our Commitment to Sustainability; Risks Factors; Industry Overview; Risk Management and Internal
Risk Management Disclose how the organisation identifies, assesses, and manages climate-related risks.	a) Describe the organisation’s processes for identifying and assessing climate-related risks.	Annual Report: Our Commitment to Sustainability; Risk Management and Internal Control System
	b) Describe the organisation’s processes for managing climate-related risks.	Annual Report: Our Commitment to Sustainability; Risk Management and Internal Control System
	c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management	Annual Report: Our Commitment to Sustainability; Risk Management and Internal Control System
Metrics & targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.	a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.	Annual Report: Our Commitment to Sustainability
	b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.	Annual Report: Our Commitment to Sustainability
	c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.	Annual Report: Our Commitment to Sustainability

METHODOLOGIES

This Non-Financial Statement addresses the requirements of the Dutch Decree dated 14 March 2017 on Non-Financial Information, that

implemented the Directive 2014/95/EU into Dutch law. This Non-Financial Statement is based on the GRI Sustainability Reporting Standards

("GRI Standards") and the Sustainability Accounting Standards ("SASB Standards").

Defining the contents of this Non-Financial Statement is a process based on principles of materiality, stakeholder inclusiveness, sustainability

context, and completeness. Ensuring the quality of information concerns principles of balance, comparability, accuracy, timeliness, clarity, and

reliability.

Environmental and social issues included in the Annual Report were selected on the basis of the materiality analysis. For further information on

Iveco Group’s commitment to sustainable development, see the 2022 Sustainability Report.

The contents related to the different requirements stated in the Dutch Decree are included in this Annual Report in different sections. The table

below shows the internal references for the information on each requirement.

Board Report Our Commitment to Sustainability 31

EU Directive Non-Financial Information and Diversity information reference table


Topic	Subtopic	Included (yes/no)	Reference
Business model		Yes	Business Overview; Our Commitment to Sustainability; Corporate Governance/Code of Conduct
Relevant social and personnel matters (e.g., HR, safety etc.)	A description of the policies pursued, including due diligence.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	The outcome of those policies.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	Principle risks in own operations and within value chain.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	How risks are managed.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	Non-financial key performance indicators.	Yes	Our Commitment to Sustainability;
Relevant environmental matters (e.g., climate-related impacts)	A description of the policies pursued, including due diligence.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	The outcome of those policies.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	Principle risks in own operations and within value chain.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	How risks are managed.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	Non-financial key performance indicators.	Yes	Our Commitment to Sustainability
Relevant matters with respect for human rights (e.g., labour protection)	A description of the policies pursued, including due diligence.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	The outcome of those policies.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	Principle risks in own operations and within value chain.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	How risks are managed.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	Non-financial key performance indicators.	Yes	Our Commitment to Sustainability;
Relevant matters with respect to anti-corruption and bribery	A description of the policies pursued, including due diligence.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	The outcome of those policies.	Yes	Our Commitment to Sustainability; Corporate Governance/Code of Conduct
	Principle risks in own operations and within value chain.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	How risks are managed.	Yes	Our Commitment to Sustainability; Risk Management and Internal Control System
	Non-financial key performance indicators.	Yes	Our Commitment to Sustainability;
Insight into diversity (executive board and the supervisory board)	A description of the policies pursued.	Yes	Our Commitment to Sustainability
	Diversity targets	Yes	Our Commitment to Sustainability
	Description of how the policy is implemented.	Yes	Our Commitment to Sustainability
	Results of the diversity policy.	Yes	Our Commitment to Sustainability

Board Report Our Commitment to Sustainability 32


SASB INDEX
TOPIC	SASB CODE	METRIC	UNIT OF MEASURE	RESPONSE COMMENT
Activity	RT-IG-000.A	Number of units produced by product category	Number	Commercial Vehicles: 165,587 Powertrain: 786,748 Buses: 5,945 Specialty Vehicles: 2,940
Activity	RT-IG-000.B	Number of employees	Number	35,611
Energy Management	RT-IG-130a.1	(1) total energy consumed	Gigajoules (GJ)	3,052,041
		(2) percentage of grid electricity	%	43.3
		(3) percentage of renewable	%	44
Employee Health and Safety	RT-IG-320a.1	(1) total recordable incident rate (TRIR)a	Rate	0.0454
		(2) fatality rateb	Rate	—
		(3) near miss frequency rate (NMFR)c	Rate	3,258
Fuel Economy & Emissions in Use- Phase	RT-IG-410a.1	Sales-weighted fleet fuel efficiency for medium- and heavy-duty vehicles	Gallons per 1,000 ton-miles	(d)
	RT-IG-410a.2	Sales-weighted fuel efficiency for non-road equipment	Gallons per hour	N/A
	RT-IG-410a.3	Sales-weighted fuel efficiency for stationary generators	Watts per gallon	N/A
	RT-IG-410a.4	Sales-weighted emissions of:
		(1) nitrogen oxides (NOx) and		—
		(2) particulate matter (PM) for:		—
		(I) marine diesel engines,		N/A
		(II) locomotive diesel engines,		N/A
		(III) on-road medium- and heavy-duty engines, and		N/A
		(IV) other non-road diesel engines	Grams per kilowatt-hour	N/A
Materials Sourcing	RT-IG-440a.1	Description of the management of risks associated with the use of critical materials	N/A	(e)
Remanufacturing Design & Services	RT-IG-440b.1	Revenue from remanufactured products and remanufacturing services	€million	93.3
(a) The total recordable incident rate is the number of recordable work-related injuries and illnesses divided by the number of hours worked, multiplied by 200,000.
(b) The fatality rate is the number of work-related fatalities divided by the number of hours worked, multiplied by 200,000.
(c) The near miss frequency rate is the number of work-related near misses divided by the number of hours worked, multiplied by 200,000.
(d) The metric used for evaluating the emission in the use-phase is CO2 emissions per vehicle per km (see Metrics and Targets in Taskforce on Climate-Related Disclosures section).
(e) The Company’s products are highly complex, typically containing thousands of parts that come from many different direct suppliers within the Company’s vast global supply network. This means that the Company must rely on its direct suppliers to work with their upstream supply chain to detect the presence and evaluate the origin of any critical substances contained.

Board Report Our Commitment to Sustainability 33

REPORT ON OPERATIONS

SELECTED FINANCIAL DATA


(€ million)	2022	2021(*)	2020(*)	2019(*)	2018(*)
Net revenues	14,357	12,651	10,411	11,948	12,005
Profit/(loss) before taxes	260	180	(488)	175	310
Profit/(loss)	159	76	(372)	101	183
Attributable to:
Owners of the parent	147	52	(408)	84	166
Non-controlling interests	12	24	36	17	17
Basic earnings/(loss) per common share (€)(1)	0.54	0.19	(1.50)	0.31	0.61
Diluted earnings/(loss) per common share (€)(1)	0.54	0.19	(1.50)	0.31	0.61
Investments in tangible and intangible assets	777	563	401	492	437
of which: capitalized R&D costs	390	271	178	177	187
R&D expenditure(2)	634	509	393	441	432
Total Assets	16,013	16,560	15,631	15,904	15,760
Total Equity	2,391	2,311	2,336	2,718	2,725
Equity attributable to owners of the parent	2,354	2,289	2,268	2,680	2,701

(*) Data included in the Report on Combined Financial Statement at 31 December 2021 issued on 24 April 2022.

(1) For the years 2021, 2020, 2019 and 2018, basic and diluted earnings per share calculation is based on the number of common shares at the Effective date of the Demerger.

(2) Includes capitalized development costs and research and development (“R&D”) costs charged directly to the income statement.

Board Report Selected Financial Data 34

RISK FACTORS

The following risks should be considered in conjunction with the risks described in the Disclaimer, the Risk Management and Control System

section and the Notes to the Consolidated Financial Statements. All these risks may affect Iveco Group business results and, individually or in the

aggregate, could cause actual results to materially differ from past and projected future results. Although the risks are organized by headings, and

each risk is discussed separately, many are interrelated. It is impossible to predict or identify all risk factors and, consequently, the following

factors shall not be considered a complete list of the risks and uncertainties that may affect the Company. According to the Company’s opinion,

there are no material uncertainties (as defined in paragraph 25 of IAS 1 - Presentation of Financial Statements) about its ability to continue as a

going concern. However, the occurrence of external disruptive events that would impact indistinctly the automotive industry and/or specifically

Iveco Group and beyond the direct control of Iveco Group could jeopardize the ability of Iveco Group to operate in the market.

The present section describes risks that could have a significant impact on the operating results and financial position of Iveco Group. Major risks

events that emerged during the risk assessment process are grouped in four main categories:

a.Strategic risks;

b.Operational risks;

c.Legal & Compliance risks;

d.Financial & Taxation risks.

Iveco Group’s main risk factors identified for each of the above-mentioned risk categories are discussed below. The order in which they are

discussed does not imply ranking in terms of likelihood of occurrence or potential impact.

The below mentioned risk factors are not to be considered comprehensive of all risks identified and evaluated within the annual risk management

process: business-as-usual risks which are considered adequately managed and controlled such that residual risk is considered minor, even if

monitored, are not detailed in this report. Nevertheless, there can be no assurance that any mitigation action will be sufficient to successfully

counter or mitigate potential risks.

Compared with previous year Annual Report, the most significant Risk Factors which are not detailed in the report because of existing mitigation

actions or because they are currently considered as causes or effects of other issues are:

▪The Group may have difficulties implementing its growth strategy and may not realize all of the anticipated benefits from being separated

from the CNH Industrial business and cost management initiatives.

▪The COVID-19 pandemic could materially adversely affect the Group’s business, financial condition, results of operations and/or liquidity

▪Reduced demand for the Group’s products would reduce the Group’s sales and profitability

Although the Company believes that the risks and uncertainties described below 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.

STRATEGIC RISKS

Global economic conditions impact Company businesses

Iveco Group results of operations and financial position are and will continue to be influenced by macroeconomic factors – including changes in

gross domestic product, the level of consumer and business confidence, changes in interest rates, the availability of credit, inflation and deflation,

energy, commodities or other raw materials prices – which exist in the countries and regions in which Iveco Group operates. Such

macroeconomic factors vary from time to time and their effect on operating results and financial position cannot be specifically and singularly

assessed and/or isolated.

Economic conditions vary across regions and countries, and demand for products and services generally increases in those regions and countries

experiencing economic growth and investment. Slower economic growth could have an adverse impact on business, results of operations and

financial condition. In a weaker economic environment, dealers and customers may delay or cancel plans to purchase Iveco Group products and

services and may not be able to fulfill their obligation timely. In addition, suppliers may be impacted by economic pressures or by adverse

geopolitical situation (e.g. escalation of tensions between China and Taiwan) which may adversely affect their ability to fulfill their obligations, as

well as the price or availability of supplies required. In addition, deterioration of key macroeconomic indicators (such as rising inflation and local

currency devaluation) as well as a strengthening of Government’s protectionist policies in some Countries, could impact the Group's financial

results and business operation particularly in those Countries where macroeconomic conditions remain volatile. If there were continued

deterioration in the global economy or the economies of key countries or regions, the demand for Iveco Group products and services may

decrease and may materially and adversely affect results of operations, financial position and cash flows.

Iveco Group is committed to constantly and closely monitor political, social, economic, and market developments in the countries of interest, both

through specialized internal resources and through providers of information analyses. The Group periodically assesses these political, social and

economic risks in the countries it operates in or intends to invest in, also through specific set of defined measures to deal with a potential demand

reduction, and through a strong commitment in investigating and scouting potential alternatives for critical supplies based on risky countries, even

if there can be no assurance these measures prove to be effective.

Board Report Risk Factors 35

Competition risk, considering both actual players and new entrants

The Group operates in global and regional markets which are highly competitive in terms of product quality, innovation, pricing, fuel economy,

reliability, safety, customer service, and financial services offered. Depending on the particular Country and product, the Group competes with

other international, regional and local manufacturers and distributors of commercial and specialty vehicles and powertrains. The Group competes

primarily on the basis of product performance, innovation, quality, distribution, customer service and price. Aggressive pricing or other strategies

pursued by competitors, unanticipated product or manufacturing delays, quality issues, or failure to price products competitively, could adversely

affect the Iveco Group’s business, operating results, and financial position. Additionally, there has been a trend toward consolidation in the truck

industry that has resulted in larger and potentially stronger competitors in this industry.

The Group’s ability to compete successfully in the longer-term will depend on, in part, the ability to keep pace with changes in vehicle technology,

including in regard to emissions. As part of its decarbonization strategy, Iveco Group is planning to develop alternative fuel engines that run on

CNG and LNG and are compatible with biomethane, with a medium-term focus on electric drive technologies. However, there is a risk that some

competitors will use their substantial resources to develop such technology and related products more rapidly, in larger quantities, with a higher

quality, or at a lower cost. Failure to develop and offer innovative products that compare favorably to those of Iveco Group’s principal competitors

in terms of price, quality, functionality, features, mobility and connected services, vehicle electrification, fuel cell technology and autonomy, or

delays in bringing strategic new products to market, or the inability to adequately protect the Group’s intellectual property rights or supply products

that meet regulatory requirements, including engine emissions requirements, could result in reduced revenue and market share.

Iveco Group continuously investigates new potential areas of interest for the future development of the ecosystem of transport and logistics, which

also potentially includes the implementation of partnership agreements. Research and development projects are also revised continuously, based

on each project’s technological and commercial relevance. To mitigate the effect of increasing competition from both actual and new, more

innovative and price-aggressive players, the Group is in progress of layering of commercial areas by region to understand demand elasticity and

monitor competitors' actions as well as of implementing some innovation activities or cost optimization actions with the aim to increase its

competitiveness. Furthermore, Iveco Group can rely on an extensive distribution service that provides a competitive advantage. Nevertheless,

should the Group be unable to adapt effectively to market conditions, this could have an adverse effect on its business, results of operations, and

financial condition.

Risks related to investments and partnerships

Iveco Group has engaged in the past, and may engage in the future, in investments or merger and acquisition transactions or enter into, expand

or exit from strategic alliances and joint ventures that could involve risks that could prevent the Company from realizing the expected benefits of

the transactions or the achievement of strategic objectives or could divert management’s time and attention. Cooperation with partners in

shareholdings and partnerships is of key importance to Iveco Group, both in the transformation towards electric mobility and comprehensive

digitization, and in connection with mobility solutions. Especially with new technologies, these solutions of cooperation may help to leverage on

synergies and improve cost structures in order to respond successfully to the competitive situation in the automotive industry.

By way of example, Iveco Group has established a Joint Venture agreement with Nikola Corporation, a US-based Group specialized in zero-

emission Class 8 Heavy-Duty Trucks ("HDT") and related energy solutions, in order to improve HDT product portfolio mix. Furthermore, Iveco

Group and Hyundai Motor Company are exploring possible areas of mutual interest, such as electric powertrains, vehicle automation and

connectivity technology for commercial vehicles.

The unreliability of key business partners in meeting the agreements undertaken and deliver on time the expected volumes, the potential

deterioration in relations with such key partners as well as the challenges in selecting new business partners could impact the ability to develop

innovative products and meet Iveco Group strategic objectives.

With a view to mitigating such risks, Iveco Group is committed to maintaining a positive trust and long-term relations with strategic partners,

sharing risks as well as opportunities. Before the implementation of a collaboration agreement, the Company performs a series of activities geared

at identifying suitable business partners; moreover, after the stipulation of the relevant agreements, Iveco Group puts in place intensive controls

over the partnership execution and all the necessary actions aimed at resolving any emerging disputes regarding business activities.

In spite of these measures, the challenges and uncertainties in selecting trustworthy business partners, their potential unreliability in meeting the

agreements undertaken and deliver on time as expected, as well as the potential deterioration in relations with such key partners may impact

Iveco Group’s ability to develop innovative products and meet its objectives.

Political or financial instability in countries where the Group operates

Iveco Group produces and sells products and offers services in several continents and numerous countries around the world including some

experiencing varying degrees of political and economic instability. Given the global nature of the activities, the Company is exposed to risks

associated with international business activities that may increase costs, impact ability to manufacture and sell products and require significant

management attention. These risks include:

▪changes in laws, regulations and policies that affect, among other things:

◦import and export duties and quotas;

◦currency restrictions;

◦interest rates;

◦taxes;

▪labor disruptions;

Board Report Risk Factors 36

▪war, civil unrest and acts of terrorism.

Further, many escalated tensions are adversely impacting macroeconomic conditions, giving rise to regional instability and resulting in heightened

economic sanctions from the U.S., EU, and UK which may adversely affect Iveco Group business in relevant countries.

The mitigant actions against such external risk include:

▪institutional relations with Local Authorities;

▪analysis of the preventive measures and implementation of emergency plans if needed;

▪safety of people and the management of activities and assets.

OPERATIONAL RISKS

Public tender management related risk

Iveco Group supplies products that are particularly complex due to their advanced technological and sustainability contents, including under long-

term contracts at a fixed all-inclusive price, which are awarded through public tenders. Terms and conditions of contracts generally include

challenging requirements and rigorous completion times; in order to meet undertaken commitment and avoid penalties, Iveco Group could be

forced to launch production before all tender’s requirements and public fund allocation is completed, increasing risks on inventory and unsold

products. Furthermore, an unforeseen rise in the costs incurred in the performance of a contract could lead to a lower profit, especially in those

contractual or regulatory frameworks in which Iveco Group is not allowed to ask for and be granted with a renegotiation of the prices.

Although to date the sustainability requirements within public tender are not stringent yet, a deeper awareness and demands from entities issuing

public tenders is expected from 2025 onward. Having proper sustainability credentials (e.g. related to respects of human rights standards, etc.)

will grant the Iveco Group's participation in public tenders, especially in countries where regulations on sustainability are more demanding.

The Group is committed to the continuous improvement of its industrial efficiency and its ability to meet customer specifications, including through

(i) constant monitoring of regulatory evolutions in the sustainability field and new requirements under discussion by public entities issuing and/or

regulating tenders, to anticipate and address new demands in a timely manner, (ii) contracts indexation on the raw materials or energy prices, (iii)

on-site audits at Group production sites, (iv) presence of an internal Human Right policy, (v) whistleblowing channels open to both employees and

third parties. In addition, the Group already participates in the Open-ES platform to encourage supplier awareness of ESG issues and support

suppliers' qualification and monitoring.

Risk related to supply of utilities, raw materials, parts and components

Iveco Group relies upon many suppliers for raw materials, parts and components that are required for products manufacturing. The Company

cannot guarantee to be able to maintain access to raw materials, parts, and components, and in some cases this access may be affected by

factors outside of Iveco Group’s and its direct suppliers’ control. Certain components and parts used in Iveco Group products are available from a

single supplier and cannot be quickly sourced from other suppliers. Significant disruptions to the supply chain resulting from shortages of raw

materials, components, and whole goods may adversely affect the ability to meet customer demand. For example, events occurred in the latest

years (such as COVID pandemic and the escalation of conflict in Ukraine) have affected global ability to receive certain materials and components

(such as semiconductors) on a timely basis and at the anticipated costs. These supply chain disruptions have been caused and compounded by

many factors, including changes in supply and demand, industry capacity constraints, labor shortages and the COVID related issues (e.g. zero

COVID policy in China). Global logistics network challenges include ocean freight capacity constraints, international port delays, trucking and

chassis shortages, railway and air freight capacity, and labor availability constraints, which have resulted in delays, shortages of key

manufacturing components, increased order backlogs, and increased transportation costs. While Iveco Group diligently monitor supply chain risk

and seeks to respond promptly to address supply chain and logistics bottlenecks, there can be no assurance that mitigation plans will be effective

to prevent disruptions that may arise from shortages of materials used in the production. Uncertainties related to the magnitude and duration of

global supply chain disruptions have adversely affected, and may continue to adversely affect, business and outlook.

Furthermore, the price volatility of raw materials and utilities like electricity and gas, particularly during times of economic volatility or regulatory

instability or in response to changes in tariffs, significantly increases costs of production, which could have a material adverse effect on business,

results of operations and financial condition.

In addition to monitoring materials availability and prices increase from suppliers, also considering spot purchases in case of favorable market

opportunities, or activation of hedging strategies (after assessing their cost-effectiveness), Iveco Group held Suppliers Risk Management

meetings at least on a quarterly basis to analyze critical suppliers and to assess potential double sourcing or reduction of business. Furthermore,

where possible, the Company takes in consideration the application of indexed contracts with clients to offset increased raw materials costs.

Focusing on semiconductors, Iveco Group takes into consideration the opportunity to investigate semiconductors’ technical alternatives, to buy

semiconductors on the broker market or to have direct relationships with semiconductors’ suppliers. The impact of supply chain disruption is

reduced thanks to the improved fleet management.

Product quality impacted by process design and production issues

Production risks include all those factors which could impact the production planning and capacity, such as:

▪the incorrect estimation of the demand causing under- or over- production capacity, potentially leading to increased costs, delivery delays,

and quality issues due to excessive work stress;

▪unforeseen disruptions of a production facility which could be caused by several different incidents.

Board Report Risk Factors 37

The success of Iveco Group products depends on the ability to maintain or increase market share in existing markets and to expand into new

markets through the development of innovative, high-quality products that provide adequate profitability. The achievement of these objectives is

dependent on several factors, including the ability to design and produce products that meet customers’ quality requirements, also through the

increased collaboration and synergies between engineering and manufacturing as well as the ability to develop connected and digital solutions.

Product quality issues could be caused or aggravated by forced re-working activities due to supply chain stop-&-go and lower maturity and

knowledge of new technologies used, increasing warranty costs and impacting the Company reputation.

The Group already carried out significant investments aimed at optimizing production capacity. Moreover, Iveco Group strategic plan covers

investments in innovation designed to further develop existing and create new product and service offerings responsive to customer needs,

including developing and delivering connected and digital solutions, automation and electrification.

In order to guarantee a high-quality level of existing and new products, Iveco Group implemented a continuous monitoring system of technical

KPIs (key performance indicators) and KAIs (key activity indicators), as well as additional quality checks on reworks related activities.

Information technology risks, including cybercrimes

Iveco Group relies upon Information Technology ("IT") systems and networks, some of which are managed by third parties, in connection with a

variety of business activities. These systems include supply chain, manufacturing, distribution, invoicing, and collection of payments from dealers

or other purchasers of Iveco Group products and from customers of Iveco Group financial services business, and connectivity services with and

among equipment. Iveco Group uses information technology systems to record, process and summarize financial information operating results for

internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements. Additionally, Iveco Group collects and

stores sensitive data, including intellectual property, proprietary business information as well as customers, suppliers and dealers’ proprietary

information and personally identifiable information in data centers and on information technology networks. Operating these information

technology systems and networks, and processing and maintaining these data, in a secure manner, is critical to business operations and strategy.

The Group’s IT systems may be subject to damage and/or interruption from, among other things, power outages or computer, network, and

telecommunications failures and usage errors by its employees, causing process inefficiencies and potential business interruptions. If the Iveco

Group’s IT systems are damaged or cease to function properly, the Group may have to make a significant investment to fix or replace them.

Moreover, the IT network could be also disrupted by the unavailability of Group's data centers due to force majeure events, with consequent

impacts on business continuity.

Increased information technology security threats (e.g. worms, viruses, malware, phishing attacks, ransomware, and other malicious threats) and

more sophisticated computer crime pose a significant risk to the security of Iveco Group’s systems and networks and the confidentiality,

availability and integrity of data. The foregoing risks are heightened in the current environment, based on hybrid work model which includes the

possibility for employees to work from home, using networks other than that of the Group, with a consequent potential increase of the area open

to attacks.

In addition, the rising presence of more connected vehicles, including autonomous driving features, has exposed automotive manufacturers at an

increasing number of cyber-attacks. Attackers work to get access to vehicles’ internal networks to potentially steal personal data, compromise

infotainment/navigation GPS units, neutralize vehicle alarm systems and remotely control connected vehicles, thus threatening physical safety of

drivers, pedestrian and the entire industry.

Lastly, the current situation related to the Russian-Ukrainian conflict has led to a sharp increase in cyber-attacks to critical systems and services

(i.e., intelligence, military, manufacturing, financial, energy).

While Iveco Group actively manages information technology security risks within its control through security measures, business continuity plans

and employee training around phishing and other cyber risks, these attacks have proliferated and there can be no assurance that mitigation

actions will be sufficient to successfully prevent attacks or to mitigate potential risks to systems, networks, data, and products. Furthermore, third

parties, including internet, mobile communications technology and cloud service providers, pose their own information security risk to the Group.

Security breaches could also result in litigation, regulatory action, unauthorized release of confidential or otherwise protected information and

corruption of data, as well as remediation costs and higher operational and other costs aimed at implementing further data protection measures.

To ensure effective, reliable, and relevant operations Iveco Group needs to constantly improve its IT ecosystem, including the latest hardware and

software technologies and effective IT organizational mechanisms, as well as how to utilize the potential of data in day-to-day business. In this

regard, Iveco Group is implementing a series of strategic initiatives covering key business areas to progressively eliminate obsolescence and

optimize the number and complexity of IT systems.

Moreover, Iveco Group has implemented measures of governance, response, and monitoring of cyber-attacks, as well as compliance processes

carried out through the involvement of specialized personnel and an advanced use of IT security technologies. Iveco Group applies procedures

and protocols based on the sector best practices and on consolidated, tested international standards with the goal of preventing and mitigating its

exposure to cyber risk, as well as security additions to meet clients’ requirements. Specifically, the Group records hundreds attempts per each

quarter (main external sources of attacks are malware, phishing, internet applications), but thanks to the multifactor authentication system in place

(including dealers and third parties) and the adoption of the latest available technologies, the impact of such attacks is always considered not

material.

The mitigation of this risk is also guaranteed by the presence of Security Operations Centers ("SOC") and the Cybersecurity Incident Response

Team ("CSIRT"). In addition, cyber awareness activities are periodically carried out with the aim of increasing the employees’ level of training and

knowledge. Despite the opportunity to transfer risk, the amount or scope of insurance coverage may be inadequate to cover claims or liabilities

relating to a cybersecurity attack.

Board Report Risk Factors 38

Risks associated to employment relationships

Iveco Group’s ability (i) to compete successfully, (ii) to manage its business effectively, (iii) to expand its business and (iv) to execute its growth

strategy, depends, in part, on the Group’s ability to attract, motivate and retain qualified personnel in key functions and markets with the requisite

education, skills, background, talents, and industry experience. Failure to attract and retain qualified personnel, whether as a result of an

insufficient number of qualified applicants, difficulty in recruiting new personnel, or the inability to integrate and retain qualified personnel, could

impair the Group’s ability to execute its business strategy and could adversely affect its business.

Furthermore, in many countries where the Group operates, employees are protected by laws and/or collective labor agreements that guarantee

them, through local and national representatives, the right of consultation on specific matters, including repurposing, downsizing or closure of

production facilities and reductions in personnel. Laws and/or collective labor agreements could impair the flexibility in reshaping and/or

strategically repositioning business activities. The ability to efficiently deploy personnel or implement permanent or temporary redundancy

measures is subject to government approvals and/or the agreement of labor unions where such laws and agreements are applicable.

Furthermore, the Group is at risk of work interruptions or stoppages that could impact the volume of production, with potential material adverse

effect on business, results of operations and financial condition. To reduce such potential risk, the Group put in place continuous communication

with all internal stakeholders and unions to monitor the situation and negotiation for the renewal workers' collective agreement in many Countries.

Labor relations might also be affected by the expected high inflation rates of some countries in which the Group operates, leading to strikes and

additional costs.

To keep up with new technical skills required by the current market environment, the Group is putting in place a strong re-skilling campaign as

well as a definition of salary packages in line with the market with the aim of attracting the best talents.

Iveco Group is committed in implementing a trusted and healthy work environment, through a strong commitment to safety and health and high

standards for rights at work, social dialogue and diversity and inclusion. In particular, the Group developed challenging Diversity, Equity and

Inclusion ("DE&I") plan, which include the increase of management position held by women.

Dealers related Risk

The Group sells most of its commercial vehicles through independent dealers and is subject to risks relating to their inventory management

decisions and operating and sourcing practices. They may also encounter financial difficulties that could restrict them from selling Iveco Group’s

products or services, and/or require Iveco Group to provide support or investment, thus leading to increased costs. In addition, if financial

difficulties affect a significant number of dealers in a region, the Group’s sales in that region as a whole could be at least temporarily adversely

affected or require it to incur investment to seek out new dealers in that region. This risk is more acute in regions with a very limited number of

dealers.

The general increase in costs and the resulting difficulties that small dealers may face result in progressive market concentration and,

consequently, in a less granular coverage, could impact the Group’s competitive advantage.

Finally, infringements perpetrated by third-party dealers via misuse of product warranties contractually offered by the Group (e.g., unauthorized

and/or out-of-warranty maintenance) could lead to extra costs for the Group.

Any of the foregoing may have a material adverse effect on the Group’s sales, operating results, and financial condition.

In order to reduce the likelihood of occurrence of this risk, Iveco Group is putting in place some significant actions, aimed at monitoring the

dealers’ aggregation and their financial health, considering the development of electric vehicles. Furthermore, a structured audit process on

dealers’ activities is aimed at mitigating potential risk related to misuse of product warranties.

LEGAL & COMPLIANCE RISKS

Non-compliance with emissions regulations, impacting product mix

Changes in environmental and climate change laws, including laws relating to engine and vehicle emissions, safety regulations, fuel requirements,

restricted substances, or greenhouse gas emissions, could require new or additional investments in product designs and could increase

environmental compliance expenditures, limiting Iveco Group’s ability to invest in other aspects of its business. Emissions regulations are

particularly demanding in EU, where the Company run most of its business. The European fleet targets for 2025, 2030 and then for 2035 already

require significant reductions in vehicles emissions that can only be achieved using new technologies (e.g. battery-electric drive systems),

requiring large capital investments. Failure to comply with the relevant regulations may result in considerable penalties and reputational damages,

potentially leading to the inability to market Iveco Group products in such regions where regulations are more demanding.

Furthermore, phases of political uncertainty and vulnerabilities in the whole economy may generally have negative effects on consumption and

investment decisions by households and companies. The higher costs of low-emission vehicles may represent an obstacle to the rapid shifting

towards a new paradigm of mobility. A lower demand for innovative products due to their higher costs could negatively impact Group’s business

results and competitive position.

In addition, there is a risk that some of the Group’s competitors will have greater resources than the Group and will be able to respond to such

laws more rapidly or at a lower cost. See also “Competition risk, considering both actual players and new entrants”.

To comply with current and future environmental rules in all markets in which its vehicles are sold, Iveco Group must incur substantial capital

expenditure and research and development expenditure to upgrade products and manufacturing facilities, planning a progressive introduction

within the product portfolio of electric vehicles to improve the product mix and allocating the first electric vehicles (e.g., eDaily) in those

Board Report Risk Factors 39

geographies where regulations are more stringent. In order to monitor the overall emissions of sold vehicles, the Group implemented a CO2

emissions monitoring system, able to evaluate the expected emission according to vehicle type and configuration.

Risk related to compliance with other product, process and supply chain’s regulations

Given the stakeholders’ expectations, the increasingly demanding regulatory requirements (in terms of complexity and/or country-specific

provisions), and the intricacy of managing product-specific sustainability aspects to meet requirements along the entire value chain (e.g.,

accountability, clear time-sensitive targets, etc.), Iveco Group must devote huge effort to avoid risk of non-compliance with product, process and

supply chain regulations.

The most significant risk factors involved in meeting these requirements are associated with compliance with regulations, such as Greenhouse

gas (GHG) emissions regulations requirements on Iveco Group plants, Recyclability and REACH (Registration, Evaluation, Authorization and

Restriction of Chemicals) regulations, requirements on the life cycle of batteries and upcoming corporate sustainability due diligence requirements

along the overall supply chain (CSDD).

Besides the continuous monitoring of regulations and on-site audits at group production sites and the presence of a whistleblowing channel open

to both employees and third parties, Iveco Group confirmed the participation in the Open-ES platform to encourage supplier awareness of ESG

issues (including Human Rights), supporting suppliers' qualification and monitoring and include sustainability scores as a criterion for supplier

selection.

Furthermore, the design and implementation of Iveco Group’s climate change risk management framework is ongoing through a detailed internal

task force reporting to the management. For further details, refer to section “Our commitment to Sustainability”, paragraph “Taskforce on climate-

related disclosures”.

Risks related to legal proceedings involving the Group

The Group is a party in judicial, civil, tax and administrative legal proceedings. For a summary of the most significant cases, see the Note 27

"Commitment and contingencies" to the Consolidated Financial Statement at 31 December 2022. Given the intrinsic and ineliminable risk that

characterizes legal proceedings, while the Group has carried out the necessary assessments, including on the basis of applicable accounting

standards, it is not possible to exclude the possibility that the Group might in future have to face payments for damages either not covered by the

legal fund, or which are covered insufficiently, or which are uninsured, or which are of an amount greater than the maximum sum that may have

been insured. Furthermore, in relation to legal proceedings brought by the Group, should it not be possible to settle the disputes by means of

negotiation, the Group may have to bear further costs associated with the length of court proceedings.

To maximize mitigation of these risks, Iveco Group implements actions aiming at constantly strengthening its internal control system and also

avails itself of in-house professionals and external consultants who are committed to support the Group in its risk anticipation and mitigation

efforts and assist the Group in legal proceedings.

Non-compliance with laws and regulations or with compliance policies

Although the Group conducts its business with loyalty, fairness, transparency, integrity, and with a goal of full compliance with laws and

regulations, on the one hand these laws and regulations are often complex and subject to varied and subjective interpretive decisions and, on the

other hand, the compliance controls, policies, and procedures in place may not in every instance protect the Group from acts committed by

employees, agents, contractors, or collaborators that would violate the laws or regulations of the jurisdictions in which Iveco Group operates,

including employment, corrupt practices, environmental, competition, and other laws and regulations. Such improper actions could subject the

Group to civil or criminal investigations, and monetary and injunctive penalties. Furthermore, the Group operates in some countries characterized

by a high level of fraud and corruption, referred to in the “Corruption Perception Index” by Transparency International. In the context of risks

related to possible fraud or wrongdoing by employees or third parties, Iveco Group is also exposed to risks related to the protection of information

and know-how, since in the performance of its activities the Group relies on sensitive information, data and know-how, processed and contained

in documents and/or electronic format, whose unauthorized use and/or disclosure of by employees or third parties may amount to a breach of

applicable laws and regulations , and might cause damage to the Group. Lastly, it cannot be excluded that non-compliance issues or the incorrect

application of the European Data Protection Regulation ("GDPR") or foreign privacy laws such as, without limitation, Chinese privacy regulation

("PIPL") may occur within the Group, that could result in the application of sanctions to the detriment of the Group. Failure to comply with any of

these regulations could adversely impact the operating results and financial condition of the Company. In addition, actual or alleged violations

could damage its reputation as well as its ability to conduct business.

The Group is also exposed to the risk that its compliance controls and procedures may not be sufficient to prevent dealers from violating the

Group’s dealership agreements or laws or regulations of the jurisdictions in which the Group operates (including performance of corrupt practices,

trade sanctions, and other), which may expose the Group to sanctions.

Among the various initiatives that Iveco Group has put in place to mitigate these risks, a “Group Integrated compliance Program” has been

developed, that provides, among other, the definition of compliance guidelines for the benefit of group affiliates that did not have a specific

compliance programme in place and for an update of the “Organizational Models” of certain affiliates intended to comply with the rules related to

Italian LD 231/2001 , in addition to the review of fundamental policies. Moreover, a structured framework is in place, in line with Italian legislation

and with the legislative frameworks of the country in which the Group operates. Iveco Group’s Code of Conduct provides that “Anti-corruption laws

such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Italian Legislative Decree

n. 231/2001, and the U.S. Foreign Corrupt Practices Act, among others, prohibit a company and its employees and third parties acting on its

behalf, from directly or indirectly paying, or promising to pay, anything of value to any foreign governmental employee/ official, political party, party

employee/official, or candidate for political office for the purpose of influencing an official act or decision to obtain business for the company”.

Board Report Risk Factors 40

Iveco Group provides employees periodic trainings to increase awareness about the importance of compliance topics; it has appointed a

dedicated compliance officer in some countries (e.g. France) and a “lead” professional as a point of reference to contribute to the prevention of

competition law issues. Iveco Group periodically performs general audits, in addition to those specific on suspected offences, also using external

consultants and considering fraud indicators and red flags. Moreover, a whistleblowing channel open to both employees and third parties is in

place and the Compliance Department includes a dedicated function (Investigation Governance) that manages whistleblowing reports.

Notwithstanding all the above, it is not possible to exclude the possible occurrence of fraudulent or unlawful conducts.

FINANCIAL RISKS

Exchange rate fluctuations, interest rate changes and other market risks

In the event of a rating downgrade or due to a severe macro-economic downturn, the Group might have difficulties to raise funds and might have

to pay higher interest rates; the current central bank policies of raising rates (e.g. to reduce inflation) might also lead to a higher cost of debt.

The Group also faces risks from currency devaluations (which is a downward adjustment of a country’s official exchange rate) in specific markets

such as Brazil and Argentina. Such currency devaluations could result in a diminished value of liquidity funds denominated in the currency of the

country suffering the devaluation.

Iveco Group’s counterparties could default, could be unable to pay the amounts owed to it in a timely manner or meet their performance

obligations under contractual arrangements.

Risks related to fluctuations in interest rates and exchange rates of foreign currency are mitigated by hedging strategies. Financial Services

normally implements a matching policy to offset the impact of differences in interest rates on the financed portfolio and the related liabilities.

In fact, although the Group seeks to manage its currency risk and interest rate risk, including through hedging activities, there can be no

assurance that it will be able to do so successfully, and the Group’s business, results of operations and financial position could be adversely

affected. In addition, by utilizing these instruments, the Group potentially foregoes the benefits that may result from favorable fluctuations in

currency exchange and interest rates.

In addition to the above-mentioned topics, the Group also faces the risks related to financial planning uncertainty and relevant impacts on cash

flow.

The volatility of market conditions and the subsequent possible deterioration of the customers’ financial position can cause delays in placing

orders or payments from clients. Such events, combined with the seasonality which characterizes the industry are the main causes of the

Company cash flow fluctuations, which may occur despite the mitigation plan already put in place by the Company to reduce the risk. Mitigation

actions around this risk include a defined plan to improve working capital management (specifically, inventory management), and the selection of

a new treasury management IT system, that is expected to help the Group's financial planning and execution capabilities, allowing to distribute the

cash generation along the year.

Therefore, Iveco Group is exposed to the risk of deterioration of working capital, which could lead to economic and financial impacts, as well as a

deterioration of the reputation in the industry and in the financial markets.

Difficulties in obtaining financing or refinancing existing debt

The Group’s performance will depend on, among other things, its ability to finance debt repayment obligations and planned investments from

operating cash flow, available liquidity, the renewal or refinancing of existing bank loans and/or facilities and access to bank lending or other

sources of financing like asset backed commercial paper ("ABCP") transactions. A decline in revenues could have a negative impact on the cash-

generating capacity of the Group’s operations. In addition, the Group’s investment strategies may at times require funds in excess of those

generated by the Group’s operations. Consequently, the Group could find itself in the position of having to seek additional financing and/or having

to refinance existing debt, including in unfavorable market conditions with limited availability of funding and a general increase in funding costs.

Instability in global capital markets, including market disruptions, limited liquidity and interest rate and exchange rate volatility, could affect the

Group’s access to sources of financing or increase the cost of the Group’s short and medium/long-term financing. Any difficulty in obtaining

financing on acceptable terms or at all could have a material adverse effect on the Group’s business, results of operations and financial position.

The Group’s ability to access bank lending or other sources of financing and related costs are highly dependent on, among other things, the credit

rating of the Company and its subsidiaries’ asset-backed commercial paper.

Risk relevant to Group’s leverage and debt service obligations

Considering the extent of the Group’s indebtedness, the potential consequences on operations and financial results may include that:

a.it may not be able to secure additional funds for capital expenditures, debt service requirements or general corporate purposes;

b.it may be more financially leveraged than some of the Group’s competitors, which could put the Group at a competitive disadvantage;

c.it may not be able to invest in the development or introduction of new products or new business opportunities;

d.it may not be able to adjust rapidly to changing market conditions, which may make the Group more vulnerable to a downturn in general

economic conditions; and

These risks may be exacerbated by volatility in the financial markets, which may be caused by strains on the finances and creditworthiness of

several governments and financial institutions and from concerns about global economic growth, particularly in emerging markets, as a result of,

among others, the Russia-Ukraine war and the COVID-19 pandemic. See also “Global economic conditions impact Company businesses”

Further, the Group’s indebtedness under some of its instruments including its credit facilities and derivative transactions may bear interest at

variable interest rates.

Board Report Risk Factors 41

Restrictive covenants in the Group’s debt agreements

The Group has established its own centralized treasury. In order to fund its own treasury facilities, from time to time it enters into agreements

governing the Group’s financing instruments, including bank debt. According to standard market practice, the agreements governing debt

instruments, depending on the rating status of the debtor and market conditions at the time of the execution of such financing instruments, could

contain covenants restricting the Group’s ability to, among other things: (a) incur additional indebtedness by certain subsidiaries; (b) make certain

investments; (c) enter into certain types of transactions with affiliates; (d) sell or acquire certain assets or merge with or into other companies; and/

or (e) pledge assets as security for other obligations. A breach of one or more of the covenants could result in adverse consequences that could

negatively impact the Group’s businesses, results of operations, and financial position. These adverse consequences may include the triggering

of cross-default clauses whereby other outstanding debt under other credit facilities of the Group existing at the time of such cross-acceleration,

ultimately resulting in an obligation to redeem such indebtedness, termination of existing unused commitments by the Group’s lenders, refusal by

the Group’s lenders to extend further credit under one or more of the facilities or to enter into new facilities or the lowering or modification of the

Group’s credit ratings or those of one or more of its subsidiaries.

Risk related to Financial Services Activities

As Financial Services provides financing for a significant portion of the Group’s sales worldwide, the Group’s operations and financial results could

be impacted materially should negative economic conditions affect the financial services industry.

Negative economic conditions can have an adverse effect on the financial services industry in which Financial Services operates. Financial

Services, through wholly owned financial services companies, joint ventures and third-party commercial agreements, provides financing for

material portion of the Group’s sales worldwide. Financial Services may experience credit losses that exceed its expectations and adversely affect

its financial condition and results of operations. Financial Services’ inability to access funds at cost-effective rates to support its financing activities

could have a material adverse effect on the Group’s business. Financial Services’ liquidity and ongoing profitability depend largely on timely

access to capital in order to meet future cash flow requirements and to fund operations and costs associated with engaging in diversified funding

activities.

The Group’s operations and financial results could be impacted materially should new regulations or changes in financial services regulations

affect the financial services industry. In addition, an increase in delinquencies or repossessions could adversely affect the results of Financial

Services.

TAXATION RISKS

The Group may incur additional tax expense or become subject to additional tax exposure

The Group is subject to income taxes in many jurisdictions around the world. The Group’s tax liabilities are dependent upon the location of

earnings among these different jurisdictions. The Group’s future results of operations could be adversely affected by changes in the consolidated

effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in the Group’s overall

profitability, changes in tax legislation and rates, changes in generally accepted accounting principles and changes in the valuation of deferred tax

assets and liabilities. If the Group’s effective tax rate were to increase, or if the ultimate determination of the Group’s taxes owed is for an amount

in excess of amounts previously accrued or paid, the Group’s operating results, cash flows, and financial position could be adversely affected. For

further information, see Note 9 “Income tax (expense) benefit” to the Consolidated Financial Statements.

In addition, tax laws are complex and subject to varied and subjective interpretive decisions. As the Group will periodically be subject to tax audits

aimed at assessing the Group’s compliance with direct and indirect taxes, the tax authorities may not agree with the Group’s interpretations of, or

the positions that the Group has taken or intends to take on, tax laws applicable to the Group’s ordinary activities and extraordinary transactions.

In case of challenges by the tax authorities to the Group’s interpretations, the Group could face long tax proceedings that could result in the

payment of additional tax, interest and penalties, which could have a material adverse effect on the Group’s operating results, business and

financial condition.

Board Report Risk Factors 42

BUSINESS OVERVIEW

GENERAL

Iveco Group is the holding company of a leading global capital goods group engaged in the design, production, marketing, sale, servicing, and

financing of trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other uses, as well as combustion engines,

alternative propulsion systems, transmissions and axles for those vehicles and engines and alternative propulsion systems for agricultural and

construction equipment and power generation applications. The Group has manufacturing, commercial and financial services companies located

in 35 countries and a commercial presence in approximately 41 countries.

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, city-buses, commuter buses under the IVECO BUS (previously Iveco Irisbus)

and HEULIEZ BUS brands, quarry and mining equipment under the IVECO 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.

Net revenues by segment in the years ended 31 December 2022 and 2021 were as follows:


(€ million)	2022	2021
Commercial and Specialty Vehicles	12,100	10,318
Powertrain	3,960	3,750
Eliminations and Other	(1,895)	(1,548)
Total of Industrial Activities	14,165	12,520
Financial Services	281	195
Eliminations and Other	(89)	(64)
Total for the Group	14,357	12,651

Net revenues by region in the years ended 31 December 2022 and 2021 were as follows:


(€ million)	2022	2021
Europe	10,316	9,403
South America	1,853	1,174
North America	322	238
Rest of World	1,866	1,836
Total	14,357	12,651

INDUSTRY OVERVIEW

Commercial and Specialty Vehicles

Trucks and Commercial Vehicles

The world truck market is generally divided into two segments: Light Commercial Vehicles (“LCV”) market (gross vehicle weight (“GVW”) 3.5-7.49

metric tons), and Medium and Heavy (“M&H”) truck market (GVW above 7.5 metric tons). The M&H segment is characterized by a higher level of

engineering specialization due to the technologies and production systems utilized, while the LCV segment has many engineering and design

characteristics in common with the automobile industry. In addition, operators of M&H trucks often require vehicles with a higher degree of

customization than the more standardized products that serve the LCV market. Customers generally purchase heavy trucks for one of three

primary uses: long distance haulage, construction haulage, and/or distribution.

The regional variation in demand for trucks and commercial vehicles is influenced by differing economic conditions, levels of infrastructure

Board Report Business Overview 43

development, and geographic region, all of which lead to differing transport requirements.

M&H truck demand tends to be closely aligned with the general economic cycle and the capital investment cycle including the general level of

interest rates and, in certain countries, governmental subsidy programs, particularly in more developed markets such as Europe, North America

and Japan, as economic growth provides increased demand for haulage services and an incentive for transporters to invest in more efficient, less

polluting, higher capacity vehicles and renew vehicle fleets. The product life cycle for M&H trucks typically covers a seven to ten-year period.

Although economic cycles have a significant influence on demand for M&H trucks in emerging economies, the processes of industrialization and

infrastructure development have generally driven long-term growth trends in these countries. As a country’s economy becomes more

industrialized and its infrastructure develops, transport needs tend to grow in response to increases in production and consumption. Developing

economies, however, tend to display volatility in short-term demand resulting from government intervention, changes in the availability of financial

resources and protectionist trade policies. In developing markets, demand for M&H trucks increases when it becomes more cost-effective to

transport heavier loads, especially as the infrastructure, primarily roads and bridges, becomes capable of supporting heavier trucks. At the same

time, the need to transport goods tends to increase in these markets, resulting in increased demand for LCV.

Industry forecasts indicate that transportation of goods by road, currently the predominant mode of transport, will remain so for the foreseeable

future. Furthermore, the Group also offers personalized aftersales customer assistance programs that provide a wide range of modular and

flexible maintenance and repair contracts, as well as warranty extension services, to meet a variety of customers’ needs and to support the

vehicle’s value over time: demand for those services, as well as for parts, is a function of the number of vehicles in use. Although demand for new

commercial vehicles tends to decrease during periods of economic stagnation or recession, the demand for those services is historically less

volatile than the new vehicle market and, therefore, helps limit the impact of declines in new vehicle sales on the operating results of full-line

manufacturers, such as Commercial and Specialty Vehicles.

Commercial vehicles markets are subject to intense competition based on initial sales price, cost and performance of vehicles over their life cycle

(i.e., purchase price, operating and maintenance costs and residual value of the vehicle at the end of its useful life), services and service-related

products and the availability of financing options. High reliability and low variable costs contribute to customer profitability over the life of the

vehicle and are usually important factors in an operator’s purchase decision. Additional competitive factors include the manufacturer’s ability to

address customer transport requirements, driver safety, comfort, and brand loyalty through vehicle design.

Demand for trucks varies seasonally by region and by product class. In Europe, the peak retail demand occurs in the second and fourth quarters

due to key fleet customer demands and customer budgetary cycles. In South America, demand is relatively stable throughout the year except for

increased demand for heavy trucks in the first and fourth quarters from customers who transport foodstuffs. In Rest of World, sales tend to be

higher in the second and fourth quarters due to local holiday periods.

Although the Group believes that diesel remains, for the foreseeable future, the key fuel source for commercial vehicles and industrial equipment

in general, the adoption of new engine technological solutions and growing public opinion in favor of more environmentally friendly solutions are

pushing for increased penetration of both alternative and renewable fuels (such as compressed natural gas (“CNG”), liquefied natural gas (“LNG”),

methane and hydrogen) and full electric vehicles.

The car industry is leading autonomous vehicle development, but commercial vehicles are also making advances in platooning and autonomous

technologies. The Group expects this development to intensify. The Group believes that the growing automation in transportation and

infrastructure solutions through the use of self-driving vehicles will also allow the industry to provide greater safety, fuel savings, and transport

efficiency.

Buses

The global bus business is organized by mission, from city and intercity transport to tourism purposes, with a capacity ranging from 7 to 150

seated/standing passengers. IVECO BUS (previously Iveco Irisbus) and HEULIEZ BUS target markets include urban and intercity buses.

Operators in this industry include three types of manufacturers: those specialized in providing chassis to bodybuilders, those that build bodies on

chassis produced by third parties, and those, like IVECO BUS, that produce the entire vehicle.

The primary customers of the bus segment are tour and intercity bus service operators, while the principal customers of the city bus segment are

the transport authorities in urban areas.

Deregulation and privatization of transport services in many markets have favored concentration towards large private companies operating in

one country, in more than one neighboring country, or at an international level. Demand has increased for highly standardized, high-use products

for large fleets, with financing and maintenance agreements or kilometric pricing. Deregulation and privatization have also increased competition

between large transport service companies, raising the level of vehicle use and increasing the choice of brands for operators in the market.

Sales for urban and intercity buses are generally higher in the second half of the year, due to public entities budgeting processes, tender rules,

and bus production lead-time.

Powertrain

The dynamics of the industrial powertrain business vary across the different market segments in which the various propulsion systems are used.

For vehicle and equipment applications, product development is driven by regulatory requirements (i.e., legislation on pollutant emissions and,

increasingly, CO2 emissions), as well as the need to reduce total operating costs: customers are seeking more efficient propulsion systems that

enable lower total cost of ownership and higher productivity.

For On-road applications in developed markets, where economy and infrastructure drive demand for local and haulage transportation, demand for

Board Report Business Overview 44

engines is driven by general economic conditions, capital investment, industrialization, and infrastructure developments.

In the bus market, engine demand is increasingly influenced by the environmental policies of governments and local authorities (i.e., requirements

for natural gas, hybrid and electric solutions).

Demand for Off-road applications in the agricultural industry is influenced by many factors, including the price of agricultural commodities and the

relative level of new and used inventories, the profitability of agricultural enterprises, net farm income, the demand for food products, agricultural

policies, as well as climatic conditions. At the same time, the construction equipment business is driven by general economic factors and the level

of public investment in infrastructure, which affects the need for replacement of old equipment and investment in more innovative solutions to

boost productivity.

Increasingly stringent emission regulations in Europe, the U.S. and Asia represent an opportunity for Powertrain to gain a competitive advantage

through technological solutions developed for engines and after-treatment systems (such as High Efficiency SCR technology). Alternative fuels

represent a viable alternative to diesel for transport vehicles, as they are more environment-friendly and offer better fuel economy than diesel

while performing comparably to diesel engines (e.g. LNG for Buses and Commercial Vehicles). Increasing demand for alternative propulsion

systems (such as electrified powertrain or fuel cell) is expected to continue, as related technologies are growing quickly and will offer business

opportunities in the industrial sector. The increasing trend among mid-sized original equipment manufacturers ("OEMs") to outsource engine

development, due to the significant research and development expenditures required to meet the new emission requirements, presents an

opportunity for Powertrain to increase sales to third party customers.

The Company believes that FPT Industrial provides the Group, as a whole, with strategic independence in a key area where competition is

particularly intense and further challenges, driven by increasingly stringent regulations, are expected.

COMPETITION

The industries in which the Group operates are highly competitive. The Group believes that it has many competitive strengths that will enable it to

improve its position in markets where it is already well established while it directs additional resources to markets and products with high growth

potential.

For Commercial and Specialty Vehicles, the Group competes with: (i) large global full-line equipment manufacturers with a presence in every

market and a broad range of products that cover most customer needs, (ii) manufacturers who are product specialists focused on particular

industry segments on either a global or regional basis, (iii) regional full-line manufacturers, some of which are expanding worldwide to build a

global presence, (iv) local, low-cost manufacturers in individual markets, particularly in emerging markets such as Eastern Europe and China. For

Powertrain, the Group competes with (i) pure non-captive players (i.e. powertrain manufacturers selling their products to third parties) and (ii)

OEMs producing powertrains by themselves.

The Group's competitive strengths include well-recognized brands, a full range of competitive products and features, a strong global presence,

and distribution and customer service network. There are multiple factors that influence a buyer’s choice of industrial equipment. These factors

include the strength and quality of the distribution network, brand loyalty, product features, quality and performance, availability of a full product

range, pricing, technological innovations, product availability, financing terms, parts and warranty programs, resale value and customer service

and satisfaction. The ability to meet or exceed applicable engine emissions standards as they take effect is also a key competitive factor,

particularly in those markets where such standards are the subject of frequent legislative or regulatory scrutiny and change, such as Europe and

North America. The Group continually seeks to improve in each of these areas but focus primarily on providing high-quality and high-value

products and supporting those products through the Group's dealer networks. Customers’ perceptions of product value in terms of productivity,

reliability, resale value and dealer support are formed over many years. Buyers tend to favor brands based on experience with the product and

the dealer.

The efficiency of the Group's manufacturing, logistic and scheduling systems are dependent on forecasts of industry volumes and the Group's

anticipated share of industry sales, which is predicated on the Group's ability to compete successfully with others in the marketplace. The Group

competes based on product performance, customer service, quality, innovation and price. The environment remains competitive from a pricing

standpoint, and actions taken to maintain the Group's competitive position in the current challenging economic environment could result in lower

than anticipated price realization. The ability of the Group supply chain and manufacturing system to timely deliver finished goods is also critical to

meeting customer expectations. Failure to do so might imply losses of market share and competitiveness.

The Group's principal competitors in the commercial and specialty vehicles market are Daimler Truck, the Traton Group, the Stellantis Group,

Paccar Inc., the Volvo Group, Rosenbauer International AG, Rheinmetall AG, Oshkosh Corporation.

The principal competitors of Powertrain include Cummins Inc., Daimler Group, Deere & Company, Deutz AG, Traton Group, Volvo Group, Yanmar

Co., Ltd, Caterpillar/Perkins and Weichai Power Co. Ltd.

Board Report Business Overview 45

PRODUCTS

Commercial and Specialty Vehicles

Trucks and Commercial Vehicles (IVECO and IVECO ASTRA)

Under the IVECO brand, the Group produces a range of light, medium, and heavy trucks and commercial vehicles for both on-road and off-road

use, with approximately 3,700 different models available. The Group's key products include the Daily, a vehicle that covers the 3.5 – 7.5 ton

vehicle weight range, the Eurocargo, a vehicle that covers the 7.5 – 16 ton range, and the Way Range, the heavy product offers above 16 ton that

was completely renewed starting from 2019. The heavy vehicles portfolio includes the S-Way (for long haulage and distribution), the X-Way

(dedicated to construction logistics and municipalities), and the T-Way for off-road applications. The product offering is complemented by a series

of aftersales and used vehicle assistance services.

Light vehicles include on-road vans and chassis cabs used for short and medium distance transportation and distribution of goods, and off-road

trucks for use in quarries and other work sites. The Group has an estimated 25% market share in Europe in professional heavy cab-chassis

(above 5 ton GVW). The Group also offers shuttle vehicles used by public transportation authorities, tourist operators, hotels and sports clubs and

campers for recreational travel.

In 2022 the new Daily Electric was launched at IAA in Hannover and first deliveries will start in Q1 2023.

The M&H vehicle product lines include on-road chassis cabs designed for medium and long-distance hauling and distribution. Medium Gross

Vehicle Weight ("GVW") off-road models are typically used for building roads, winter road maintenance, construction, transportation, maintenance

of power lines and other installations in off-road areas, civil protection and roadside emergency service. Heavy GVW off-road models are

designed to operate in virtually any climate and on any terrain and are typically used to transport construction plant materials, transport and mix

concrete, maintain roads in winter and transport exceptionally heavy loads.

The Group offers ecological diesel and natural gas engines on its entire range of vehicles. The Group continues to develop engines with specific

components and configurations optimized for use with CNG and LNG. The Group has developed a comprehensive roadmap for the introduction in

the market of a complete range of zero emission vehicles (from Light to Heavy).

Under the IVECO ASTRA brand, the Group builds vehicles that can enter otherwise inaccessible quarries and mines and move large quantities of

material, such as rock or mud, and perform heavy-duty tasks in extreme climatic conditions. The Group's product range for IVECO ASTRA

includes mining and construction vehicles, rigid and articulated dump trucks and other special vehicles.

Iveco S.p.A. and Nikola Corporation (“Nikola”), a U.S. based leader in fuel cell truck technology development whose common shares are listed on

NASDAQ, are jointly developing cab over battery-electric vehicle (“BEV”) and hydrogen fuel cell electric vehicle (“FCEV”) trucks, which will be

manufactured in Europe through a legal entity 50/50 owned by Iveco S.p.A. and Nikola Corporation, and in the U.S. by Nikola Corporation. The

agreements entered into by Iveco S.p.A. and Nikola to establish the European legal entity includes two licenses granted by the two shareholders

to allow this legal entity to manufacture BEVs and at a later stage FCEVs. Furthermore, under these agreements, Iveco S.p.A. will be the

manufacturer for any EU emission-related purposes of the vehicles produced and distributed in EU by this European legal entity and will be

responsible for their distribution in the EU different jurisdictions. The set-up activities of the legal entity are progressing according to internal

schedules and production of first samples started in the fourth quarter of 2021.

The new Nikola Tre BEV artic 4x2 was officially launched during last IAA in Hannover in September 2022 and first customer deliveries in Europe

will start in Q4 2023. The Nikola Tre Fuel Cell will follow after about one year with first deliveries forecasted for 2024.

Buses (IVECO BUS and HEULIEZ BUS)

Under the IVECO BUS and HEULIEZ BUS brands, the Group offers local and inter-city commuter buses, minibuses, school buses and tourism

coaches, and is a leader in inter-city buses as well as in low and zero emissions solutions. IVECO BUS is one of the major European

manufacturers in the passenger transport sector and is expanding its activities globally. HEULIEZ BUS produces city buses for public

transportation and is a leader in France for the urban bus market. The Group has a competitive footprint in Europe, the Middle East and Africa

and is looking to grow in Latin America through portfolio expansion. The Group’s bus segment also benefits from sharing technology with IVECO

trucks and commercial vehicles.

Specialty Vehicles (MAGIRUS and IDV)

Under the MAGIRUS brand, the Group manufactures vehicles designed to respond to natural disasters and civil emergencies, such as fires,

floods, earthquakes and explosions, using new digital and innovative technologies. IDV develops and manufactures specialized vehicles for

defense missions and civil protection.

Powertrain

Powertrain is dedicated to the design, development, manufacture and sale of combustion engines, alternative propulsion systems, transmissions,

and axles under the FPT Industrial brand.

FPT Industrial has a wide product offering, including six engine ranges from 42 to 1,000 hp and transmissions with torque up to 500 Nm, and front

and rear axles from 2.45 to 32 ton GAW (Gross Axle Weight). Furthermore, FPT Industrial offers the most complete Natural Gas engines line-up

on the market with power outputs ranging from 50 to 520 hp. FPT Industrial's product portfolio includes engines for buses and for light, medium

and heavy commercial vehicles, engines for industrial machinery including construction, agricultural and industrial equipment, engines for special-

Board Report Business Overview 46

purpose vehicles and engines for power generation units and marine applications. A dedicated ePowertrain division is accelerating the path

towards net zero-emissions mobility, with electric drivelines, battery packs, and battery management systems. This extensive offering, and its

strong focus on R&D, makes FPT Industrial a world leader in industrial powertrains and solutions.

Launches: During 2022, FPT Industrial collected a series of product launches and news. Early January, the Brand joined CES 2022 in Las Vegas

(Nevada), the world’s most innovative trade fair, to showcase its revolutionary concepts for future mobility and sustainable industrial transport. In

its stand FPT Industrial exhibited: two electric axles suitable for on-road heavy duty, developed thanks to the joint-venture between Nikola, IVECO

and FPT Industrial, for the version of the NIKOLA TRE BEV and a battery pack with a Battery Management System customized to meet customer

needs. The F28 Natural Gas engine on the first vineyard tractor to run on bio-methane and the DeepSpeed Jet, a turn-key solution addressing the

challenge of electrification in marine propulsion - fruit of the collaboration between FPT Industrial and the Italian startup Sealence - were also

exhibited. Last but not least, the new Smart Hybrid Hub, featuring the world's first variable-speed, hybrid, multi-mode genset concept - developed

entirely by FPT Industrial - was displayed. FPT Industrial’s partner in this project was Bennamann Ltd., a British agricultural technology company

in the field of clean energy. Late March, during the Brazilian Tecnoshow Comigo, held in Rio Verde, the new HORSCH spray called Leeb VL –

equipped with FPT N67 engine – was launched in Brazil.

In the second quarter, FPT Industrial and its partner and distributor Frydenbø Industri AS attended Nor-Shipping 2022, the biennial fair dedicated

to marine technology innovation and sustainable solutions held at NOVA Spektrum in Lillestrøm (Oslo, Norway), where the Keel Cooling

configuration of the C16 600 marine engine for commercial vessels was presented, which is the solution for effective cooling of engines operating

in sandy, muddy and shallow water. In addition, FPT Industrial presented a full range of solutions to implement a zero-carbon footprint agricultural

virtuous cycle at Agrishow 2022, which took place in Ribeirão Preto (São Paulo, Brazil). The major new launch during the fair was the

biomethane-powered irrigation motor pump for applications such as drainage and agricultural irrigation, developed with partner TMA and

equipped with the N67 Natural Gas engine. In May, FPT Industrial returned to the United States as diamond premier sponsor and exhibitor at

POWERGEN International in Dallas (Texas), the largest network and business hub for power generators, displaying its cutting-edge Stage V/

EPA Tier 4 Final engine technology. On that occasion, FPT Industrial’s stand showcased its full Stage V/EPA Tier 4 Final range, the N67 Tier 3,

and the engine of the future Cursor X. Late June, during the World Biogas Expo 2022, the world’s leading trade show dedicated to the biogas

industry, held in Birmingham (UK), in its stand the Brand showcased the solution for Power Generation fueled by renewable resources: the genset

concept Smart Hybrid Hub. FPT Industrial’s partner in this project was Bennamann Ltd.

In third quarter, during the BEYOND - Iveco Group Days, an important carbon-neutral event held in July at the Officine Grandi Riparazioni

("OGR") in Turin (Italy), FPT Industrial organized two roundtables on propulsion. In that occasion, the Brand and its partner Blue Energy Motors

("BEM") signed an agreement with the goal of deploying the very first LNG trucks in India, powered by FPT N67 NG BSVI compliant engines,

which took shape in the first natural gas truck rolled off the production line. In September, FPT Industrial announced the acquisition of a minority

stake in BEM. In addition, in Chakan, Pune, Blue Energy Motors launched India’s first manufacturing facility for the production of Liquified Natural

Gas ("LNG")-fuelled trucks, whose first models were powered by FPT N67 NG engines. In the same month, FPT Industrial deployed a full fleet of

innovations, champions and award-winning products from its Marine Range at the Cannes Yachting Festival 2022, held in Cannes (France). At

its booth, the Brand indeed revealed the next step in its marine hybridization route: its own parallel hybrid electric marine propulsion system, one

of the key results of its collaboration with Vulkan Hybrid Architect. FPT Industrial also showed off the Guinness World Speed Record holding

diesel powerboat engine, the C16 1000, and the double design award-winning Red Horizon Integrated Marine Control System. In the same days,

the Brand was - for the first time - an exhibitor at SMM, the leading international trade fair for the maritime industry held in Hamburg (Germany).

For its debut, together with its renewed marine propulsion line, FPT Industrial showcased also a comprehensive presentation of its connected

customer service approach, as well as its worldwide sales and service network. Late September, with its exemplary multi-energy approach

towards sustainable on-road propulsion, FPT Industrial took part at IAA Transportation 2022, held in Hannover (Germany). On display in its

stand there was the XC13 FPT Industrial’s first multi-fuel single base engine: from diesel to natural gas, including biomethane, hydrogen and

renewable fuels: the base engine was designed with multiple versions to offer maximum component standardization and easy integration into the

final product. FPT Industrial also displayed its zero-emissions technologies at IAA, with a primary focus on eAxles, central drive systems, modular

battery packs and battery management systems. Just a week after the launch at IAA, FPT Industrial presented the first concept application of the

new XC13 hydrogen combustion engine and a new collaboration with a partner of excellence PRINOTH (Bolzano, Italy), a world leader in the

production of snow groomers and tracked vehicles, who celebrated its 60th Anniversary on September showcasing all its historical models and its

most innovative ones, including the LEITWOLF h2MOTION, the powered snow groomer featuring the FPT XC13 hydrogen engine.

The fourth quarter was also very strong for FPT Industrial. The Brand inaugurated its new ePowertrain - plant in Turin, the first totally Carbon-

neutral Iveco Group plant, a total area of 15,000 square-metres where products are handled, assembled and tested through the extensive use of

Industry 4.0 technologies. The factory is fully dedicated to the production of its electric drivetrain range including electric axles, electric central

drive applications and battery packs for light commercial vehicles, minibus and buses. This opening marked another important milestone for the

brand in its decarbonization path and for its strategy of achieving net-zero emissions for its products and of all its industrial activities. The same

month, FPT Industrial took part in Bauma, the world’s leading trade fair for the construction sector, held in Munich (Germany). Debut models,

proven bestsellers and environmentally friendly powertrain solutions were the highlights of a bolstered engine line-up. The new Stage V engine

models, the complete range of power units, the new version of the F28 compact hybrid solution, and the new battery pack attracted visitors to the

Brand's stand. At the beginning of November, FPT Industrial showcased its innovative and environmentally friendly "core" power at CIIE (China

International Import Expo), in Shanghai (China). At CIIE, the Brand demonstrated its technological development achievements and global

manufacturing quality, together with its comprehensive and increasing commitment to sustainability in all of its products and industrial processes.

The Brand displayed its cutting-edge solutions for the mobility of tomorrow and its innovative technologies, such as the power and torque leader

F1C Euro VI Step E engine and the concept Cursor X. Present in South America, FPT Industrial attended Fenatran 2022, one of the most

important transport trade shows in Brazil. In its stand the Brand showcased a complete range of solutions, covering the needs of all commercial

Board Report Business Overview 47

vehicle classes and including innovative and new products designed to increase efficiency, promote the use of renewable fuels, and open the

road to electric mobility. In November, FPT Industrial attended EIMA International 2022, one of the leading European trade fairs for agricultural

equipment. Through an extended offering of Stage V engines and PowerPacks, biomethane and hybrid powertrains, plus new off-road battery

pack, FPT Industrial is providing agricultural equipment manufacturers with a complete choice to power machines of every size with the best

energy mix solutions. In the same month, FPT Industrial attended METSTRADE Show, the world’s largest B2B trade exhibition of marine

equipment, materials and systems. Sustainability, efficiency, hybrid propulsion solutions and new collaborations were the main themes of the

Brand’s presence at RAI Amsterdam Europaplein (The Netherlands). Among the solutions proposed by FPT Industrial were those developed in

collaboration with Frydenbø Industri AS Marine, the authorized distributor of FPT Industrial's products in Norway and Sweden, that met the IMO

Tier III emission requirements. The C90 650 EVO Hybrid, the C16 600 Keel Cooling and the C90 410 were also on display. Furthermore, Red

Horizon could not be missing. To remark the FPT Industrial’s decarbonization path for agriculture, during the CNH Industrial Tech Day event,

held in Phoenix (Arizona, USA) in December, New Holland Agriculture unveiled the new T7 Methane Power LNG (Liquified Natural Gas) pre-

production prototype tractor, the world’s first LNG tractor powered by FPT Industrial’s N67 NG. FPT Industrial concluded in glory a year-long cycle

of events and various initiatives, taking part in the 45th edition of the DAKAR Rally as co-sponsor and supplier of Cursor 13 engines especially

prepared for the IVECO Powerstar trucks of the two new teams, Boss Machinery Team De Rooy IVECO, that took first place overall and Eurol

Team De Rooy IVECO, that achieved third and fourth places. The DAKAR Rally was the world’s most challenging rally raid held in Saudi Arabia.

During the year, in line with its commitment and shared brand values, FPT Industrial reconfirmed its engagement in sustainability through

contemporary art by becoming Technical Sponsor of the Italian Pavilion at the 59th International Art Exhibition - La Biennale di Venezia.

The Technical sponsorship of the Italian Pavilion was promoted by the Directorate-General for Contemporary Creativity – Italian Ministry of

Culture, which stars artist Gian Maria Tosatti with an environmental installation by Eugenio Viola, was a major opportunity for the company to

once more support Italian excellence in the prestigious international setting of the Art Biennale 2022, while consolidating its focus on

environmental, ethical and social issues. In fact, the exhibition, entitled Storia della Notte e Destino delle Comete (History of Night and Destiny of

Comets) invited the visitors into a narrative experience that declared the urgent need to reflect on sustainable ecologies; at the end of the

dialogical experiential pathway, it was featured the engine loaned for the project by FPT Industrial, as a positive message of hope about the

destiny awaiting humanity. In March, FPT Industrial and its partner Slow Food inaugurated the first Sana Slow Wine Fair, the trade fair for good,

clean and fair wine, that was held at BolognaFiere exhibition center in Bologna, Italy, where the worldwide members of the Slow Wine Coalition

met and compared notes. FPT Industrial - the main sponsor of Sana Slow Wine Fair - displayed at its stand the F34 Stage V engine. In 2022, FPT

Industrial presented also the new special project called “Behind Food” along with its latest engines at the World Ag Expo 2022, the world’s

largest agricultural exhibition, in Tulare, California. The project was an initiative to promote sustainable agriculture, showing how innovative

powertrain technologies are part of a chain that takes high-quality, healthy products from the field to the table, in collaboration with Eataly, the

world’s largest artisanal Italian food and beverage marketplace. As in 2021, for the second consecutive year, in September, FPT Industrial took a

leading role at the Grape Harvest Festival in the evocative setting of the Fontanafredda wine estate in Serralunga d’Alba (Piedmont region,

Italy). The event included guided visits, tastings of dishes, concerts, and the traditional crushing of the grapes: one of the highlights of the tour

was the cru Vigna La Rosa, whose Barolo wine features in Wine Spectator’s Top 100. Here the Nebbiolo grapes are grown and harvested with

the aid of a New Holland TK Methane Power crawler tractor with biomethane-fueled sustainable FPT F28 NG engine.

Deliveries: In 2022, FPT Industrial continued its strong partnership with the Aprilia Racing Team in the MotoGP™ World Championship. The two

companies shared a focus on technology and innovation that let them improve both their product portfolios and production processes. Throughout

the year MotoGP season, FPT Industrial supported the Aprilia Racing Team on the track with two IVECO S-WAY trucks powered by the Brand’s

top-of-the-range Cursor 13 engines. In January, thanks to the contract based on the industrial and commercial agreement signed in 2019 with

Microvast Holdings, Inc. (NASDAQ: MVST) - the leading global supplier of next generation battery technologies for commercial and special

vehicles - FPT Industrial started supplying the electric propulsion system for the new Crossway Low Entry, both city and intercity buses,

manufactured by IVECO BUS. In February, The Brand became also the new engine supplier for Volkswagen Caminhões e Ônibus, a Brazilian

company, which produces commercial vehicles under the Volkswagen brand. In particular, the new F1C Euro VI 156 hp engine was chosen to

equip the Express Delivery+ light truck thanks to its power, performance and fuel-efficiency figures. Moreover, FPT Industrial continued to confirm

its solid position in off-road and Power Generator applications with the new “E-Series” crawler excavator from CASE Construction Equipment,

powered by the FPT’s Stage V NEF engines. In October, in Rovigo (Italy) the FPT F28 Stage V diesel engine became once again the protagonist

thanks to the new range of Carraro Agricube Pro specialized vineyard and orchard tractors. In addition, FPT Industrial and CNH Industrial

joined the WeWorld charity organization in their effort to mitigate the effects of climate change. The focus of the partnership was Mozambique, a

country frequently subject to extreme weather events. The goal was to create School Disaster Risk Management Committees (SDRM) and to

renovate several classrooms. For this project, FPT Industrial donated an N45 genset to the Civil Protection (INGD).

Prizes and achievements: In June 2022, FPT Industrial and its employees celebrated the milestone of 150,000 engines manufactured to date

in the Argentinian plant of Cordoba and in October the Brand celebrated also 10 years of intense work aimed at the development of industry in

Argentina, where FPT Industrial plant produces the 9, 10, 13 Cursor engines and the NEF range for transport and agriculture for export in South

America. Since its opening in 2012, the factory stood out for the level of training and commitment of its team. In 2018, the plant achieved Bronze

level in the WCM (World Class Manufacturing) and in 2022 the Argentinian plant became the reference point of Iveco Group for DOT (Driving

Operations Together), the new results oriented program to optimize the Company’s operations worldwide and drive process sustainability. In

addition, FPT Industrial and Mitsubishi Fuso Truck and Bus Corporation celebrated their uninterrupted 15-year partnership, a

collaboration that grew up even bigger following an agreement to expand and extend the contract between the two companies until 2030. The

partnership contract was first signed in 2007 and since 2010 FPT Industrial delivered over 500,000 F1C engines to Mitsubishi Fuso. In July FPT

Industrial achieved a new milestone with its 10,000 ATS (After-Treatment System), which was produced at its Chongqing ATS plant in

China. In the next month, the two millionth NEF engine rolled off the production line at the FPT Industrial plant in Turin, Italy. In

November, there was double celebration for FPT Industrial at EIMA International 2022 trade in Bologna (Italy). The New Holland T4.120F -

Board Report Business Overview 48

powered by F36 engine - and the McCormick X6.414 P6-Drive - powered by NEF45 engine - were awarded as “Tractor of the Year®” 2023

respectively in the Best of Specialized and Best Utility categories.

SALES AND DISTRIBUTION

Commercial and Specialty Vehicles

Commercial and Specialty Vehicles’ worldwide distribution strategy is based on a network of independent dealers, in addition to its own

dealerships and branches. As of 31 December 2022, Commercial and Specialty Vehicles had approximately 655 dealers globally (of which 16

were directly owned by the Group and 11 were branches). All dealers sell spare parts for the relevant vehicles. Commercial and Specialty

Vehicles bolsters its distribution strategy by offering incentives to its dealers based on target achievements for sales of new vehicles and parts

and providing high quality aftersales services.

As of 31 December 2022, Commercial and Specialty Vehicles had approximately 5,000 sales and/or service network points. In addition to

Commercial and Specialty Vehicles' standard one-year full vehicle warranty and two-year powertrain warranty, Commercial and Specialty

Vehicles offers personalized aftersales customer assistance programs.

A key element of Commercial and Specialty Vehicles’ growth strategy is its distribution network. In Western Europe, Eastern Europe, Türkiye,

Australia and Latin America, continued consolidation of the distribution network is aimed at improving service to customers (such as the

implementation of the Truck Stations network of specialized workshops), increasing profitability and reducing overall distribution costs. In Africa

and the Middle East, the distribution network is being expanded to fully exploit growth in these markets.

In the U.K., Commercial and Specialty Vehicles is one of the OEMs that sells trucks and other commercial vehicles to companies which offer

commercial vehicle rental solutions, such as Ryder, Fraikin and Burntree, among others.

Powertrain

Powertrain provides propulsion solution products to Commercial and Specialty Vehicles, as well as to Agriculture and Construction segments of

CNH Industrial. Additionally, Powertrain’s commercial strategy and business model are focused on the development of a portfolio of medium-to-

large OEM customers. Powertrain has entered into long-term supply agreements with a growing number of third-party customers.

Powertrain has a network of dealers and service points that cover its entire product range and related market sectors. Large OEMs use their own

internal networks to obtain parts and services for purchased equipment, while small OEMs frequently rely on us for delivery of parts and services

through Powertrain’s worldwide network.

PRICING AND PROMOTION

The retail price of any particular piece of equipment or vehicle is determined by the individual dealer or distributor and generally depends on

market conditions, features, options and, potentially, regulatory requirements. Retail sale prices may differ from the manufacturer-suggested list

prices, as a result of different factors (markets' demand; customers' specific requirements; local market conditions; general economic conditions;

access to financing; etc.). The Group sells most of the Group's portfolio to its dealers and distributors at wholesale prices that reflect a discount

from the manufacturer-suggested list price. In the ordinary course of business, the Group engages in promotional campaigns that may include

price incentives or preferential financing terms with respect to the purchase of certain products.

The Group regularly advertises its products to transporters, distributors and dealers in each of its major markets. To reach the Group's target

audience, the Group uses a combination of general media, specialized design and trade magazines, the Internet and direct mail. The Group also

regularly participates in major international and national trade shows and engage in co-operative advertising programs with distributors and

dealers. The promotion strategy for each brand varies according to the target customers for that brand.

PARTS AND SERVICES

The quality and timely availability of parts and services are important competitive factors for each of the Group's businesses, as they are

significant elements in overall dealer and customer satisfaction and important considerations in a customer’s original equipment purchase

decision. The Group supplies parts, many of which are proprietary, to support items in the current product line as well as for products the Group

has sold in the past. The Group also offers personalized aftersales customer assistance programs that provide a wide range of modular and

flexible maintenance and repair contracts, as well as warranty extension services, to meet a variety of customers’ needs and to support the

vehicle’s value over time. Many of the Group's products can have economically productive lives of up to 10 years when properly maintained, and

each unit has the potential to produce a long-term parts and services revenue stream for the Group and its dealers.

Connectivity and digitalization play an important part in the Company strategy, supporting both sustainability goals and to pursuing service

excellence. More than 80,000 assets are monitored 24/7 in FPT Industrial’s Control Room in Turin headquarters, where aftersales experts and

engineers work side by side to develop and release in field algorithms that increase Customer uptime and reduce fuel consumption and emissions

through FPT Industrial Proactive Assistance Service, part of FPT Industrial Connect portfolio of services.

In the unlikely event of a breakdown related to one of brand products, FPT Industrial and its network increasingly intervene in field through virtual

field visits, saving time and fuel as the goal of re-starting customer operations is reached guiding the field technician through a tested Remote

Support platform, now operating since 2019.

As of 31 December 2022, the Group operated and administered 22 parts depots worldwide either directly, through a joint venture, or through

Board Report Business Overview 49

arrangements with warehouse service providers. This network includes 9 in Europe, 2 in South America, 1 in North America, and 10 in Rest of

World. The network includes 19 that support Commercial and Specialty Vehicles and 6 that support Powertrain. These depots supply parts to

dealers and distributors, which are responsible for sales to retail customers. The Group's parts depots and parts delivery systems provide

customers with access to substantially all the parts required to support Group's products.

COMMERCIAL AND/OR MANUFACTURING COLLABORATIONS

As part of a strategy to enter and expand in new markets, the Group is involved in several commercial and/or manufacturing collaborations

relating to Industrial Activities business, including the following:

▪in China, the Group controls 60.0% of SAIC Fiat Powertrain Hongyan Ltd (“SFH”), a manufacturing company located in Chongqing, which

produces diesel engines under license from us to be sold in the Chinese market and to be exported to Europe, the U.S. and Latin America;

▪in Germany, the Group owns 50.0% of Nikola Iveco Europe GmbH, which will manufacture cab over battery-electric vehicle and hydrogen fuel

cell electric vehicle trucks, jointly developed by Iveco S.p.A. and Nikola Corporation.

FINANCIAL SERVICES

Financial Services offers a range of financial products and services to dealers, importers, customers and suppliers in the various regions in which

the Group's Industrial Activities segments operate. The principal products offered directly or through joint ventures with banks are retail loan, lease

financing and operating lease for the purchase or lease of new and used vehicles, wholesale financing to dealers and factoring of trade

receivables from legal entities of the Group. Wholesale financing consists primarily of dealer floor plan financing and gives the dealers the ability

to maintain a representative inventory of new products. In addition, Financial Services directly or through joint ventures with banks provides

financing to dealers for used vehicles taken in trade, vehicles utilized in dealer-owned rental yards, parts inventory, working capital and other

financing needs. As a captive finance business, Financial Services is reliant on and supports the operations of Commercial and Specialty

Vehicles, and Powertrain, their dealers and customers.

Financial Services supports the growth of Industrial Activities by developing and structuring financial products with the objective of increasing

vehicle sales as well as profitability and customer loyalty. Financial Services’ strategy is to grow a core financing business to support the sale of

the Group's vehicles while at the same time maintaining its portfolio credit quality, service levels, operational effectiveness and customer

satisfaction. Financial Services also offers products to finance third party vehicles sold through the Group's dealer network or within the Group's

core businesses. Financed third party vehicles include used vehicles taken in trade on the Group's products used in conjunction with or attached

to the Group's products.

In Europe, there are two joint ventures that provide retail financing to customers for the purchase or lease of new and used vehicles sold directly

by the Group or through brand dealers, depending on the country of origin. CNH Industrial Capital Europe S.a.S., a joint venture accounted for

under the equity method, owned by BNP Paribas Group (51.1%), Iveco Group (24.95%) and CNH Industrial N.V. (24.95%). Transolver Finance

Establecimiento Financiero de Credito S.A. (“Transolver Finance”), a joint venture with the Santander Group, owned by Iveco Group N.V. (49%)

and accounted for under the equity method. Transolver Finance also provides dealer financing. Additionally, there are vendor programs with

banking partners that provide customer financing of new and used vehicles sold by brand dealers of the Group, in different countries.

In Europe, the Middle East and Africa (EMEA), the Iveco Group Financial Services organization provides services to the CNH Industrial Financial

Services segment on customer financing and factoring deeply described and regulated in a specific Master Service Agreement (Financial

Services Master Service Agreement). In this context in Europe, IC Financial Services S.A. (previously known as CNH Industrial Financial Services

S.A.), a French specialized credit institution with passporting to operate in main European countries, wholly-owned by the Group, manages CNH

Industrial dealer financing through a dedicated securitization.

For South America, customer and dealer financing activities in Brazil are managed through CNH Industrial wholly-owned financial services

company, Banco CNH Industrial Capital S.A. (“Banco CNH Industrial Capital”), which supports the sales of Commercial and Specialty Vehicles

with a "Vendor Program". For customer financing of the Group, Banco CNH Industrial Capital mainly continues to serve as a lender for funding

provided by BNDES, a federally-owned financial institution linked to the Brazilian Ministry of Development, Industry and Foreign Trade. In

Argentina, customer and dealer financing activities, which support the sales of Commercial and Specialty Vehicles, are supported and served

through a wholly-owned CNH Industrial financial services company, with a "Vendor Program". In addition, other vendor programs with banking

partners are also in place in Argentina.

For Rest of World (Australia), customer and dealer financing activities for the Commercial and Specialty Vehicles are managed through a "Vendor

Program" with CNH Industrial wholly-owned financial services companies.

Customer Financing

Financial Services - also through the joint ventures - has retail underwriting and portfolio management policies and procedures that are specific to

Commercial and Specialty Vehicles. This distinction allows Financial Services to reduce risk by deploying industry-specific expertise in each of

these businesses. The Group provides retail financial products primarily through the Group's dealers, who are trained in the use of the various

financial products. Dedicated credit analysis teams perform retail credit underwriting. The terms for financing vehicle retail sales typically provide

for retention of a security interest in the vehicles financed.

Financial Services’ guidelines for minimum down payments for vehicles generally range from 5% to 30% of the actual sales price, depending on

Board Report Business Overview 50

equipment types, repayment terms, and customer credit quality. Finance charges are sometimes waived for specified periods or reduced on

vehicles sold or leased in advance of the season of use or in connection with other sales promotions. For periods during which finance charges

are waived or reduced on the retail notes or leases, Financial Services generally receives compensation from the applicable Industrial Activities

segment based on Financial Services’ estimated costs and a targeted return on equity. The cost is recognized as a reduction in net sales for the

applicable Industrial Activities segment.

Dealer Financing

Financial Services provides wholesale floor plan financing for nearly all the Group's dealers. This allows them to acquire and maintain a

representative inventory of products. Financial Services also provides financing to dealers for used vehicle taken in trade, vehicle utilized in

dealer-owned rental yards, parts inventory, working capital, and other financing needs. For floor plan financing, Financial Services generally

provides a fixed period of “interest free” financing to the dealers. This practice helps to level fluctuations in factory demand and provides a buffer

from the impact of sales seasonality. For the “interest-free” period, the applicable Industrial Activities segment compensates Financial Services

based on Financial Services’ estimated costs and a targeted return on equity. The cost is recognized as a reduction in net sales for the applicable

Industrial Activities segment. After the expiration of any “interest-free” period, interest is charged to dealers on outstanding balances until Financial

Services receives payment in full.

A wholesale underwriting group reviews dealer financial information and payment performance to establish credit lines for each dealer. In setting

these credit lines, Financial Services seeks to meet the reasonable requirements of each dealer while managing its exposure to any one dealer.

The credit lines are secured by the vehicles financed. Dealer credit agreements generally include a requirement to repay the particular financing

at the time of the retail sale of the unit. Financial Services leverages employees, third party contractors, and new digital technologies like “geo-

fencing” to conduct periodic stock audits at each dealership to confirm that the financed vehicle is maintained in inventory. These audits are

unannounced, and their frequency varies by dealer and depends on the dealer’s financial strength, payment history, and prior performance.

Factoring

Financial Services also provides intragroup factoring of trade and other receivables. This activity involves the purchase (without recourse) of

receivables of Iveco Group Industrial Activities legal entities, originating from the different Industrial Activities segments, and due from third or

related parties.

Sources of Funding

The long-term profitability of Financial Services’ activities largely depends on the cyclical nature of the industries in which the Group operates,

interest rate volatility, and the ability to access funding on competitive terms. Financial Services funds its on book operations and lending activity

through a combination of financing sources including receivable securitizations, committed secured and unsecured facilities, uncommitted lines of

credit, unsecured commercial paper, affiliated financing, equity and retained earnings. Financial Services’ current funding strategy is to maintain

sufficient liquidity and flexible access to a wide variety of financial instruments and funding options.

LEGAL PROCEEDINGS

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, emissions and/or fuel economy regulatory and contractual issues, competition law and other

investigations and 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, Iveco Group recognizes specific provisions for this purpose. Contingent liabilities estimated by the Group, for which no

provisions have been recognized since an outflow of resources is not considered probable at the present time, were not material at 31 December

2022 and 2021.

Although the ultimate outcome of legal matters pending against the Iveco Group and its subsidiaries cannot be predicted, the 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 Consolidated Financial Statements, except for the following cases.

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 its 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

Board Report Business Overview 51

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 recognize any specific provision for these claims. 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 non-compliance. Therefore, Iveco Group did not recognize any specific provision in relation to this investigation.

INSURANCE

Iveco Group covers with third party insurers the various risks arising from its business activities including, but not limited to, risk of loss or damage

to its assets or facilities, business interruption, general liability, product liability and directors' and officers' liability. The Group believes it maintains

insurance coverage that is customary in its industry. Until the end of September, the Group used a broker that was a subsidiary of Stellantis N.V.

("Stellantis", formerly Fiat Chrysler Automobiles N.V. which, effective 16 January 2021, merged with Peugeot S.A. by means of a cross-border

legal merger), starting from October, Iveco Group relies on international brokers to place its insurance coverage.

PLANTS AND MANUFACTURING PROCESSES

As of 31 December 2022, the Group owned 26 manufacturing facilities. The Group also owns other significant properties including spare parts

depots, research laboratories, test tracks, warehouses, and office buildings.

The Group makes capital expenditures in the regions in which it operates principally related to initiatives to introduce new products, enhance

manufacturing efficiency and improve capacity, and for maintenance and engineering. In 2022, the Group's total capital expenditures in long-lived

assets, excluding assets sold with buy-back commitments and equipment on operating leases, were €777 million of which 90% was spent in

Europe, 9% in South America and 1% in Rest of World, respectively. These capital expenditures were funded through a combination of cash

generated from operating activities and borrowings under short-term facilities. In 2021, the Group's total capital expenditures were €563 million. In

2022, capital expenditures were higher than in 2021 mainly due to the energy transition and Model Year ‘24 launches across all ranges.

The following table provides information about our manufacturing and engineering facilities as of 31 December 2022:


Location	Primary Functions	Approximate Covered Area (Sqm/000)
Italy
Brescia	Medium vehicles, cabs, chassis; R&D center	276
Brescia	Firefighting vehicles; R&D center	25
Bolzano	Defense vehicles; R&D center	83
Foggia	Engines; drive shafts; R&D center	151
Piacenza	Quarry and construction vehicles; R&D center	64
Suzzara	Light vehicles; R&D center	170
Torino	Transmissions and axles	222
Torino	Engines	142
Torino	R&D center (Commercial and Specialty Vehicles)	41
Torino	R&D center (Powertrain)	28
France
Annonay	Buses (Coaches & City); R&D center	114
Bourbon Lancy	Engines; R&D center	107
Fourchambault	Engines (remanufacturing)	24
Rorthais	Buses (City); R&D center	32
Venissieux	R&D center (Commercial and Specialty Vehicles)	17
Brazil
Sete Lagoas	Heavy, medium and light vehicles; R&D center	160
Sete Lagoas	Defense vehicles	19

Board Report Business Overview 52


Location	Primary Functions	Approximate Covered Area (Sqm/000)
Sete Lagoas	Engines; R&D center	19
Germany
Ulm	Firefighting vehicles; R&D center	35
Ulm	R&D center (Commercial and Specialty Vehicles)	45
China
Chongqing	Engine; R&D center	76
Chongqing	ATS plant	4
Shanghai	R&D center (Powertrain)	—
Argentina
Cordoba	(Medium/Heavy) Trucks and buses; R&D center	58
Cordoba	Engines; R&D center	27
Spain
Madrid	Heavy vehicles; R&D center	134
Valladolid	Light vehicles, heavy cab components	81
United Kingdom
Coventry	R&D center (Powertrain)	1
Shoream-by-Sea	R&D center (Powertrain)	—
Others
Vysoke Myto (Czech Republic)	Buses (City & Intercity); R&D center	126
Arbon (Switzerland)	R&D center (Powertrain)	6
Burr Ridge (United States)	R&D center (Diesel engines)	8

Board Report Business Overview 53

RESEARCH AND DEVELOPMENT

In a continuously and rapidly changing competitive environment, Iveco Group’s research activities are a vital component of its long-term growth

strategy. Each year the Group makes substantial investments in research and development. Such continuous investment and development

activities are critically important to the continuing success of the Group.

Research and development times are reduced, where possible, to accelerate time-to-market, while taking advantage of specialization and

experience in different markets. Technical and operational synergies and rapid technical communication form the basis of Group's research and

development process. The Group’s innovation process consists of a series of clear-cut steps, from the evaluation of innovative concepts up to the

final step before product development. The Group believes innovation is essential to offering customers highly technological, eco-friendly, safe,

and ergonomic products with a low Total Cost of Ownership (“TCO”).

In this spirit, research activities focus primarily on the development of products that can: reduce polluting and CO2 emissions; optimize energy

consumption and efficiency; use alternative fuels; adopt alternative traction systems; incorporate advanced telematics systems and ensure safe

use. The Group’s research and development activities focus mainly on: decarbonization, electrification, automated driving and connectivity and

data management.

In 2022, our expenditure on research and development (including capitalized development costs and costs charged directly to operations during

the year) totaled €634 million, or 4.5% of net revenues from Industrial Activities.

Research and development activities involved approximately 3,300 employees at 29 sites around the world of which approximately 350

employees were located at 6 sites in emerging countries(1).

The following table shows our total research and development expenditures, including capitalized development costs and costs charged directly

to operations during the year, by segment for the years ended 31 December 2022 and 2021:


(€ million)	2022	2021
Commercial and Specialty Vehicles	462	352
Powertrain	172	157
Eliminations and Other	—	—
Total of Industrial Activities	634	509
Financial Services	—	—
Eliminations	—	—
Total for the Group	634	509

The Group owns a significant number of patents, trade secrets, and trademarks related to its products and services, and that number is expected

to grow as its research and development activities continue. At 31 December 2022, the Group owned 1,067 patent families, with a total of 5,452

active patents, including 67 new patents registered during the year (in addition to 554 patents applications pending at such date). 75% of the

patents portfolio owned by the Group relates to its fire fighting vehicles, heavy, medium and light commercial vehicles, special vehicles, buses and

spare parts, whereas the remaining 25% relates to engines and driveline systems. These patents cover products, industrial processes and the

internal and external style of the Group’s product. In more detail, approximately 535 patents relate to fire fighting vehicles, 360 patents relate to

buses, more than 400 patents relate to heavy trucks, approximately 80 on medium trucks, and more than 250 patents relate to light trucks and

vans. Approximately 470 patents protect spare parts of the Group’s vehicles, and approximately 1,000 patents relate to innovative technologies to

be implemented in the Group’s vehicles, including alternative propulsion, battery management systems, and autonomous driving solutions. The

remaining patents relate to engines (approximately 1,270), drivetrain (120), while other patents relate to the electronics system, chassis or

hydraulic components, and manufacturing processes. In recent years the portfolio of patents owned by the Group has been focusing on covering

key technological areas such as alternative propulsion, including fuel cell and battery electric vehicles, liquid and compressed natural gas

engines, and innovative solutions for autonomous driving for short and long international goods transport. As of 31 December 2022, more than

65% of the Group’s patents portfolio protects current vehicles and engines. The Group expects to introduce products in the next five years that will

increase this figure to 75%. The entire patent portfolio has been creating for defending the Group against possible patent infringements.

(1) Emerging Markets are defined as low, lower-middle or upper-middle income countries as per the World Bank list of economies as at June 2022.

Board Report Research and Development 54

HUMAN RESOURCES

EMPLOYEES

The ability to attract, retain, and further develop qualified employees is crucial to the success of Iveco Group’s businesses and its ability to create

value over the long-term. The Group’s business is, by its nature, labor intensive and this is reflected in the high number of the Group hourly

employees.

The following tables show the breakdown of the number of employees by segment and by region at 31 December 2022 and 2021:


(number)	2022	2021
Commercial and Specialty Vehicles	26,718	25,332
Powertrain	8,198	8,213
Other Activities	207	66
Total of Industrial Activities	35,123	33,611
Financial Services	488	521
Total	35,611	34,132


(number)	2022	2021
Europe	29,914	29,151
North America	74	63
South America	4,432	3,606
Rest of World	1,191	1,312
Total	35,611	34,132

As of 31 December 2022, Iveco Group had 35,611 employees, an increase of 1,479 from the 34,132 employees at year-end 2021. The change

was mainly attributable to the difference between new hires (approximately 4,500) and departures (approximately 3,000) during the year.

A decrease of approximately 200 employees was due to changes in the scope of the operations mainly related to the sale of 2H Energy S.a.S., a

French legal entity. Excluding the changes in the scope of operations, the increase compared to year-end 2021 is attributable mainly to the hiring

of fixed-term and open-term workers in manufacturing due to the production volumes increase driven by demand in the market and by the launch

of new products, primarily in the Commercial and Specialty Vehicles segment in South America and in Europe on top of a similar trend in

Powertrain in Europe. A significant increase in the Research and Development areas is related to project activities focused on adopting

innovative automotive technologies strengthening the pool of skills and competencies aiming for technology transitions, particularly electrification,

autonomous driving, alternative propulsion solutions, digitalization and cloud web-based software technologies.

COLLECTIVE BARGAINING

At global level more than 90% of the Iveco Group employees are covered by collective labor agreements (“CLAs”) stipulated either by an Iveco

Group subsidiary or by the employer association for the specific industry which the Iveco Group subsidiary belongs to.

In Italy, approximately 13,000 Iveco Group employees, except Managers, are covered by the CLA that was renewed in 2019 and expired at the

end of 2022. The approximately 350 Iveco Group Managers are covered by the 2016 CLA extended on 21 October 2020 until 31 December

2022. Negotiations for the renewal of both CLAs started in the last months of 2022. In March 2022 an agreement was reached with the national

trade union organizations signatory of the CLA applied, to set a new "performance bonus" replacing for the year 2022 the bonus linked to WCM

efficiency included in the 2019-2022 CLA applicable to all the employees, except Managers. This is a transitory solution due to the progressive

reduction of the corporate focus on WCM and aimed at being a pilot in order to possibly include the new bonus scheme in the renewed CLA.

Board Report Human Resources 55

OPERATING AND FINANCIAL REVIEW

OVERVIEW

The Group is a leading global capital goods company engaged in the design, production, marketing, sale, servicing, and financing of trucks,

commercial vehicles, buses and specialty vehicles for firefighting, defense and civil protection, as well as combustion engines, alternative

propulsion systems, transmissions and axles for those vehicles and engines and alternative propulsion systems for agricultural and construction

equipment and for marine and power generation applications. The Group has manufacturing, commercial and financial services companies

located in 35 countries.

The Group’s segments consist of: (i) Commercial and Specialty Vehicles, (ii) Powertrain, and (iii) Financial Services. The Group’s Industrial

Activities include the Group’s entire enterprise without Financial Services (i.e., Commercial and Specialty Vehicles, Powertrain, and Iveco Group

N.V., including the treasury operations). The Group generates revenues and cash flows principally from the sale of vehicles to dealers and

distributors and engines to third parties. Financial Services provides a range of financial products and services focused on financing the sale and

lease of vehicles to the Group’s dealers and their customers.

Revenues of Industrial Activities are presented net of discounts, allowances, settlement discounts and rebates, as well as costs for sales incentive

programs, determined on the basis of historical costs, country by country, and charged against profit for the period in which the corresponding

sales are recognized. The Group’s sales incentive programs may include the granting of retail financing at discounts to market interest rates. The

corresponding cost to Industrial Activities is recognized at the time of the initial sale and the revenues of Financial Services are recognized on a

pro rata basis in order to match the cost of funding.

BASIS OF PREPARATION

The results presented in this report are prepared in accordance with EU-IFRS and use the euro as the presentation currency.

On 1 January 2022 the Demerger of CNH Industrial N.V. took legal effect (refer to the “Introduction” of the Board Report for additional details).

The 2021 figures presented in this report relate to activities transferred to Iveco Group N.V. and are derived from CNH Industrial Consolidated

Financial Statements for the year ended 31 December 2021.

ALTERNATIVE PERFORMANCE MEASURES (OR “NON-IFRS FINANCIAL MEASURES”)

Iveco Group monitors its operations through the use of several non-IFRS financial measures. Iveco Group's management believes that these non-

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-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-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.

As of 31 December 2022, Iveco Group's non-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

Board Report Operating and Financial Review 56

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.

Global Supply Chain, energy costs, and COVID-19 pandemic

Global supply chain remains challenging, as well as increased energy costs and inflation, representing the main challenge for the Group

operations. Furthermore, the Group remains cautious about future impacts on its end-markets and business operations of restrictions on social

interactions and business operations to limit the resurgence of the COVID-19 pandemic.

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 the first quarter, Iveco Group recorded a negative after-tax

impact of €51 million in connection with our 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.

The increased risk resulting from the Russia-Ukraine conflict is described in section “Risk Factors - Political or Financial instability in countries

where the Group operates” of this Annual Report.

Board Report Operating and Financial Review 57

RESULTS OF OPERATIONS

The operations, and key financial measures and financial analysis, differ significantly for manufacturing and distribution businesses and Financial

Services business; therefore, for a better understanding of its operations and financial results, the Company presents the following tables

providing the consolidated income statements of Iveco Group split between Industrial Activities and Financial Services. Industrial Activities

represents the activities carried out by Commercial and Specialty Vehicles and Powertrain segments, as well as the holding company Iveco

Group N.V.

Consolidated income statement by activity for the year 2022 compared to 2021


	2022					2021
(€ million)	Industrial Activities(1)	Financial Services	Eliminations		Consolidated	Industrial Activities(1)	Financial Services	Eliminations		Consolidated
Net Revenues	14,165	281	(89)	(2)	14,357	12,520	195	(64)	(2)	12,651
Cost of sales	12,339	139	(89)	(3)	12,389	10,866	79	(64)	(3)	10,881
Selling, general and administrative costs	871	65	—		936	769	56	—		825
Research and development costs	473	—	—		473	481	—	—		481
Result from investments	(20)	15	—		(5)	13	14	—		27
Gains/(losses) on the disposal of investments	33	—	—		33	8	—	—		8
Restructuring costs	15	—	—		15	36	—	—		36
Other income/(expenses)	(104)	(2)	—		(106)	(168)	—	—		(168)
EBIT	376	90	—		466	221	74	—		295
Financial income/ (expenses)	(206)	—	—		(206)	(115)	—	—		(115)
PROFIT/(LOSS) FOR BEFORE TAXES	170	90	—		260	106	74	—		180
Income tax (expense) benefit	(81)	(20)	—		(101)	(89)	(15)	—		(104)
PROFIT/(LOSS) FOR THE PERIOD	89	70	—		159	17	59	—		76

(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 €14,357 million in 2022, an increase of 13.5% compared to 2021. Net revenues of Industrial Activities were €14,165 million in

2022, an increase of 13.1% compared to 2021, mainly due to higher volumes and positive price realization.

Cost of sales

Cost of sales was €12,389 million in 2022 compared to €10,881 million in 2021. As a percentage of net revenues, cost of sales of Industrial

Activities was 87.1% in 2022 (86.8% in 2021), mainly due to higher raw material and energy costs. In 2022, cost of sales includes €31 million

related to the impairment of certain assets in connection with operations in Russia and Ukraine.

Selling, general and administrative costs

Selling, general and administrative costs amounted to €936 million in 2022, up €111 million compared to 2021 (6.5% of net revenues in both

years), primarily due to emerging corporate costs.

Research and development costs

In 2022, R&D costs were €473 million (compared to €481 million in 2021) and included all R&D costs not recognized as assets in the year

amounting to €244 million (€238 million in 2021), €15 million of impairment losses (€16 million in 2021) and the amortization of capitalized

development cost of €214 million (€227 million in 2021). During 2022, the Group capitalized new expenditures for development costs for

€390 million (€271 million in 2021). The costs in both periods were primarily attributable to spending on engine development activities associated

with emission requirements and continued investment in new products.

Result from investments

Result from investments was a net loss of €5 million in 2022 and a net gain of €27 million in 2021, which included the positive impact of

€11 million from the sale of investments by a joint venture accounted for under the equity method.

Board Report Operating and Financial Review 58

Gains/(losses) on the disposal of investments

Gains/(losses) on the disposal of investments was a gain of €33 million in 2022 primarily due to the €36 million gain on the final step of Chinese

joint ventures' restructuring. In 2021, this item was a gain of €8 million that included the pre- and after-tax gain from the sale of a 30.1% interest

in Naveco.

Restructuring costs

Restructuring costs were €15 million and €36 million in 2022 and 2021, respectively.

Other income/(expenses)

Other expenses were €106 million in 2022 compared to €168 million in 2021. In both periods, this item primarily included legal costs, indirect

taxes, and the separation costs related to the spin-off of the Iveco Group business. In 2022, this item also 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, and the €52 million gain from the disposal of certain fixed assets in Australia. In

2021, this item also included a pre- and after-tax-loss of €21 million from the valuation at their recoverable amount of certain assets classified as

held for sale.

Financial income/(expenses)

Net financial expenses were €206 million in 2022 (€115 million in 2021). The increase was primarily attributable to higher interest rates and the

impact of hyperinflation accounting in Argentina and Türkiye.

Income tax (expense) benefit


(€ million, except percentages)	2022	2021
Profit (loss)/before taxes	260	180
Income tax (expense) benefit	(101)	(104)
Effective tax rate	38.8%	57.8%

In 2022, income tax expenses were €101 million, based on a profit before taxes of €260 million, compared to tax expenses of €104 million in

2021, based on a profit before taxes of €180 million. The effective tax rates for 2022 and 2021 were 38.8% and 57.8%, respectively. Excluding

the gain on the final step of Chinese joint ventures’ restructuring, the pre-tax and corresponding tax impacts related to the costs for the

impairment of certain assets in connection with operations in Russia and Ukraine, the impact from the first-time adoption of the hyperinflationary

accounting in Türkiye, the gain related to the disposal of certain assets in Australia, the impairment related to development costs and other

assets, primarily related to the bus business, as a consequence of the acceleration in emission-related technological transition, the spin-off costs,

restructuring costs, impairment losses 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 30% in 2022. The 2021 effective tax rate reflected the impact of unbenefited losses in certain jurisdictions

and certain other discrete items. Excluding the pre-tax and corresponding tax impacts related to restructuring costs, charges associated with the

Demerger, the loss due to valuation at their recoverable amount of certain assets classified as held for sale, the gain from the sale of a 30.1%

interest in Naveco, the gain from selling investments by a joint venture, as well as minor net discrete tax benefits, the effective tax rate was 47%

in 2021.

Profit/(loss)

Net profit was €159 million in 2022 (€76 million in 2021) and also included (amounts after-tax): the negative impact of €45 million in connection

with operations in Russia and Ukraine, the negative impact of €15 million from the first-time adoption of the hyperinflation accounting in Türkiye,

€30 million related to the impairment of development costs and other assets, primarily related to the bus business, as a consequence of the

acceleration in emission-related technological transition, €21 million spin-off costs, partially offset by the gain of €36 million on the disposal of

certain fixed assets in Australia, and the gain of €30 million on the final step of Chinese joint ventures’ restructuring. In 2021, net profit included

(amounts after-tax): €36 million spin-off costs, the €21 million loss from the valuation at their recoverable amount of certain assets classified as

held for sale, the gain of €8 million from the sale of a 30.1% interest in Naveco, €11 million gain from the sale of investments by a joint venture,

and €29 million of restructuring costs.

Board Report Operating and Financial Review 59

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

The following tables summarize the reconciliation of Adjusted net profit (loss), a non-IFRS financial measure, to profit/(loss), the most comparable

EU-IFRS financial measure, for 2022 and 2021.


(€ million)	2022	2021
Profit/(loss)	159	76
Adjustment impacting Profit/(loss) before tax (expense) benefit (a)	61	84
Adjustment impacting Income tax (expense) benefit (b)	5	(20)
Adjusted net profit/(loss)	225	140
Adjusted net profit/ (loss) attributable to Iveco Group N.V.	213	116
Weighted average shares outstanding – diluted (million)	272	271
Adjusted diluted EPS (€)	0.78	0.43

Profit/(loss) before taxes	260	180
Adjustment impacting Profit/(loss) before taxes (a)	61	84
Adjustment Profit/(loss) before income taxes (expenses) benefit (A)	321	264

Income tax (expense) benefit	(101)	(104)
Adjustment impacting Income tax (expense) benefit (b)	5	(20)
Adjustment Income tax (expense) benefit (B)	(96)	(124)

Adjusted Effective Tax Rate (Adjusted ETR) (C=A/B)	30%	47%

a) Adjustments impacting Profit/(loss) before income tax (expense) benefit
Restructuring cost	15	36
Spin-off costs	30	46
Russia and Ukraine - impairment of certain assets	44	—
Assets disposal in Australia	(52)	—
Gain on the final step of Chinese joint ventures' restructuring	(36)	—
Impairment of certain R&D costs and other assets due to technological transition	40	—
Impairment of certain assets held for sale	4	21
Gain from the sale of 30.1% interest in Naveco	—	(8)
Non-recurring expense (income) recognized by Chinese joint ventures	—	(11)
First.time adoption of hyperinflationary accounting in Türkiye	14	—
Other	2	—
Total	61	84

b) Adjustments impacting income tax (expense) benefit
Tax effect of adjustments impacting Profit/ (loss) before income tax (expense) benefit	1	(17)
Valuation allowance on Russian deferred tax assets	4	—
Other	—	(3)
Total	5	(20)

Board Report Operating and Financial Review 60

Industrial Activities and Business Segments

The following tables show total Net Revenues and Adjusted EBIT of Industrial Activities by segment. Also is included a discussion of the results

of Industrial Activities and each of its business segments.

Net revenues by segment


(€ million, except percentages)	2022	2021	% Change
Net Revenues:
Commercial and Specialty Vehicles	12,100	10,318	17.3
Powertrain	3,960	3,750	5.6
Eliminations and other	(1,895)	(1,548)	—
Total Net revenues of Industrial Activities	14,165	12,520	13.1
Financial Services	281	195	44.1
Eliminations and other	(89)	(64)	—
Total Net revenues	14,357	12,651	13.5

Adjusted EBIT by segment


(€ million, except percentages)	2022	2021	Change	2022 Adj. EBIT Margin	2021 Adj. EBIT Margin
Adjusted EBIT:
Commercial and Specialty Vehicles	415	254	161	3.4%	2.5%
Powertrain	187	208	(21)	4.7%	5.5%
Unallocated items, eliminations and other	(178)	(160)	(18)	—%	—%
Adjusted EBIT of Industrial Activities	424	302	122	3.0%	2.4%
Financial Services	103	74	29	36.7%	37.9%
Eliminations and Other	—	—	—	—%	—%
Total Adjusted EBIT	527	376	151	3.7%	3.0%

Net revenues of Industrial Activities were €14,165 million in 2022, a 13.1% increase compared to the prior year, mainly due to higher volumes

and positive price realization.

Adjusted EBIT of Industrial Activities was €424 million, compared to €302 million in 2021, representing an Adjusted EBIT margin of 3.0%, up

60 basis points ("bps") compared to 2021. The increase was primarily attributable to positive price realization, higher volumes and better mix

more than offsetting higher raw material and energy costs.

Board Report Operating and Financial Review 61

Reconciliation of EBIT to Adjusted EBIT

The following tables summarize the reconciliation of Adjusted EBIT, a non-IFRS financial measure, to EBIT, the most comparable EU-IFRS

financial measure, for 2022 and 2021.


	2022
(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, eliminations and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	373	186	(183)	376	90	—	466
Adjustments
Restructuring costs	7	1	7	15	—	—	15
Other discrete items(1)	35	—	(2)	33	13	—	46
Adjusted EBIT	415	187	(178)	424	103	—	527

(1)This item primarily includes €44 million charge in connection with our Russian and Ukrainian operations, due to the impairment of certain assets, €14 million related to the first time

adoption of hyperinflationary accounting in Türkiye, €30 million spin-off costs, €40 million loss for the impairment of certain development costs and other assets, primarily related to

the bus business, as a consequence of the acceleration in emission-related technological transition, €4 million related to the impairment of certain assets held for sale, €36 million

gain on the final step of Chinese joint ventures’ restructuring, and €52 million gain from the disposal of certain fixed assets in Australia.


			2021
(€ million)	Commercial and Specialty Vehicles	Powertrain	Unallocated items, eliminations and other	Total Industrial Activities	Financial Services	Eliminations	Total
EBIT	239	206	(224)	221	74	—	295
Adjustments
Restructuring costs	34	2	—	36	—	—	36
Other discrete items(1)	(19)	—	64	45	—	—	45
Adjusted EBIT	254	208	(160)	302	74	—	376

(1)This item primarily included the pre- and after-tax gain of €8 million from the sale of a 30.1% interest in Naveco, as well as the positive impact of €11 million from the sale of

investments by a joint venture accounted for under the equity method, €46 million spin-off costs, and a loss of €21 million due to the impairment of certain assets held for sale.

Board Report Operating and Financial Review 62

Industrial Activities Performance

Commercial and Specialty Vehicles

Net revenues

The following table shows Commercial and Specialty Vehicles net revenues by geographic region in 2022 compared to 2021:


(€ million, except percentages)	2022	2021	% Change
Europe	9,087	8,143	11.6
South America	1,625	963	68.7
North America	122	88	38.6
Rest of World	1,266	1,124	12.6
Total	12,100	10,318	17.3

Commercial and Specialty Vehicles net revenues were €12,100 million in 2022, up 17.3% compared to 2021, primarily driven by increased

volumes in trucks and bus in Europe and South America, and positive price realization.

In 2022, the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, decreased 11% compared to 2021. The light-duty trucks

("LCV") market decreased 18%, and the medium and heavy trucks ("M&H") market increased by 5%. In South America, new truck registrations

(GVW ≥3.5 tons) decreased 2% compared to 2021, with a decrease of 3% in Brazil and an increase of 4% in Argentina. In Rest of World, new

truck registrations decreased 5% compared with 2021.

Iveco Group’s estimated market share in the European truck market (GVW ≥3.5 tons), excluding U.K. and Ireland, was 12.5%, up 0.6 percentage

points ("p.p.") compared with 2021. The European market share increased 1.9 p.p. to 15.1% in LCV and decreased 1.0 p.p. to 8.0% in M&H

segment. In South America, in 2022, Iveco Group’s market share increased 1.4 p.p. to 11.9%.

During 2022, Commercial and Specialty Vehicles delivered approximately 175,900 vehicles (including buses and specialty vehicles), representing

a 9% increase from 2021. Volumes were 3% higher in LCV and 19% higher in M&H truck segments. Commercial and Specialty Vehicles

deliveries increased 8% in Europe and Rest of World and 18% in South America.

Order intake remained solid, above pre-COVID 19 levels, with between 30-35 weeks of production already sold for LCV and M&H. Worldwide

truck book-to-bill was 1.02 at 31 December 2022. Normalized book-to-bill, excluding previous quarter unfinished products delivered in full year

2022, was 1.03.

Commercial and Specialty Vehicles deliveries


(units in thousands)	2022	2021	% Change
France	24.6	24.6	—
Germany & Switzerland	18.7	18.1	3.3
U.K.	10.1	7.6	32.9
Italy	31.9	27.9	14.3
Iberia (Spain & Portugal)	13.2	10.2	29.4
Rest of Europe	30.5	31.6	-3.5
Europe	129.0	120.0	7.5
South America	26.5	22.4	18.3
Rest of World	20.4	18.8	8.5
Total Sales	175.9	161.2	9.1

Commercial and Specialty Vehicles Deliveries– by product:


(units in thousands)	2022	2021	% Change
Medium & Heavy	56.1	47.8	17.4
Light	104.6	101.6	3.0
Buses	11.6	9.1	27.5
Specialty vehicles(*)	3.6	2.7	33.3
Total	175.9	161.2	9.1

(*) Defense and firefighting vehicles

Board Report Operating and Financial Review 63

Adjusted EBIT

Adjusted EBIT was €415 million in 2022, with Adjusted EBIT margin of 3.4%. The €161 million improvement was driven by positive price

realization and higher volumes, more than offsetting higher product costs, mainly due to increased raw material and energy costs.

Powertrain

Net revenues

Powertrain net revenues were €3,960 million in 2022, up 5.6% compared to 2021, which included volumes from the Stellantis Ducato contract

until July, before its discontinuation. The increase was mainly driven by pricing. Sales to external customers accounted for 55% of total net

revenues (61% in 2021).

During 2022, Powertrain sold approximately 476,000 engines, a decrease of 12% compared to 2021. In terms of customers, 38% of engines

were supplied to Commercial and Specialty Vehicles, and 62% to external customers. Additionally, Powertrain delivered approximately 64,400

transmissions, a decrease of 5% compared to 2021, and approximately 203,100 axles (of which 900 E-axles and 200 batteries), an increase of

6% compared to 2021.

Adjusted EBIT

Adjusted EBIT was €187 million in 2022, down €21 million compared to 2021, mainly due to higher raw material and energy costs and

unfavorable volumes, negatively affected by the Stellantis Ducato contract discontinuation, partially offset by positive price realization. Adjusted

EBIT margin was 4.7%% in 2022 (5.5% in 2021).

Financial Services Performance


(€ million, except percentages)	2022	2021	Change
Net revenues	281	195	44%
Adjusted EBIT	103	74	29

Net revenues

Financial Services reported net revenues of €281 million in 2022, an increase of €86 million compared to 2021, mainly due to higher receivables

portfolio and higher base rates.

Adjusted EBIT

Adjusted EBIT was €103 million in 2022, a €29 million increase compared to 2021, primarily due to higher receivables portfolio and better

collection performances on managed receivables, and the release of certain previous years’ risk accruals in the third quarter of 2022.

In 2022, retail loan originations (including unconsolidated joint ventures) were €1,304 million, €118 million lower compared to 2021.

The Iveco Group managed portfolio (including unconsolidated joint ventures) was €6,807 million as of 31 December 2022 (of which retail was

41% and wholesale 59%), up €1,397 million compared to 31 December 2021.

At 31 December 2022, the receivable balance greater than 30 days past-due as a percentage of on book portfolio was 2.4% (3.9% as of 31

December 2021).

Board Report Operating and Financial Review 64

CONSOLIDATED STATEMENT OF FINANCIAL POSITION BY ACTIVITY

The operations, and key financial measures and financial analysis, differ significantly for manufacturing and distribution businesses and Financial

Services business; therefore, for a better understanding of the financial position of Iveco Group, and in particular of the net cash/debt position,

the Company presents the following tables providing the consolidated statement of financial position of the Group, split between Industrial

Activities and Financial Services. Specific comments on the net cash/debt position of Iveco Group split by Industrial Activities and Financial

Services are included in section "Liquidity and Capital Resources".

Board Report Operating and Financial Review 65


	At 31 December 2022					At 31 December 2021
(€ million)	Industrial Activities(1)	Financial Services	Eliminations		Consolidated	Industrial Activities(1)	Financial Services	Eliminations		Consolidated
ASSETS
Intangible assets:	1,496	15	—		1,511	1,301	13	—		1,314
Goodwill	57	12	—		69	58	12	—		70
Other intangible assets	1,439	3	—		1,442	1,243	1	—		1,244
Property, plant and equipment	3,096	1	—		3,097	3,053	2	—		3,055
Investments and other non-current financial assets:	84	153	—		237	442	140	—		582
Investments accounted for using the equity method	10	140	—		150	182	128	—		310
Equity investments measured at fair value through other comprehensive income	62	—	—		62	224	—	—		224
Other investments and financial assets	12	13	—		25	36	12	—		48
Leased assets	19	51	—		70	24	34	—		58
Defined benefit plan assets	—	—	—		—	15	—	—		15
Deferred tax assets	622	78	—		700	569	78	(1)	(5)	646
Total Non-current assets	5,317	298	—		5,615	5,404	267	(1)		5,670
Inventories	2,838	—	—		2,838	2,650	1	—		2,651
Trade receivables	334	18	(11)	(3)	341	313	21	(16)	(3)	318
Receivables from financing activities	772	4,758	(1,152)	(3)	4,378	67	2,954	(112)	(3)	2,909
Current tax receivables	120	5	(30)	(4)	95	119	2	(11)	(4)	110
Other current receivables and financial assets	267	92	(20)	(2)	339	3,210	722	(30)	(2)	3,902
Prepaid expenses and other assets	58	10	—		68	42	5	—		47
Derivative assets	51	2	(3)	(6)	50	49	1	—		50
Cash and cash equivalents	2,100	188	—		2,288	726	171	—		897
Total Current assets	6,540	5,073	(1,216)		10,397	7,176	3,877	(169)		10,884
Assets held for sale	1	—	—		1	6	—	—		6
TOTAL ASSETS	11,858	5,371	(1,216)		16,013	12,586	4,144	(170)		16,560
EQUITY AND LIABILITIES
Total Equity	1,623	768	—		2,391	1,571	740	—		2,311
Provisions:	2,000	108	—		2,108	1,834	97	—		1,931
Employee benefits	495	15	—		510	603	18	—		621
Other provisions	1,505	93	—		1,598	1,231	79	—		1,310
Debt:	1,173	4,412	(1,152)	(3)	4,433	2,661	3,236	(112)	(3)	5,785
Asset-backed financing	—	3,149	—		3,149	—	1,926	—		1,926
Other debt	1,173	1,263	(1,152)	(3)	1,284	2,661	1,310	(112)	(3)	3,859
Derivative liabilities	47	2	(3)	(6)	46	42	1	—		43
Trade payables	3,660	32	(2)	(3)	3,690	3,130	22	(19)	(3)	3,133
Tax liabilities	113	22	(28)	(4)	107	38	22	(11)	(4)	49
Deferred tax liabilities	25	—	—		25	11	1	(1)	(5)	11
Other current liabilities	3,217	27	(31)	(2)	3,213	3,299	25	(27)	(2)	3,297
Total Liabilities	10,235	4,603	(1,216)		13,622	11,015	3,404	(170)		14,249
TOTAL EQUITY AND LIABILITIES	11,858	5,371	(1,216)		16,013	12,586	4,144	(170)		16,560

(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 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 reclassification of deferred tax assets/liabilities in the same jurisdiction and reclassifications needed for appropriate consolidated presentation.

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

Board Report Operating and Financial Review 66

LIQUIDITY AND CAPITAL RESOURCES

The following discussion of liquidity and capital resources principally focuses on the Group’s consolidated statement of cash flows and the

Group’s 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. See sections "Risk Factors" and "Industry Overview", for additional information concerning risks related to the

Group’s business, strategy and operations.

Cash Flows

The following tables present the cash flows from operating, investing and financing activities by activity for the years ended 31 December 2022

and 2021.

Board Report Operating and Financial Review 67


	2022					2021
(€ million)	Industrial Activities (1)	Financial Services	Eliminations		Consolidated	Industrial Activities (1)	Financial Services	Eliminations		Consolidated
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	726	171	—		897	366	97	—		463
CASH FLOWS FROM/ (USED IN) OPERATING ACTIVITIES:
Profit/(loss)	89	70	—		159	17	59	—		76
Amortization and depreciation (net of vehicles sold under buy- back commitments and operating leases)	558	2	—		560	565	2	—		567
(Gains)/losses on disposal of non-current assets (net of vehicles sold under buy- back commitments)	(96)	—	—		(96)	8	—	—		8
Other non cash items	7	11	—		18	(1)	(5)	—		(6)
Dividends received	75	—	(71)	(2)	4	18	—	(2)	(2)	16
Change in provisions	264	13	—		277	100	26	—		126
Change in deferred income taxes	(9)	(2)	—		(11)	43	—	—		43
Change in items due to buy-back commitments(a)	5	13	—		18	36	13	—		49
Change in operating lease items(b)	—	(29)	—		(29)	(6)	9	—		3
Change in working capital	505	2	—		507	(303)	(40)	—		(343)
TOTAL	1,398	80	(71)		1,407	477	64	(2)		539
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)	(775)	(2)	—		(777)	(563)	(1)	—		(564)
Consolidated subsidiaries and other equity investments	(42)	—	12	(3)	(30)	(49)	—	5	(3)	(44)
Proceeds from the sale of non-current assets (net of vehicles sold under buy- back commitments)	75	—	—		75	14	—	—		14
Net change in receivables from financing activities	50	(1,370)	—		(1,320)	(37)	(80)	—		(117)
Change in other current financial assets	29	—	—		29	85	—	—		85
Other changes	237	446	—		683	465	116	—		581
TOTAL	(426)	(926)	12		(1,340)	(85)	35	5		(45)
CASH FLOWS FROM/ (USED IN) FINANCING ACTIVITIES:
Net change in debt and derivative assets/liabilities	424	922	—		1,346	(61)	(27)	—		(88)
Capital increase	—	12	(12)	(3)	—	—	5	(5)	(3)	—
Dividends paid	(1)	(71)	71	(4)	(1)	—	(2)	2	(4)	—
TOTAL	423	863	59		1,345	(61)	(24)	(3)		(88)
Translation exchange differences	(21)	—	—		(21)	29	(1)	—		28
TOTAL CHANGE IN CASH AND CASH EQUIVALENTS	1,374	17	—		1,391	360	74	—		434
CASH AND CASH EQUIVALENTS AT END OF YEAR	2,100	188	—		2,288	726	171	—		897

Board Report Operating and Financial Review 68

(a) Cash generated from the sale of vehicles under buy-back commitments, net of amounts included in Profit/(loss), is recognized under operating activities in a single line item, which

includes changes in working capital, capital expenditure, depreciation and impairment losses. The item also includes gains and losses arising from the sale of vehicles subject to buy-

back commitments.

(b) Cash from operating lease is recognized 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 and the holding

company Iveco Group N.V.

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

(3) This item includes the elimination of paid in capital from Industrial Activities to Financial Services.

(4)This item includes the elimination of dividends from Financial Services to Industrial Activities, which are included in Industrial Activities net cash provided by operating activities.

At 31 December 2022, the Group had cash and cash equivalents of €2,288 million, an increase of €1,391 million, or 155.1%, from €897 million at

31 December 2021. Cash and cash equivalents at 31 December 2022 included €83 million of restricted cash (€48 million at 31 December 2021)

that was reserved principally for the servicing of securitization-related debt. At 31 December 2022, undrawn medium-term unsecured committed

facilities were €2,000 million (€41 million at 31 December 2021) and other current financial assets were €26 million at 31 December 2022

(€54 million at 31 December 2021). 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”), totaled

€4,364 million at 31 December 2022 (€1,436 million at 31 December 2021). At 31 December 2022 this amount also included €50 million financial

receivables from CNH Industrial (€444 million at 31 December 2021) deriving from the sale of trade receivables.

Net Cash from Operating Activities

Cash provided by operating activities in 2022 totaled €1,407 million and primarily comprised the following elements:

▪€159 million in profit;

▪plus €560 million in non-cash charges for depreciation and amortization (net of commercial vehicles sold under buy-back commitments and

operating leases);

▪plus €507 million in change in working capital;

▪plus €277 million change in provisions;

▪plus €18 million for changes in items due to buy-back commitments;

▪plus €18 million for other non-cash items;

▪minus €96 million in gains on the disposal of non-current assets (net of vehicles sold under buy-back commitments);

▪minus €29 million for changes in operating lease items;

▪minus €11 million change in deferred income taxes.

In 2021, cash generated by operating activities during the year was €539 million as a result of cash generated from income-related inflows

(calculated as profit plus amortization and depreciation, dividends, changes in provisions and deferred taxes, various items related to sales with

buy-back commitments and operating leases, net of gains/losses on disposals and other non-cash items) for a total amount of €882 million,

partially offset by of a €343 million decrease in cash resulting from changes in working capital.

Net Cash from Investing Activities

In 2022, cash used by investing activities was €1,340 million. The negative flows were primarily generated by:

▪investments in tangible and intangible assets that used €777 million in cash, including €390 million in capitalized development costs.

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;

▪the net change in receivables from financing activities which used €1,320 million in cash, partially offset by:

▪cash generated by “Other changes” of €683 million, mainly deriving from the change in receivables/payables from/to CNH Industrial.

In 2021, cash used in investing activities totaled €45 million. Expenditures on tangible and intangible assets (including €271 million in capitalized

development costs) totaled €564 million. Net change in receivables from financing activities used €117 million in cash, primarily due to wholesale

portfolio.

The following table summarizes our investments in tangible assets (excluding assets sold with buy-back commitments and assets leased on

operating leases) by segment and investments in intangible assets for the years ended 31 December 2022 and 2021:

Board Report Operating and Financial Review 69


	Years ended 31 December,
(€ million)	2022	2021
Commercial and Specialty Vehicles	198	144
Powertrain	121	95
Total Industrial Activities investments in tangible assets	319	239
Industrial Activities investments in intangible assets	456	324
Total Industrial Activities capital expenditures	775	563
Financial Services investments in tangible assets	—	—
Financial Services investments in intangible assets	2	1
Total Capital expenditures	777	564

The Group incurred these capital expenditures in the regions in which the Group operates principally related to initiatives to introduce new

products, enhance manufacturing efficiency and increase capacity, and for maintenance and engineering.

Net Cash from Financing Activities

In 2022, cash generated by financing activities totaled €1,345 million, primarily due to the drawing of the €500 million term loans and to the

increase of third party debt on Financial Services mainly related to the financing of the receivable portfolio.

In 2021, cash absorbed by financing activities totaled €88 million, primarily attributable to a net decrease in third party debt (mainly on Financial

Services).

Capital Resources

The cash flows, funding requirements and liquidity of Iveco Group are managed on a standard and centralized basis, in order to optimize the

efficiency and effectiveness of the Group’s management of capital resources.

The Group’s subsidiaries participate in a company-wide cash management system, which the Group operates in a number of jurisdictions. Under

this system, the cash balances of the Group’s subsidiaries are aggregated at the end of each business day to central pooling accounts. The

centralized treasury management offers financial and systems expertise in managing these accounts, as well as providing related services and

consulting to the Group’s business segments.

The Group’s policy is to keep a high degree of flexibility with its funding and investment options in order to maintain the Group’s desired level of

liquidity to improve the Company’s capital structure over time.

A summary of the Group’s strategy is set forth below:

▪Industrial Activities usually sells its receivables to Financial Services and relies on internal cash flows including managing working capital to

fund its near-term financing requirements. The Group will also supplement its short-term financing by drawing on existing or new facilities with

banks.

▪To the extent funding needs of Industrial Activities are determined to be of a longer-term nature, the Group will access public debt markets as

well as private investors and banks, as appropriate, to refinance borrowings and replenish the Group’s liquidity.

▪Financial Services’ funding strategy is to maintain a sufficient level of liquidity and flexible access to a wide variety of financial instruments.

While the Company expects factoring and securitization to continue to represent a material portion of the Group’s capital structure and

intersegment borrowings to remain a marginal source of funding, the Group will continue to diversify its funding sources including committed

asset-backed facilities, unsecured notes, bank facilities and commercial paper programs.

On a global level, the Group will continue to evaluate alternatives to ensure that Financial Services has access to capital on favorable terms to

support its business, including agreements with global or regional partners, new funding arrangements or a combination of the foregoing.

Financial Services, leveraging on its specific expertise, grants support to CNH Industrial financial services, by providing business process

services to their European activities, and receiving a fee for the services rendered.

As of 31 December 2022, the credit rating assigned by Fitch Ratings to Iveco Group N.V. is a Long-Term Issuer Default Rating (IDR) of ‘BBB-’.

The outlook is stable.

The Group believes that the current investment grade rating allows it to access funding at better rates. A credit rating is not a recommendation to

buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating

should be evaluated independently of any other rating. A deterioration in our ratings could impair our ability to obtain debt financing and would

increase the cost of such financing. Ratings are influenced by a number of factors, including, among others: financial leverage on an absolute

basis or relative to peers, the composition of the balance sheet and/or capital structure, material changes in earnings trends and volatility, ability

to dividend monies from subsidiaries and our competitive position. Material deterioration in any single, or a combination, of these factors could

result in a downgrade of our rating, thus increasing the cost, and limiting the availability, of financing.

Board Report Operating and Financial Review 70

Consolidated Debt

The Group’s consolidated debt as of 31 December 2022 and 2021 is as detailed in the following table:


	At 31 December 2022			At 31 December 2021
(€ million)	Consolidated	Industrial Activities	Financial Services	Consolidated	Industrial Activities	Financial Services
Total Debt	4,433	1,173	4,412	5,785	2,661	3,236

The Company believes that Net Cash (Debt) (a non-IFRS financial measure as defined in the section "Alternative performance measures (or

“Non-IFRS financial measures”)" above) is a useful analytical metric for measuring the Group’s effective borrowing requirements. The Group

provides a separate analysis of Net Cash (Debt) for Industrial Activities and Net Cash (Debt) for 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’ legal entities.

The calculation of Net Cash (Debt) as of 31 December 2022 and 2021, and the reconciliation of Total (Debt), the EU-IFRS financial measure that

the Company believes to be most directly comparable, to Net Cash (Debt), are shown below:


	At 31 December 2022			At 31 December 2021
(€ million)	Consolidated	Industrial Activities	Financial Services	Consolidated	Industrial Activities	Financial Services
Third party (debt)	(4,156)	(739)	(3,417)	(2,709)	(220)	(2,489)
Intersegment notes (payable)(1)	—	(432)	(720)	—	(71)	(41)
(Debt) payable to CNH Industrial (2)	(277)	(2)	(275)	(3,076)	(2,370)	(706)
Total (Debt)	(4,433)	(1,173)	(4,412)	(5,785)	(2,661)	(3,236)

Cash and cash equivalents	2,288	2,100	188	897	726	171
Intersegment financial receivables(1)	—	720	432	—	41	71
Financial receivables from CNH Industrial(3)	146	50	96	3,520	2,896	624
Other current financial assets(4)	26	26	—	54	54	—
Derivative assets(5)	50	51	2	50	49	1
Derivative (liabilities)(5)	(46)	(47)	(2)	(43)	(42)	(1)
Net Cash (Debt)(6)	(1,969)	1,727	(3,696)	(1,307)	1,063	(2,370)

(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 €432 million and €71 million as of 31 December 2022 and 2021, respectively. Total Debt of Financial Services includes

Intersegment notes payable to Industrial Activities of €720 million and €41 million as of 31 December 2022 and 2021, respectively.

(2) At 31 December 2022, it includes payables related to purchases of receivables or collections with settlement in the following days; at 31 December 2021, it mainly included overdraft

and advances/utilizations under cash management and/or cash pooling arrangements and loans granted by the CNH Industrial central treasury. Following the Demerger, debt payable

to CNH Industrial outstanding at 31 December 2021 was almost entirely settled during 2022.

(3) At 31 December 2022, it includes receivables related to sales of receivables or collections with settlement in the following days; at 31 December 2021, it mainly referred to cash

balances deposited with the CNH Industrial central treasury, including cash management and/or cash pooling arrangements. Following the Demerger, the financial receivables from

CNH Industrial outstanding at 31 December 2021 were entirely settled during 2022.

(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 €-288 million and €30 million as of 31 December 2022 and 2021,

respectively.

Net Debt at 31 December 2022 increased by €662 million compared to 31 December 2021, mainly reflecting higher Financial Services third-party

debt, partially offset by a Free Cash Flow generation from Industrial Activities of €690 million during 2022.

The following table shows the change in Net Cash (Debt) of Industrial Activities for the years ended 31 December 2022 and 2021:

Board Report Operating and Financial Review 71


	Years ended 31 December
(€ million)	2022	2021
Net Cash (Debt) of Industrial Activities at beginning of period	1,063	1,165
Adjusted EBIT of Industrial Activities	424	302
Depreciation and amortization	558	565
Depreciation of assets under operating leases and assets sold with buy-back commitments	221	227
Cash interest and taxes	(150)	(155)
Changes in provisions and similar(1)	(160)	(159)
Change in working capital	505	(303)
Operating cash flow of Industrial Activities	1,398	477
Investments in property, plant and equipment and intangible assets(2)	(775)	(563)
Other changes	67	(39)
Free Cash Flow of Industrial Activities	690	(125)
Capital increases and dividends	—	—
Currency translation differences and other	(26)	23
Change in Net Cash (Debt) of Industrial Activities	664	(102)
Net Cash (Debt) of Industrial Activities at end of period	1,727	1,063

(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.

The Company believes that Free Cash Flow of Industrial Activities (a non-IFRS financial measure as defined in the section "Alternative

performance measures (or “Non-IFRS financial measures”)" above) is a useful analytical metric for measuring the cash generation ability of the

Group’s Industrial Activities. In 2022, Free Cash Flow of Industrial Activities was positive for €690 million, a €815 million improvement compared

to the 2021 primarily due to operating performance and working capital improvement.

The reconciliation of Free Cash Flow of Industrial Activities to Net cash provided by (used in) Operating Activities, the EU-IFRS financial measure

that the Company believes to be most directly comparable, for the years ended 31 December 2022 and 2021, is shown below:


	Years ended 31 December
(€ million)	2022	2021
Net cash provided by (used in) Operating Activities	1,407	539
Less: Cash flows from Operating Activities of Financial Services net of eliminations	(9)	(62)
Operating cash flow of Industrial Activities	1,398	477
Investments in property, plant and equipment, and intangible assets of Industrial Activities	(775)	(563)
Other changes(1)	67	(39)
Free Cash Flow of Industrial Activities	690	(125)

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

The non-IFRS financial measures (Available liquidity, Net Cash (Debt) and Free Cash Flow of Industrial Activities, as defined the section

"Alternative performance measures (or “Non-IFRS financial measures”)" above), 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, this non-IFRS financial

measure may not be computed in the same manner as similarly titled measures used by other companies.

Industrial Activities

Third-party debt of Industrial Activities was €0.7 billion at 31 December 2022 and €0.2 billion at 31 December 2021 and primarily consisted of

bank debt and lease liabilities.

Bank Debt

At 31 December 2022, Industrial Activities available committed unsecured facilities expiring after twelve months amounted to €1.7 billion (zero at

31 December 2021).

On 4 January 2022, Iveco Group signed a €1.9 billion syndicated facility, which included a €1.4 billion committed revolving credit facility with a 5-

year tenor with two extension options of 1-year each (subject to the bank’s approval), as well as a €0.5 billion committed term facility with a 12-

Board Report Operating and Financial Review 72

months tenor, extendable for up to an additional 12 months at the Company’s sole option. In October 2022 Iveco Group signed a new

€400 million syndicated term facility with a 2-year tenor extendable for up to an additional 12 months at the Company’s sole option. The proceeds

have been used to refinance the existing term facility. The €1.4 billion revolving credit facility has been extended for one additional year with all

lenders, by exercising the first one-year extension option. The facility is now due to mature in January 2028. The syndicated facilities include the

following covenants:

▪customary covenants (including a negative pledge, a status (or pari passu) covenant and restrictions on the incurrence of indebtedness by

certain subsidiaries);

▪customary events of default (some of which are subject to minimum thresholds and customary mitigants), including cross-default provisions,

failure to pay amounts due or to comply with certain provisions under the loan agreement and the occurrence of certain bankruptcy-related

events;

▪mandatory prepayment obligations upon a change in control of Iveco Group N.V.;

▪a financial covenant (Net debt/EBITDA ratio relating to Industrial Activities), not applicable in case of rating equal or higher than BBB/Baa2.

At 31 December 2022, Iveco Group was in compliance with the covenants of the syndicated facilities.

Financial Services

Total third-party debt of Financial Services’ was €3.4 billion at 31 December 2022 (€2.5 billion at 31 December 2021), and included the following:

Bank Debt

At 31 December 2022, Financial Services available committed, unsecured facilities expiring after twelve months amounted to €300 million

(€41 million at 31 December 2021).

Asset-Backed Financing

At 31 December 2022, Financial Services’ asset-backed facilities amounted to €839 million (€751 million at 31 December 2021), of which

€719 million committed and expiring after twelve months.

The sale of financial receivables is executed primarily through asset-backed securitization transactions and involves mainly accounts receivable

from wholesale customers and from the network of dealers (wholesale) previously sold from Industrial Activities subsidiaries to the Group’s

Financial Services subsidiaries.

At 31 December 2022, the Group’s receivables from financing activities included receivables sold and financed through both asset-backed

securitization transactions and factoring transactions of €3.3 billion (€2.0 billion at 31 December 2021), which did not meet derecognition

requirements and therefore were recorded on the Group’s consolidated statement of financial position. These receivables are recognized as such

in the Group’s financial statements even though they have been legally sold; a corresponding financial liability is recorded in the consolidated

statement of financial position as debt (see Note 24 “Debt” to the Group’s Consolidated Financial Statements for the year ended 31 December

2022).

Commercial Paper Programs

With the purpose of further diversifying its funding structure, Iveco Group has established a commercial paper program in Europe. The issuer is

IC Financial Services S.A. The program's outstanding amount was €66 million as at 31 December 2022 (€73 million outstanding at 31 December

2021).

Board Report Operating and Financial Review 73

FUTURE LIQUIDITY

The Group has adopted formal policies and decision-making processes designed to optimize the allocation of funds, cash management

processes and financial risk management. The Group’s liquidity needs could increase in the event of an extended economic slowdown or

recession that would reduce the Group’s cash flow from operations and impair the ability of the Group’s dealers and retail customers to meet their

payment obligations.

The Company believes that funds available under its current liquidity facilities, those obtained from the settlement with CNH Industrial occurred in

the first months after the Demerger, those realized under existing and planned asset-backed securitization programs and possible issuances of

debt securities and those expected from ordinary course refinancing of existing credit facilities, together with cash provided by operating

activities, will allow the Group to satisfy its debt service requirements for the coming year. At 31 December 2022, the Group had available

committed, unsecured facilities expiring after twelve months of €2,000 million (€41 million at 31 December 2021).

Financial Services securitized debt is repaid with the cash generated by the underlying amortizing receivables. Accordingly, additional liquidity is

not normally necessary for the repayment of such debt. Financial Services has traditionally relied upon the asset-backed securitization and

committed asset-backed facilities as a primary source of funding and liquidity. At 31 December 2022, Financial Services’ asset-backed facilities

amounted to €839 million (€751 million at 31 December 2021).

Iveco Group continues to closely monitor its liquidity and capital resources for any potential impact that the challenging environment in which it

operates, including the COVID-19 pandemic, Russia-Ukraine conflict, supply chain issues, cost and availability of energy, raw material cost

increases and components availability, 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.

If Financial Services were unable to obtain asset-backed securitization funding at competitive rates, its ability to conduct its financial services

activities would be limited.

OFF-BALANCE SHEET ARRANGEMENTS

The Group uses off-balance sheet arrangements with unconsolidated third parties in the ordinary course of business, including financial

guarantees. The Group’s arrangements are described in more detail below. For additional information, see Note 27 “Commitments and

contingencies” to the Consolidated Financial Statements.

Financial Guarantees

The Group’s financial guarantees requires the Group to make contingent payments upon the occurrence of certain events or changes in an

underlying instrument that is related to an asset, a liability or the equity of the guaranteed party. These guarantees include arrangements that are

direct obligations, giving the party receiving the guarantee a direct claim against the Group, as well as indirect obligations, under which the Group

has agreed to provide the funds necessary for another party to satisfy an obligation.

Iveco Group provided guarantees on the debt or commitments of third parties and performance guarantees in the interest of non-consolidated

affiliates totaling €409 million as of 31 December 2022 and €452 million as of 31 December 2021.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table sets forth the Group’s contractual obligations and commercial commitments with definitive payment terms that will require

significant cash outlays in the future, as of 31 December 2022:


(€ million)	Total	Less than one year	One to three years	Three to five years	After five years
Debt obligations(1)
Borrowings from banks	721	49	663	—	9
Asset-backed financing	3,149	3,072	71	6	—
Other debt	378	370	8	—	—
Undiscounted lease payments	208	57	71	34	46
Purchase obligations	1,144	583	512	41	8
Total	5,600	4,131	1,325	81	63

(1) Amounts presented exclude the related interest expense that will be paid when due. The table above does not include obligations for pension plans, other post-employment benefits

and other employee benefits. The Group’s best estimate of expected contributions in 2023 to pension plans is approximately €8 million. Potential outflows in the years after 2023 are

subject to a number of uncertainties, including future asset performance and changes in assumptions, and therefore the Group is unable to make sufficiently reliable estimates of future

contributions beyond 2023.

Board Report Operating and Financial Review 74

Debt Obligations

For information on the Group’s debt obligations, see “Capital Resources” above and Note 24 “Debt” to the Consolidated Financial Statements.

The debt obligations reflected in the tables above can be reconciled to the amount in the consolidated balance sheets at 31 December 2022 as

follows:


(€ million)	At 31 December 2022
Debt reflected in the consolidated balance sheet	4,433
Less:
Lease liabilities	(185)
Total Debt obligations	4,248

The amount reported as debt obligations in the table above consists of the Group’s borrowings from banks, asset-backed financing and other

debt (excluding undiscounted lease payments, which are reported in a separate line item in the table above).

Undiscounted Lease Payments

The Group’s assets under lease agreements consist mainly of industrial buildings and plant, machinery and equipment used in the Group’s

businesses. The amounts reported above include the minimum future lease payments and payment commitments due under such leases.

Purchase Obligations

The Group’s purchase obligations at 31 December 2022 were the following:

▪the repurchase price guaranteed to customers on sales with a buy-back commitment which is included in the line item “Other liabilities” in the

Group’s consolidated balance sheets in an aggregate amount of €995 million; and

▪commitments to purchase tangible fixed assets, largely in connection with planned capital expenditures, in an aggregate amount of

approximately €149 million.

Board Report Operating and Financial Review 75

RISK MANAGEMENT AND INTERNAL CONTROL

SYSTEM

Effective risk management is a key factor in maintaining the Group’s value over time. In this regard, Iveco Group (hereafter also referred as “IVG”)

Risk management and Internal Control System is consistent and compliant with the provisions of Principle 1.2 of the Dutch Corporate Governance

Code (2016 edition) and, more generally, with international best practices.

The Board of Directors is tasked with defining the general guidelines of the Risk management and Internal Control System, so that the main risks

pertaining to IVG are properly identified, as well as adequately measured, managed and monitored. It shall also set criteria to ensure that such

risks are compatible with sound and proper management of the Company. The Board of Directors is aware that the control processes cannot

provide absolute assurances that the Company objectives will be achieved and the intrinsic risks of business prevented. However, it believes that

the Risk management and Internal Control System shall reduce and mitigate the likelihood and impact of risk events associated with wrong

decisions, human errors, frauds, violations of laws, regulations and Company procedures, as well as unexpected events.

The Risk management and Internal Control System is therefore subject to regular monitoring and update, taking account of developments in the

Company’s operations and reference context, as well as international best practices.

Following the Demerger, the Board of Directors has identified the main corporate committees/functions relevant for risk management purposes, by

defining their respective duties and responsibilities within the Risk management and Internal Control System scope. More specifically:

▪the Audit Committee, the ESG Committee, the Human Capital and Compensation Committee, tasked with supporting the Board of Directors

on, among others, internal control, risk management, remuneration and sustainability issues;

▪the ERM Committee responsible for identifying and weighting the macro-risks and working with the system parties to mitigate them;

▪the Head/Chief of Risk Management, tasked with spreading an effective risk-based organizational culture and supporting the management

in the risks identification, adequate measurement, management and monitoring as well as ensuring the integration of Risk Management

process within a governance system consistent with strategic objectives.

Risks are monitored at managerial meetings held on at least a monthly basis (Monthly Operating Review ("MOR") and other committees), where

results, opportunities and risks are analyzed for each business unit and geographical area in which IVG operates. The meetings also focus on

determining the actions required to mitigate any risks.

IVG Chief Executive Officer ("CEO") deploys the risk management guidelines based on principles of prevention, cost effectiveness and ongoing

improvement, as monitored by the Board of Directors, in order to provide the organization with the instruments for defining the risk categories to

which attention should be drawn.

IVG INTERNAL AUDIT and INTERNAL CONTROL SYSTEM

The Internal Control System is made up of the set of organizational functions, committees, IT support, administrative and management systems,

policies, regulations, operating procedures and practices, and managerial behavior as well, which exercise various types of control on business

management, and on the risks that could compromise the shareholder's objective of long-term sustainable value creation.

Direct permanent controls are carried out by the people who manage and coordinate the operational activities (e.g., purchases, logistics,

production, sales), governed by the principles of separation of duties and delegation of authority. Monitoring controls are ensured by corporate

functions – such as Finance Business Control, ICT and HR, Legal and Compliance, ERM, among others – also through accounting and reporting

systems, personnel development, proxies and authorization profiles, policies and procedures updating. The Internal Audit function carries out a

further level of control, which operates independently of the previous ones, with priorities determined by the identification and assessment of

Company risks, to ensure the Board of Directors that the overall set of the aforementioned controls works effectively.

The Internal Audit function evaluates the effectiveness and efficiency of the overall Internal Control and Risk Management System on a regular

basis and reports the results to the CEO, the Audit Committee and the Supervisory Committees of Iveco Group N.V. and its Italian subsidiaries,

with reference to specific risks connected with compliance with Legislative Decree No. 231/2001. At least on an annual basis, it also reports to the

Company Board of Directors.

The IVG Internal Audit ("IA") performs its duties - specified within a Charter that was approved by the Board of Directors - with the independence

required, in accordance with the Dutch Corporate Governance Code, the Company's corporate governance, the International Standards for the

Professional Practice of Internal Auditing, and best practices.

The IA mission is to protect and enhance the IVG long-term value creation by providing independent risk-based and objective assurance, and

advice. The aim of IA is to improve the effectiveness and the efficiency of IVG operations, assisting IVG management in accomplishing its

strategy and goals through a systematic professional approach oriented to verify, evaluate, and improve the governance, risk management, and

control processes.

The IA objective is to evaluate the internal control and risk management system adequacy, encouraging effective controls at reasonable costs,

referred to:

▪Compliance with laws, regulations, policies, plans, and internal procedures.

Board Report Risk Management and Internal Control System 76

▪Efficiency and effectiveness of the operations.

▪Tangible and intangible asset value safeguarding.

▪Reliability, timeliness, transparency, and integrity of the financial and non-financial reporting.

The Chief Risk and Internal Audit Officer ("CRIAO") directly reports to the CEO and functionally to the Audit Committee. The Audit Committee

oversees their activities and reviews their responsibilities, budget, organisation, and operations.

IA is authorized to:

▪Have full, free, and unconditional access to all documents, contracts, records, transactions, files, data, physical properties, including access

to management information systems and records, and the IVG personnel relevant to carrying out any audit engagement. IA will be

accountable for the confidentiality and safeguarding of such information.

▪Consult, meet, request information, and obtain assistance from the necessary IVG personnel, as well as other collaborators, third parties,

and specialised services, to complete the audit engagements.

The scope of IA activities encompasses, but is not limited to, objective examinations and robust analyses of evidence to provide independent

assessments to the CEO, the management team, the Audit Committee and the Board of Directors on the adequacy and effectiveness of IVG

governance, risk management, and control processes.

The CRIAO will report to the CEO and the Audit Committee on a regular basis:

▪The audit activities and results of the period, compared to the approved audit plan and reporting scope limitations, if any, and

▪Significant risks exposures and control issues, including fraud risks, governance issues, and other matters requiring the attention of, or

requested by, the Audit Committee.

IVECO GROUP RISK MANAGEMENT

Following the Demerger (occurred on 1 January 2022), IVG has adopted an ERM process designed to assist in the identification, evaluation and

prioritization of business risks (including environmental, social, and governance) followed by a coordinated and balanced application of resources

to minimize, monitor, and control the probability or impact of adverse events or to maximize the realization of opportunities. Risk management is

an important component of IVG’s overall culture and is integral to the achievement of its long-term goals. The ERM process is also linked with IVG

Sustainability Program and its strategic sustainability targets, aspirational goals articulated in the strategic business plan and employee and

customer safety goals. These targets and goals provide a framework to address the long-term challenges to increase stakeholder value and

proactively mitigate associated risks.

IVG’s ERM process is based on the framework published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”),

as well as the principles of the Dutch Corporate Governance Code, and adapted for specific business requirements by incorporating Company

management knowledge and best practices identified by third-party risk consulting firms inside IVG perimeter.

In particular, risk assessment is performed by assessing in detail the risk events that could impact IVG’s strategic and management objectives,

taking into account the changes in the business and organization model and Group processes and procedures, developments in the external

environment (specifically, political, economic, social, technological and legal aspects) and the relevant industry and competitors.

Through this process, IVG’s has identified 55 primary risks, including several significant topics, such as business strategies and operations,

competitive factors, social responsibility and environmental issues, and regulatory compliance, better detailed in the Risk Factors section. The

process follows a bottom-up analysis starting at the business unit level, with risk survey completion by business and function leaders worldwide,

followed by cross-functional reviews, one-on-one interviews with all Senior Leadership Team ("SLT") members, presentations and risk

assessment discussions with the Audit Committee.

Direct feedback received from each of these layers up to and including the Board of Directors is then used to identify and develop risk mitigation

activities as necessary within the business or functional area, which are deployed by management.

The risk mitigation activities initiated by management (and detailed in the Risk Factors section of this report) are designed to mitigate adverse

impacts to IVG’s strategic goals, including financial and operational performance.

Despite the Risk Management and Internal Control System process in place, it is not possible to predict, identify and eliminate all risks and

uncertainties which could impact IVG business. IVG’s potential overall risk exposure is described in the Risk Factors section.

EMERGING RISKS

ERM process also monitors emerging risks, which are defined as new risks or risks for which the impacts are unknown or evolving and thus may

be incorporated into risk assessment and mitigation activities when appropriate. In 2022, risks related to the supply of utilities, raw materials, parts

and components and the Financial Planning Uncertainty, impacting Cash Flow, included in the Risk Factors section, represent key emerging risks

with a potential significant impact to IVG.

The events occurred in the latest years (such as COVID pandemic and consequent changes in supply and demand, the escalation of conflict in

Ukraine) generated significant supply chain disruptions which affected the global ability to receive certain materials and components (such as

semiconductors) on a timely basis and caused a strong utility (i.e. energy and gas) and raw materials price volatility. Besides the continuous

commitment in reducing the energy consumption at Company sites, the monitoring of materials availability and prices increase from suppliers,

spot purchasing in case of favorable market opportunities and the activation of hedging strategies (after assessing their cost-effectiveness), the

Board Report Risk Management and Internal Control System 77

Company introduced specific mitigating actions, such as to hold periodical Suppliers Risk Management meetings to analyze critical suppliers and

to assess potential double/alternative sourcing. Furthermore, where possible, IVG takes into consideration the application of indexed contracts

with clients to offset increased raw materials costs.

Focusing on semiconductors IVG takes also into consideration the opportunity to buy semiconductors on the broker market or to have a direct

relationship with semiconductor suppliers.

As regards the emerging risk related to Financial Planning Uncertainty, impacting Cash Flow, the current macroeconomic context and relevant

supply chain disruptions together with regulatory challenges require rapid adjusting initiatives, causing financial planning uncertainty and relevant

impacts on cash flow. IVG mitigation actions include the improvement of working capital management (specifically, inventory management), and

the selection of a new treasury management IT system, that is expected to help Group's financial planning and execution capabilities, allowing to

distribute the cash generation along the year.

RISK APPETITE

IVG’s risk appetite is set within risk taking and risk acceptance parameters driven by its business plan, Code of Conduct, core principles and

values, policies, and applicable laws. In the best interest of IVG’s stakeholders, the group has defined the following levels of risk appetite

1.TOLERANT: High tolerance to risks occurrence, meaning the Group is willing to accept risk exposure in pursuing its business objectives

2.MODERATELY TOLERANT: Moderate tolerance to risks occurrence, meaning the Group is comfortable with risk but with some bounds

3.MODERATELY ADVERSE: Aversion to risks occurrence, meaning the Group seeks to minimize the occurrence and consequences of

unforeseen risks

4.ADVERSE: No acceptance of risks, meaning the Group’s priority is to avoid risks occurrence.

In continuity with the methodology applied in the previous years, for the time being the Risk Appetite has been currently applied to the risk

categories and risk areas described in the table below, based on current ERM Risk Model. Nevertheless, it is worth mentioning that in some

cases, the single risk factor (listed in the Risk Factors section) could deviate, in terms of risk tolerance and applied resources and/or investment to

mitigate the risk, from the Risk Appetite level of the relevant category. The process and methodology for the definition of Risk Appetite at single

Risk level is currently under definition.


		Risk Category Description	Enterprise Risks	Risk Appetite
Long-term	Strategic risks Create value	Strategic risks may affect IVG’s long-term strategic business plan performance targets, innovation roadmap and sustainability objectives	Macroeconomics and sociopolitical events, product portfolio, technological innovation and regulatory evolution, customer demands, investments and competitions, JV & Alliances	Taking into consideration IVG stakeholders’ interests, IVG has risk appetite from tolerant to moderately tolerant concerning strategic risk, meaning the willingness to accept additional risk while applying cost/ benefit considerations in pursuing our long-term targets
Short- and Medium-term	Operational risks Enhance value	Operational risks are related to internal processes, people and systems, or external events linked to the actual operation of IVG’s portfolio of businesses	Supply chain, production capacity, quality control, labor relations, information technology, cybersecurity, tender management, health & safety	IVG seeks to minimize the occurrence and consequences of unforeseen operational risks with a moderately adverse risk appetite
	Financial & Taxation risks Enhance & protect value	Financial risks include uncertainty of returns and the potential for losses due to financial performance	Financial management, foreign exchange and interests’ rate, counterparty, liquidity and cash flow	IVG has a moderately adverse risk appetite with respect to financial risks (such as liquidity, market, foreign exchange and interest rate risks
	Compliance risks Protect value	Compliance risks cover unanticipated failures to comply with applicable laws, regulations, policies and procedures	Technical & safety regulations, regulatory requirements, contractual obligations, ethics & integrity, anti-corruption, antitrust/fair competition, corporate compliance & culture, privacy, intellectual property and conflict of interest	IVG has a risk appetite from moderately adverse to adverse with respect to compliance risks and requires full compliance

Board Report Risk Management and Internal Control System 78

ENHANCEMENTS TO THE RISK MANAGEMENT PROCESS

The development and implementation of an effective and robust ERM process require continuous evaluation and improvement and for this reason

IVG continues to enhance its risk management process in compliance with the Company principles and international best practices. The evolving

ERM Model is characterized by the following elements: (i) Risk Governance: represents the general framework as regards roles, responsibilities

and information flows for management of the main Company risks; (ii) Process: represents the grouping of all activities through which the various

actors identify, measure, manage and monitor the main risks that could influence IVG’s ability to achieve its objectives; (iii) Reporting: reports and

represents the results of the Risk Assessment and Risk Monitoring activities, highlighting the most significant risks in terms of likelihood and

potential impact, as well as the plans for dealing with them. Furthermore, the under development ERM process is projected to a deep risk

quantification, starting from the assumption included in the Strategic Business Plan, and to a direct connection with the sustainability objectives

and the Company’s value. As example, the Enterprise Risk Assessment results have been used as input for the IVG materiality assessment,

aimed at identifying and prioritizing the sustainability aspects of IVG business that could substantially influence the assessments and decisions of

its stakeholders and are considered most significant for the Company itself.

RISK TRANSFER

In order to minimize the volatility and financial impact of any detrimental event and in continuity with previous years as part of CNH Industrial

Group, IVG has considered the possibility of transferring the residual risks exposure to the insurance market, where insurable. IVG’s changing

needs through the years have been specifically reflected in its insurance coverage, which has been optimized to decrease the Company’s

exposure to intrinsic risks related to the type of activities carried out by the Company. Thanks to international programs, all IVG companies are

currently covered against the following key risks: property all risks, general liability and umbrella excess liability, directors & officers’ responsibility,

public offering of security, cyber risk and potential frauds, environmental liability. After the Demerger, all such insurance coverages are specifically

appointed for IVG activities and responsibilities.

Additional coverage has been arranged locally based on the specific requirements of local legislation or collective labor contracts and/or corporate

agreements or regulations, such as product liability employment practices or general third-party liability. Insurance analysis and transfer of the

risks to which the Group is exposed are conducted in collaboration with high standing insurance brokers, which supports this process with its

international organization and is responsible for the compliance and management of Group insurance programs at global level.

Board Report Risk Management and Internal Control System 79

CORPORATE GOVERNANCE

INTRODUCTION

The Company is a public limited liability company (naamloze vennootschap), incorporated and organized under the laws of the Netherlands. Its

corporate seat is in Amsterdam, the Netherlands, while the principal place of business and effective management is in Turin, Italy. The

Company’s Common Shares are listed on Euronext Milan, managed by Borsa Italiana S.p.A.

Iveco Group’s governance is built on a set of rules and practices that the Company has adopted (and intends to improve throughout time) to

manage its operations in an ethical and transparent way, according to its purpose and values, that are the groundwork of its culture. The

Company believes that a robust governance model is pivotal to doing business in the pursuit of true sustainable long-term value creation, duly

balancing the interests of all its stakeholders.

In this Report, Iveco Group summarizes its overall corporate governance structure as it applied to the Company as of 31 December 2022. The

Company discloses in this Report, and intends to disclose in its future annual reports, any material deviation from the best practice provisions of

the Dutch Corporate Governance Code, which applies, on a comply or explain basis, to Dutch companies whose shares have been admitted to

trading on a regulated market or comparable system (the “DCGC”). Upon the Demerger and in connection with the start of the trading of its

Common Shares on Euronext Milan, the Company has adopted the DCGC, as existing and in force from time to time, as a guide for its corporate

structure, except as discussed below. In this Report, reference to the DCGC is to its 2016 version; during 2023 the Company will assess the

changes (if any) required to be made to its rules, regulations, procedures, and practices, in order to comply with the principles and best practice

provisions in the 2022 update of the same Code, effective as from the financial year starting on 1 January 2023.

The Company believes that compliance with the recommendations of the DCGC enables Iveco Group to respond to investors’ demands for high

corporate governance standards and compliance with international best practice. In this connection, the DCGC addresses substantially the same

concerns as the corporate governance code sponsored by Borsa Italiana S.p.A. (which manages Euronext Milan, where the Common Shares are

listed), whilst better fitting with its Dutch legal structure and corporate operation.

GENERAL MEETING OF SHAREHOLDERS

Consistently with the DCGC, shareholders through their general meeting (the “General Meeting”) play a fully-fledged role in the system of checks

and balances of the Company. In addition, Iveco Group is committed to maintaining an open and constructive dialogue with its shareholders (and

potential shareholders) even outside the context of a formal general meeting, and an ad-hoc policy (posted on the corporate website) has been

adopted to this end.

At least one General Meeting shall be held every year, within six months after the close of the prior financial year. General Meetings shall also be

held in the situations referred to in Dutch law (including at the request of shareholders solely or jointly representing at least 10% of the Company’s

issued share capital) and as often as the Board of Directors, the Chairperson, the Senior Non-Executive Director or the Chief Executive Officer

deems it necessary to hold them. General Meetings shall be held in Amsterdam or Haarlemmermeer (Schiphol Airport) and shall be called in such

manner as is required to comply with the law and the applicable stock exchange regulations, not later than on the forty-second day prior to the

meeting. All convocations of meetings of shareholders and all announcements, notifications, and communications to Company shareholders shall

be made by means of an announcement on the Company’s website and such announcement shall remain accessible until the relevant meeting of

shareholders. The notice shall state the place, date, and hour of the meeting and the agenda of the meeting as well as the other information

required by law. Any communication to be addressed to the General Meeting by virtue of law or the Articles of Association may be either included

in the notice or, to the extent provided for in such notice, on the Company’s website and/or in a document made available for inspection at the

office of the Company and such other place(s) as the Board of Directors shall determine.

The agenda of the General Meeting shall contain, inter alia, the following items:

a.an advisory vote in respect of the remuneration report;

b.the adoption of the Company’s annual accounts;

c.the granting of discharge to the members of the Board of Directors in respect of the performance of their duties in the relevant financial

year;

d.the policy of the Company on additions to reserves and on dividends, if any;

e.if applicable, the proposal to pay a dividend;

f.the annual appointment of Directors and the external auditors;

g.every four years, the Company's Remuneration Policy;

h.discussion of any substantial change in the corporate governance structure of the Company;

i.any matters decided upon by the person(s) convening the meeting and any matters placed on the agenda with due observance of

applicable Dutch laws.

In this respect, an item proposed in writing by one or more shareholders representing solely or jointly at least 3% of the Company’s share capital

shall be included in the agenda, provided that the Company has received the relevant shareholder’s request, including the reasons for putting the

relevant item on the agenda, no later than the sixtieth day before the day of the General Meeting.

Persons with the right to vote or attend General Meetings shall be considered those persons who have these rights at the twenty-eighth day prior

Board Report Corporate Governance 80

to the day of the meeting (the “Record Date”), irrespective of whether they will have these rights at the date of the meeting. In addition to the

Record Date, the notice of the meeting shall further state how Company shareholders and other parties with meeting rights may have themselves

registered and how those rights can be exercised, either directly or through a proxy duly authorized in writing. For the avoidance of doubt, such an

attorney is also authorized in writing if the proxy is documented electronically.

Each share (whether common or special voting) shall confer the right to cast one vote. Votes can be cast at the meeting in person or through

proxies or in advance of the meeting via the web procedure made available on the Company’s website. All resolutions shall be passed with an

absolute majority of the votes validly cast unless otherwise specified; blank votes shall not be counted as votes cast. Shares in respect of which

the law determines that no votes may be cast shall be disregarded for the purposes of determining the proportion of shareholders voting, present

or represented, or the proportion of the share capital provided or represented. No voting rights shall be exercised in the General Meeting for

shares owned by the Company or by a subsidiary of the Company.

The General Meeting shall be presided over by the Senior Non-Executive Director or, in his/her absence, by the person chosen by the Board of

Directors to act as chairperson for such meeting. The chairperson of the meeting shall decide on the admittance of persons other than those who

are entitled to attend and may determine the time for which those who are permitted to attend may speak, if they consider this desirable with a

view to the orderly conduct of the meeting. The Board shall provide the General Meeting with all requested information, unless this would be

contrary to an overriding interest of the Company; in case, the Board must provide shareholders with details of the overriding interest.

One of the persons present and designated for that purpose by the chairperson of the meeting shall act as secretary and take minutes of the

business transacted. The minutes shall be made available to the shareholders no later than three months after the end of the meeting, after which

the shareholders shall have the opportunity to react in the following three months. The minutes shall then be adopted and confirmed by the

chairperson of the meeting and the secretary, and signed by them in witness thereof. If an official notarial record is made of the business

transacted at the shareholders’ meeting, then minutes need not be drawn up and it shall suffice that the official notarial record is signed by the

notary.

BOARD OF DIRECTORS

The Company has a one-tier board structure comprising executive and non-executive directors (the "Executive Directors" and "Non-Executive

Directors" and each of them a "Director"). The Executive Directors are primarily responsible for all day-to-day operations of the Company. The

Non-Executive Directors supervise (i) the Executive Directors’ policy and performance of duties and (ii) the Company’s general affairs and its

business, and render (solicited or unsolicited) advice and direction to the Executive Directors. The Board of Directors as a whole is responsible for

the strategy of the Company and for the continuity of the Company and the business affiliated with it. Each Director has a duty to the Company to

properly perform the duties assigned under or pursuant to the law or the Articles of Association and to act in the Company’s corporate interest,

which extends to the interests of all its stakeholders, including its shareholders, creditors, and employees.

Responsibilities and composition

The Board is accountable for the performance of its duties to the General Meeting, that appoints all members of the Board for a period of

approximately one year, such period expiring on the day the first annual General Meeting is held in the following calendar year. The General

Meeting has the power to suspend or dismiss any member of the Board at any time.

The Board may perform all acts necessary or useful for achieving the Company’s objectives, with the exception of those acts that are prohibited

by law or by the Articles of Association; Dutch law provides that resolutions of the Board involving major changes in the Company’s identity or

character are subject to the approval of the General Meeting. The Board’s responsibilities include, among other things, developing a view on long-

term value creation by the Company, determining the Company’s strategy and risk management policy, ensuring compliance with legislation and

regulations and the corporate governance structure of the Company, as well as publishing the information required under applicable law and the

DCGC. Pursuant to the Articles of Association, the Board may allocate its duties and powers among the Directors pursuant to the Board

Regulations (see below), provided that the following duties and powers may not be allocated to the Executive Directors: (i) supervising the

performance of the Executive Directors, (ii) making a nomination for the appointment of Directors, (iii) determining an Executive Director’s

remuneration and (iv) recommending to the General Meeting the appointment of an auditor to audit the financial statements. Regardless of an

allocation of tasks, all members of the Board remain collectively responsible for the proper management and strategy of the Company (including

supervision thereof in case of Non-Executive Directors).

The chair of the Board of Directors as referred to by law and the DCGC is a Non-Executive Director, with the title Senior Non-Executive Director,

while the title of Chairperson as referred to by the Articles of Association is reserved to an Executive Director. The general authority to represent

the Company is vested in the Board, as well as in each of the Executive Directors to whom the title Chairperson or Chief Executive Officer has

been granted. Accordingly, the Board appointed Lorenzo Simonelli as Senior Non-Executive Director, Suzanne Heywood as Chairperson, and

Gerrit Andreas Marx as Chief Executive Officer.

The Board shall consist of three or more Directors, appointed individually and on an annual basis, and the number of Executive Directors and the

number of Non-Executive Directors shall be determined by the Board, ensuring an appropriate balance between their respective numbers. The

composition of the Non-Executive Directors is such that they will be able to operate independently and critically with respect to one another, the

Executive Directors, and any other particular interest involved. Moreover, out of the Non-Executive Directors independent ones have an essential

role in protecting the interests of all stakeholders: in the assessment of its members’ independence, the Board abides by the criteria set forth by

the DCGC. The independent Directors’ contribution is welcome and necessary for the proper composition and functioning of the Board

committees, too, whose advisory functions include preliminary examination and formulation of proposals relating to areas of potential risk.

Board Report Corporate Governance 81

Pursuant to Dutch law, there are limitations to the number of positions persons can hold on the boards of directors of “large Dutch companies”. In

addition, large Dutch companies are required to set an “appropriate and ambitious” diversity target for their management board, supervisory board

and senior executives (the latter as determined by the company). The Company is expected to qualify as a “large Dutch Company” at the end of

its second financial year as a listed company, on 31 December 2023, and as of that moment will start making the appropriate disclosures. In the

meantime, no member of the Board exceeds the maximum number of positions and the Company in the profile of the Board posted on its website

already recognizes that diverse boards are more effective in performing their monitoring and advisory activities, due to the variety of professional

experience, perspectives, insights, skills and connections to the outside world that diversity can add. Accordingly, in considering candidates for

appointment to the Board, a number of diversity factors will be taken into account, believing that bringing different perspectives into the

Boardroom creates more effective discussions.

On 31 December 2022, the Board was made up of two Executive Directors and seven Non-executive Directors, all of them appointed for a term

ending at the annual General Meeting of the Company to be held in 2023. Their positions and diversity are summarized in the table below:

The Board of Directors believes that, considering the specific characteristics, cultural background, experience, and skillset of its members, it has

the appropriate diversity mix, independence and judgment to fulfil its responsibilities, execute its duties appropriately and have a good

Board Report Corporate Governance 82

understanding of the current affairs and long-term risks and opportunities related to the Company’s business.

Biographical Details of the Executive Directors

▪Suzanne Heywood (Chairperson)

Date of first appointment: 1 January 2022

Born in 1969, British citizenship.

Lady Heywood is Chair of CNH Industrial N.V., and of Shang Xia. She is also a non-executive Director of Louboutin and The Economist

and a Director of the Royal Academy of Arts Trust.

She became a Managing Director of Exor in 2016 and was appointed as its Chief Operating Officer in November 2022. Prior to that she

worked at McKinsey & Company which she joined as an associate in 1997 and left as a Senior Partner (Director) in 2016. Lady Heywood

co-led McKinsey’s global service line on organization design for several years and also worked extensively on strategic issues with clients

across different sectors. She has published a book, “Reorg,” and multiple articles on these topics. Suzanne started her career in the U.K.

Government as a Civil Servant in the U.K. Treasury. At the Treasury she worked as Private Secretary to the Financial Secretary (who is

responsible for all direct taxation issues) as well as leading thinking on the Government’s privatization policy and supporting the

Chancellor in his negotiations at ECOFIN (the meeting of European Finance Ministers) in Brussels.

Lady Heywood grew up sailing around the world for ten years on a yacht with her family. She studied science at Oxford University (BA)

and then at Cambridge University (PhD).

External directorships in publicly listed companies (as of 31 December 2022):

• CNH Industrial N.V.

• Juventus Football Club S.p.A. (up to 18 January 2023).

▪Gerrit Andreas Marx (Chief Executive Officer)

Date of first appointment: 1 January 2022

Born in 1975, German citizenship.

Gerrit Marx has more than 20 years of experience in roles of increasing importance in different locations around the world and in a variety

of industrial segments, with a specific in-depth focus on automotive industries.

From 1999 to 2007, Mr. Marx worked at the global consulting firm McKinsey & Company, focusing on operational improvement

programmes in the automotive and aerospace industries in Europe, Brazil, and Japan. He joined Daimler AG in 2007 to head the global

controlling function for vehicle and powertrain component projects, as well as market-entry / mergers and acquisitions for three truck

brands in North America, Europe, and Asia. This led him to the role of President and Chief Executive Officer at Daimler Trucks China in

2009 and subsequently, President of Skoda China with Volkswagen AG, overseeing imports and joint venture business relations in both

roles. In 2012 Mr. Marx joined the European leadership team of Bain Capital as a member of their portfolio group, driving and leading

transformational change programs. This role also encompassed due diligence and merger and acquisition activities, with specific focus on

automotive and industrial assets, and also included interim roles such as Chief Executive Officer of Wittur Group, a global Tier-1 supplier

to the elevator industry.

Gerrit Marx joined CNH Industrial in January 2019 as President of Commercial and Specialty Vehicles. Since the spin-off of Iveco Group

from CNH Industrial on 1 January 2022, Mr. Marx has served as Chief Executive Officer of the newly formed Company. He holds a

degree in Mechanical Engineering (“Diplom Ingenieur”) and an MBA (“Diplom Kaufmann”) from RWTH Aachen University, and a

Doctorate in Business Administration from Cologne University.

External directorships in publicly listed companies (as of 31 December 2022):

• Nikola Corporation.

Biographical Details of the Non-Executive Directors

▪Tufan Erginbilgic (Non-Executive Director - independent), Member of the ESG Committee, Member of the Human Capital and

Compensation Committee

Date of first appointment: 1 January 2022

Born in 1959, British and Turkish citizenship.

Tufan Erginbilgic has a background in engineering and has built his career in international business with over 20 years with BP, five years

as part of its executive team. He held a number of senior roles at BP, including CEO of Lubricants, BP and Castrol; Chief of Staff to the

Group CEO; and Chief Operating Officer of the downstream business, becoming its CEO in 2014 until 2020. Mr. Erginbilgic has held

several non-executive directorships in heavy industry and manufacturing. These include aerospace technology group GKN; energy,

healthcare technology group DCC plc; and energy company Turkiye Petrol Rafinerileri A.S (Tupras). He is stepping down as a partner in

Global Infrastructure Partners, a private equity firm focused on large-scale investments in infrastructure businesses, however, will remain

a Senior Adviser. On 1 January 2023, Mr. Erginbilgic was appointed Group Chief Executive Officer of Rolls-Royce. He has a BSc in

engineering, a Master of Business Administration degree and an MA in economics.

Board Report Corporate Governance 83

External directorships in publicly listed companies (as of 31 December 2022):

• Dcc Plc.

• Türkiye Petrol Rafinerileri AŞ.

▪Essimari Kairisto (Non-Executive Director - independent), Chair of the Audit Committee

Date of first appointment: 1 January 2022

Born in 1966, Finnish and German citizenship.

Ms. Kairisto was the Chief Financial Officer and a Board Director for Hochtief Solutions AG until 2016 after which she has taken on

independent consulting roles. These include, since 2015, a Supervisory Board Member and a member of the Audit Committee of

Freudenberg SE, the privately owned German technology company, and since 2018, a Non-Executive Director and chair of the Audit and

Risk Committee of Fortum Oyj, a clean energy generation and distribution company which is listed on the Helsinki stock exchange.

Additionally, Ms. Kairisto is member of the Supervisory Board, chair of the Audit Committee and member of the Strategy and Investment

Commitee of TenneT B.V., a Dutch state owned leading European electricity transmission system operator with its main activities in the

Netherlands and Germany. She is also a director and member of the Audit Committee of Applus+ S.A., a Spanish company, listed on the

Madrid Stock Exchange, that is a worldwide leader in the testing, inspection and certification sector.

Prior to her move to Hochtief Solutions AG in 2013, Ms. Kairisto had several high profile roles in finance and general management

including at Sasol, RWE and Schlumberger.

Essimari Kairisto has a diploma in Business Administration from the University of Fachhochschule Bielefeld (Germany).

External directorships in publicly listed companies (as of 31 December 2022):

• Applus+ S.A.

• Fortum Oyi.

▪Linda Knoll (Non-Executive Director), Member of the ESG Committee, Chair of the Human Capital and Compensation Committee

Date of first appointment: 1 January 2022

Born in 1960, American citizenship.

Linda Knoll currently serves as director at Schneider Electric SE, and Astec Industries.

After a career in the land systems division of General Dynamics, Linda Knoll honed her career in the predecessor companies to Fiat

Chrysler Automobiles (FCA) and CNH Industrial through numerous operational assignments, accumulating a wealth of relevant industrial

industry experience spanning more than 25 years (including Vice-President and General Manager of the Crop Production Global Product

Line, Vice-President North America Agricultural Industrial Operations, Executive Vice-President Agricultural Product Development,

President Parts and Service (ad interim) and Executive Vice-President Worldwide Agricultural Manufacturing). Linda Knoll has been

CHRO in CNH Industrial (from 2007 to 2019) and FCA (from 2011 to March 2021).

Linda Knoll holds a Bachelor of Science Degree in Business Administration from Central Michigan University.

External directorships in publicly listed companies (as of 31 December 2022):

• Astec Industries Inc.

• Schneider Electric SE.

▪Alessandro Nasi (Non-Executive Director), Chair of the ESG Committee, Member of the Human Capital and Compensation Committee

Date of first appointment: 1 January 2022

Born in 1974, Italian citizenship.

Mr. Nasi is a Director of Giovanni Agnelli B.V., a Director of the Board of Directors of Exor N.V., Chairman of Comau, Chairman of Iveco

Defence Vehicles (an affiliate of Iveco Group), Chairman of Astra Veicoli Industriali (an affiliate of Iveco Group), Director of CNH Industrial

and Chair of its Environmental, Social, and Governance Committee. He is a member of the Advisory Board of the Lego Brand Group and

Non-Executive, Independent Director of GVS S.p.A. In October 2022 he was appointed member of the Board of Istituto Italiano di

Tecnologia and member of the Strategic Advisory Board of 3 Boomerang Capital LLC.

Alessandro Nasi started his career as a financial analyst in several banks, gaining experience at Europlus Asset Management, a division

of Unicredit in Dublin, Ireland, PricewaterhouseCoopers in Turin, Italy, Merrill Lynch and JP Morgan in New York, U.S. He also worked as

an Associate in the Private Equity Division of JP Morgan Partners in New York, U.S.

Mr. Nasi joined the Fiat Group in 2005 as manager of Corporate and Business Development, heading the APAC division and supporting

Fiat Group sectors in Asia Pacific. In 2007, Mr. Nasi was appointed Vice President of Business Development and a member of the

Steering Committee of Fiat Powertrain Technologies. In 2008, he joined CNH in the role of Senior Vice President of Business

Development and from 2009 to 2011 he also served as Senior Vice President of Network Development. In January 2011, he was also

appointed Secretary of the Industrial Executive Council of Fiat Industrial, continuing in the role of Executive Coordinator to the successor

Group Executive Council of CNH Industrial until January 2019. In 2013 he was appointed President Specialty Vehicles, a role he held

until January 2019.

Mr. Nasi obtained a degree in Economics from the University of Turin.

Board Report Corporate Governance 84

External directorships in publicly listed companies (as of 31 December 2022):

• Exor N.V.

• CNH Industrial N.V.

• GVS S.p.A.

▪Olof Persson (Non-Executive Director - independent), Member of the Audit Committee

Date of first appointment: 1 January 2022

Born in 1964, Swedish citizenship.

Olof Persson is currently Senior Advisor. Mr. Persson is also currently Chairman of the Board of New Wave Group, non-executive director

of World Flight Services and non-executive board member of Recover Textile Systems, S.L. In the course of his career Mr. Persson held

various positions at ABB and was appointed Division President at Bombardier Transportation in 2004. In 2006, he joined Volvo Group as

President of Volvo Aero and subsequently President of Volvo Construction Equipment in 2008. In 2011 he became President and CEO of

the AB Volvo Group. In 2015 Mr. Persson was appointed Senior Operating Executive at Cerberus Capital Management. Mr. Persson

holds a Bachelor of Business Administration, BBA – Ekonomi 1988, at Karlstads University.

External directorships in publicly listed companies (as of 31 December 2022):

• New Wave Group AB.

▪Benoît Ribadeau-Dumas (Non-Executive Director)

Date of first appointment: 13 April 2022

Born in 1972, French citizenship.

Benoît Ribadeau-Dumas is a Partner at Exor.

He began his career at the French Council of State in 1997 before joining Thales, a leading French technology group in aerospace and

defense, as Director of Business Development. He held different roles within the Company until 2009 when he was named CEO of Thales

Underwater Systems. Mr. Ribadeau-Dumas was later appointed at geoscience global leader CGG as Senior Executive Vice President,

responsible for Data Acquisition and then at ZodiacAerospace, as member of the management Board and CEO of Aerosystems Branch.

In 2017 he joined the Cabinet of the French Prime Minister as Chief of Staff.

Mr. Ribadeau-Dumas graduated from Ecole Polytechnique and attended the Ecole Nationale d'Administration (ENA).

External directorships in publicly listed companies (as of 31 December 2022): none.

▪Lorenzo Simonelli (Senior Non-Executive Director - independent), Member of the Audit Committee

Date of first appointment: 1 January 2022

Born in 1973, Italian, British and Swiss citizenship.

Lorenzo Simonelli is the Chairman, President and CEO of Baker Hughes, an energy technology company that combines innovation,

expertise and scale to provide solutions for energy and industrial customers worldwide. In October 2017 he was named Chairman of the

Board of Baker Hughes, and has been President and CEO since the Company’s creation in 2017, where he oversaw the successful

merger of GE Oil & Gas with Baker Hughes Inc. In 2013 he was appointed President and CEO of GE Oil & Gas.

Previously, Mr. Simonelli served as President and CEO of GE Transportation, a global transportation leader in the rail, mining, marine and

energy storage industries. During his five-year tenure, he expanded and diversified GE Transportation by focusing on advanced

technology manufacturing, intelligent control systems and a diverse approach to new propulsion solutions. He served as Chief Financial

Officer for the Americas for GE Consumer & Industrial, as well as General Manager, Product Management for GE Appliances, Lighting,

Electrical Distribution and Motors. Lorenzo Simonelli joined GE’s Financial Management Program in 1994, where he worked on

assignments in GE International, GE Shared Services, GE Oil & Gas and Consolidated Financial Insurance. Mr. Simonelli also served on

the Board of C3.ai, Inc. (from 2020 - 2021) and on the Board of CNH Industrial N.V. (from 2019 - 2021). He graduated in Business &

Economics from Cardiff University, Wales and received a master’s degree honoris causa in Chemical Sciences from the University of

Florence, Italy.

External directorships in publicly listed companies (as of 31 December 2022):

• Baker Hughes Company.

Meetings

Regular meetings shall be held according to the calendar determined by the Board. In addition, special meetings shall be held whenever called by

direction of the chair of the Board or, in their absence, by the Chief Executive Officer or by a majority of the directors then in office. The Board of

Directors can only transact business, if a majority of the Directors in office shall be present or represented by a co-member at such meeting. The

Board is authorized to adopt resolutions without convening a meeting if all Directors have expressed their opinions in writing, and none has

objected to the resolution being adopted in this way.

Board Report Corporate Governance 85

In addition to actions taken without meeting, the Board met eight times during 2022. The following chart shows the 2022 Board members and their

attendance at Board meetings.


Board member	Heywood	Marx	Erginbilgic	Kairisto	Knoll	Nasi	Persson	Ribadeau- Dumas*	Simonelli
Attendance	8/8	8/8	7/8	7/8	8/8	8/8	8/8	6/6	7/8

* Mr Ribadeau-Dumas was appointed as Non-Executive Director of the Company by the General Meeting of Shareholders on 13 April 2022; at the time two out of eight meetings of the

Board had already taken place.

In these meetings, the Board addressed a number of topics, including the Company’s general affairs and business, its overall strategy and

specific opportunities, the most relevant transactions, risk management, ESG-related and compensation issues, Iveco Group funding and its

capital market performance. Substantially at all meetings of the full Board, the Non-Executive Directors separately met too, to discuss the

functioning of the Board and its Committees, the Executive Directors’ functioning and performance of their duties, the Company’s strategy and

general affairs. In 2022 the overall activity of the full Board, the Non-Executive Directors as well as the internal Committees was necessarily

impacted by 2022 being the first year after the Demerger becoming effective, and the Company being publicly listed; this involved a series of

specific organizational and compliance post-spin off tasks which the Board (directly and through its Committees) duly overviewed or actually

performed.

Board practice

As recommended by the DCGC, the Board adopted internal regulations governing its (and its Committees’) operations, including the decision-

making process. The document addresses internal organization, calling, management, quorum and minuting of meetings, action at and without

meeting, determination of independence according to the DCGC, and conflicts of interest.

In this connection, the Regulations of the Board of Directors stipulate that a Director shall not participate in discussions and decision making with

respect to a matter in relation to which they have a direct or indirect personal interest that is in conflict with the interests of the Company and the

business associated with the Company (“Conflict of Interest”). In case, they shall immediately report the situation, so that the Non-Executive

Directors can assess it, and – in case – exclude the conflicted Director from the discussion and decision-making process with respect to the

relevant matter or transaction; all conflicted transactions require the approval of the Non-Executive Directors. In addition, as – in compliance with

the DCGC – the Company pursues the prevention of conflict of interest in general, the Board as a whole may, on an ad hoc basis, resolve that

there is such a strong appearance of a Conflict of Interest of an individual Director in relation to a specific matter that it is in the best interest of a

proper decision-making process that such individual Director be excused from participation, even though they may not have an actual Conflict of

Interest. Finally, as a precautionary measure, in the event, based on the information available to the Company, there is a strong appearance of a

Conflict of Interest of an individual member of the Board in relation to a specific matter, the Chairperson will exclude such a Director from the

relevant information flow, pending a decision by the full Board. The DCGC recommends that all transactions in which there are conflict of interests

with Board members be agreed on terms that are customary in the market.

At least annually, each Director shall assess in good faith whether (i) they are independent under the best practice provisions of the DCGC; and

(ii) they would have a Conflict of Interest in connection with any transactions between the Company and a significant shareholder or related party

of the Company, including affiliates of a significant shareholder (such conflict, a “Related-Party Conflict”), it being understood that currently Exor

N.V. is considered a significant shareholder. Based on this self-assessment (part of the annual D&O questionnaire administered to all Board

members), and any subsequent update provided by the individual Directors, whenever this is appropriate, the Board of Directors shall make its

determination regarding the individual Director’s independence and Related-Party Conflict, such (at least annual) determinations being conclusive

absent a change in circumstances from those already disclosed to the Board of Directors.

Suzanne Heywood, who is the Chairperson, is also executive director and chairperson of CNH Industrial N.V., as well as Chief Operating Officer

of Exor N.V.. Alessandro Nasi, who is a Non-Executive Director of the Company, is also a non-executive director of Exor and CNH Industrial.

Benoît Ribadeau-Dumas, who is a Non-Executive Director of the Company, is also a Partner at Exor. As a result, Suzanne Heywood, Alessandro

Nasi, and Benoît Ribadeau-Dumas owe duties both to Iveco Group and to CNH Industrial and/or Exor, which may raise potential conflicts of

interest should the Company have to enter into new transactions (or amend existing transactions as the case may be) with CNH Industrial, Exor

or their affiliates.

The current version of the Regulations of the Board of Directors (as lastly amended on 21 December 2022) is available at the Company’s website

at www.ivecogroup.com.

Pursuant the Articles of Association, the Company is committed to indemnify any and all of its directors, officers, former directors, former officers

(as well as any person who may have served at its request as a director or officer of another company in which it owns shares or of which it is a

creditor), against any and all expenses actually and necessarily incurred by any of them in connection with the defense of any action, suit or

proceeding in which they are made parties, by reason of being or having been director or officer, except in relation to matters as to which any

such indemnified person shall be adjudged to be liable for negligence or misconduct in the performance of their duty.

In addition, IVG has purchased directors’ and officers’ liability insurance for the members of the Board of Directors and certain other officers, in

line with international best practice for similarly situated companies.

By the end of 2022, the Board undertook an evaluation of the Board, its Committees and individual members, in terms of composition,

effectiveness and performance.

Under the oversight of the ESG Committee, the evaluation consisted of a self-assessment, performed through a written questionnaire (considered

as the most appropriate solution in the first year after the Demerger), covering Profile, Responsibilities and Functioning of the Board (and its

Board Report Corporate Governance 86

Committees), with an invitation to comment on the various relevant topics. The response rate was 100%. The replies were tabulated by the Board

Secretary and represented the basis for subsequent one-to-one conversations with the Chairperson (focused on the overall functioning of the

corporate collective bodies, as well as the individual Director and the Executive Directors) and collective discussion.

The overall conclusion was that this is the new Board of a new company resulting from the Demerger, and both are climbing along their learning

curve: as a result, processes and practices still need consolidation and/or fine tuning, that are considered within the reach of the Board and

expected to be achieved through experience. Nevertheless, the skill mix and combination of diversity factors are considered appropriate to enable

the Board as a whole to manage its responsibilities and exercise its role effectively, and this is true separately for the managing role of the

Executive Directors and the supervisory role of the Non-Executive Directors, too. The Board of Directors considers itself well-suited to fulfil its

duties, vis-à-vis the existing and prospective Company’s challenges. It has a good understanding of the business and the relevant competitive

and regulatory scenarios and is aware of the impacts of the Company’s operations, including beyond financials. In 2022 the Board developed an

open and fruitful interaction, internally between Executive Directors and Non-Executive Directors, as well as with the SLT (the Company’s Senior

Leadership Team as further described and defined below), in terms of guidance, support, oversight, and challenge.

The ESG Committee fully endorsed these conclusions, which were duly presented to the full Board, in order to discuss how to implement them in

2023. It was further concluded that each of the Directors in charge continued to demonstrate due commitment to their respective role in the

Company.

BOARD COMMITTEES

After the completion of the Demerger, as per the Articles of Association, the Board appointed among its Non-Executive Directors three

committees to assist it to discharge its duties: an Audit Committee, an ESG Committee, and a Human Capital and Compensation Committee. The

Board may appoint additional committees from time to time, as it deems necessary and appropriate to carry out its responsibilities and oversight

function. The Board, at the establishment of each committee, set their terms of reference, further setting out the tasks of the relevant committee

and providing for the internal rules and procedures for the functioning of the relevant committee.

Notwithstanding the establishment of committees to assist the Board on certain specified matters, the Board remains accountable for the work

carried out by its committees and the performance and affairs of the Company. Except as otherwise required by applicable law, the Articles of

Association or the resolution of the Board designating the committee, the presence in person of a majority of the total number of members of a

committee shall be required and constitute a quorum for the transaction of business. If at any meeting of a committee a quorum is not present, a

majority of the committee members present may adjourn the meeting from time to time, without notice other than adjournment at the meeting, until

a quorum shall be present. Whenever a quorum cannot be secured for any meeting of a committee from the members of such committee, the

member(s) thereof present and not disqualified from voting may unanimously appoint one or more Non-Executive Directors who are not regular

members of the committee to act at the meeting in the place of any absent or disqualified member or members of the committee.

According to their terms of reference as presently in force, each of the Audit Committee, the ESG Committee and the Human Capital and

Compensation Committee shall report regularly to the Board, making recommendations where appropriate. They are entitled to utilize the services

of the appropriate personnel of the Company and its subsidiaries, and, if they deem it fit, without the Board’s approval and at the Company’s

expense, to appoint, compensate and oversee the work of any outside advisor to assist them in connection with their responsibilities.

Audit Committee

The tasks, functions and organization of the Audit Committee are described in detail in the Audit Committee charter, which is published on the

Company website at www.ivecogroup.com.

The Audit Committee is responsible, inter alia, for assisting and advising the Board of Directors, with respect to: (i) the integrity of the Company’s

financial statements, (ii) the Company’s policy on tax planning, (iii) the Company’s financing, (iv) the Company’s application of information and

communication technology, (v) the systems of risk management and internal controls that the management and the Board of Directors have

established, (vi) the Company’s compliance with legal and regulatory requirements, (vii) the Company’s compliance with recommendations and

observations from internal and independent auditors, (viii) the Company’s policies and procedures for addressing certain actual or perceived

conflicts of interest, (ix) the review of related party transactions, (x) the independent auditors’ qualifications, independence, remuneration and any

non-audit services for the Company, (xi) the functioning of the Company’s internal auditors and of the independent auditors, (xii) risk management

guidelines and policies, and (xiii) the implementation and effectiveness of the Company’s ethics and compliance program.

The Audit Committee consists of at least three Non-Executive, independent Directors. All of them must be financially literate and have accounting

or financial management expertise qualification, and at least one shall have competence in accounting and/or auditing, while its members as a

whole must have competence relevant to the sector in which the Company is operating. As a rule, no Director may serve as a member of the

Company’s Audit Committee if they already have the same role in more than four other public companies.

The Audit Committee shall meet at such time and place as its chair or a majority of its members shall determine, but normally at least four times

every year. The Audit Committee shall meet with the external auditor as often as it considers necessary, but at least once a year, outside the

presence of the Executive Directors. The Chief Executive Officer, the chief financial officer, the internal auditor and the external auditor shall

attend the Audit Committee meetings, unless the Audit Committee determines otherwise.

The Audit Committee is currently composed of: Essimari Kairisto as chair, and Olof Persson and Lorenzo Simonelli as members. The Board

acknowledged all meet the relevant accounting and/or auditing competence requirements, and satisfy the requirement of competence in the

sector as a group.

In addition to actions taken without meeting, the Audit Committee met eight times during 2022, duly and timely reporting its activities to the Board

Board Report Corporate Governance 87

and the Non-Executive Directors. The following chart shows the attendance by the Audit Committee members at its meetings.


Committee member	Kairisto	Persson	Simonelli
Attendance	7/8	8/8	8/8

In these meetings (all attended in all or in part by the General Counsel, the CFO and the Head of Enterprise Risk Management & Internal Audit,

as well as the external auditors and other representatives of the Company’s management, depending on the issues at stake), the Committee inter

alia reviewed and discussed the annual and quarterly financial statements (and the independent auditors’ review or audit thereof), the Group’s tax

strategy (including the decision to apply to the Italian Tax Authority for admission to the co-operative compliance regime), the Company’s funding

plan, the initial setting-up of the Company’s internal control and risk management systems (including the adoption of the Internal Audit Charter),

the Company’s risk assessment and risk appetite, key risks and controls relating to cybersecurity, performance and plans of the Company’s

internal audit function and the Company’s independent public auditors, the external auditor’s rotation, the quality of the control environment and

the evaluation of the internal audit function, major legal matters facing the Company (in terms of both compliance and litigation), and the

implementation and effectiveness of the Company’s ethics and compliance programs (including whistleblowing and anti-corruption policies).

ESG Committee

The tasks, functions and organization of the ESG Committee are described in detail in the ESG Committee charter, which is published on the

Company website at www.ivecogroup.com.

While fulfilling the role of the selection and appointment committee according to the DCGC, the ESG Committee is responsible for, among other

things, assisting and advising the Board of Directors with respect to: (i) drawing up the selection criteria and appointment procedures for members

of the Board of Directors and making proposals for its composition profile; (ii) proposals to the non-executive members of the Board of Directors

for the nomination and re-nomination of directors to be appointed by the General Meeting; (iii) periodic assessment of the Board of Directors, its

Committees and individual members; (iv) overseeing the integration of sustainability aspects into the Company business model, including

appropriate key ESG performance indicators or metrics; and (v) monitoring, evaluation and reporting on the strategy, targets, achievements, and

disclosures relating to ESG matters globally of the Company and its subsidiaries.

The ESG Committee consists of at least three Non-Executive Directors; at least one will be independent. It shall meet at such time and place as

its chair or a majority of its members may determine, but at least once every year.

The ESG Committee is currently composed of: Mr. Alessandro Nasi as chair, and Tufan Erginbilgic (who qualifies as independent) and Linda

Knoll as members.

In 2022 the ESG Committee met six times, duly and timely reporting its activities to the Board and the Non-Executive Directors. The following

chart shows the attendance by the ESG Committee members at its meetings.


Committee member	Nasi	Erginbilgic	Knoll
Attendance	6/6	6/6	6/6

In these meetings (all attended in all or in part by the General Counsel, the Head of Institutional Relations & Sustainability, as well as other

representatives of the Company’s management, depending on the issues at stake), the Committee inter alia addressed the Company’s ESG

strategy, targets, industry benchmarks, and engagement activities, making this the object of continuous monitoring (which a specific focus on

health & safety); discussed the Board’s diversity and skill matrix; managed the nomination process in preparation of the appointment of a ninth

Director, in the person of Mr. Benoît Ribadeau-Dumas; approved the evaluation process of the Board and its Committees.

Human Capital and Compensation Committee

The tasks, functions and organization of the Human Capital and Compensation Committee are described in detail in the Human Capital and

Compensation Committee charter, which is published on the Company website at www.ivecogroup.com.

While fulfilling the role of the remuneration committee according to the DCGC, the Human Capital and Compensation Committee is responsible

for, among other things, assisting and advising the Board of Directors with respect to: (i) determining executive compensation consistent with the

Company’s remuneration policy (and, at least every four years, submitting a proposal to the Board for the remuneration policy to be pursued), (ii)

reviewing and approving the remuneration structure for the executive Directors (preparing the Board’s relevant decision-making), (iii)

administering equity incentive plans and deferred compensation benefit plans, (iv) discussing with management the Company’s policies and

practices related to compensation and issuing recommendations thereon, (v) talent development/management and succession plans for the

Senior Leadership Team, (vi) the Company’s policies and initiatives related to equal employment opportunity, as well as diversity, equity, and

inclusion, (vii) the Company’s programs designed to measure and improve overall employee engagement, and (viii) preparation of the annual

compensation report.

The Human Capital and Compensation Committee consists of at least three Non-Executive Directors; at least one will be independent. It shall

meet at such time and place as its chairperson or a majority of its members may determine, but at least once every year. The Head of the

Company’s Human Resources Department shall attend the meetings, unless the Human Capital and Compensation Committee determines

otherwise.

The Human Capital and Compensation Committee is currently composed of: Ms. Linda Knoll as chair, and Tufan Erginbilgic (who qualifies as

independent) and Alessandro Nasi as members.

Board Report Corporate Governance 88

In 2022 the Human Capital and Compensation Committee met six times, duly and timely reporting its activities to the Board and the Non-

Executive Directors. The following chart shows the attendance by the Human Capital and Compensation Committee members at its meetings.


Committee member	Knoll	Erginbilgic	Nasi
Attendance	6/6	6/6	6/6

In these meetings (all attended in all or in part by the General Counsel, the Head of HR & ICT, as well as other representatives of the Company’s

management, depending on the issues at stake), the Committee inter alia appointed Mercer as its external advisor and addressed the Executive

Directors’ compensation (submitting the relevant proposals to the Non-Executive Directors, as a result of internal analyses and external

benchmarks), short-term and long-term variable pay initiatives (preparing the Board’s relevant decision-making, as appropriate), the Company’s

diversity, equity & inclusion initiatives, the Company’s programs designed to enhance employee value proposition and improve overall employee

engagement, the top management succession planning, the preparation of the annual compensation report.

SENIOR LEADERSHIP TEAM

On certain key industrial matters, the Board is advised by the Company’s Senior Leadership Team (the “SLT”), that serves to strengthen the

quality of the Company’s decision-making and the implementation of its strategy. As of 31 December 2022 it comprised the Company’s Chief

Executive Officer and the senior management reporting to the CEO: the heads of the Business Units (Truck – Luca Sra; Bus – Domenico Nucera;

Powertrain – Sylvain Blaise; Defence Vehicles & Astra – Claudio Catalano; Firefighting – Thomas Hilse; Financial Services – Simone Olivati), the

Support & Industrial Functions (Supply Chain – Angela Qu; Manufacturing – Ángel Rodríguez Lagunilla; Technology & Digital – Marco Liccardo;

Finance – Francesco Tanzi; HR & ICT – Francesco Tutino), and the Corporate Functions (Institutional Relations & Sustainability – Michele Ziosi;

Communications – Francesco Polsinelli; General Counsel and Chief Compliance Officer – Gabriella Porcelli; Enterprise Risk Management &

Internal Audit – Alessandra Ramorino). None of the members of the SLT has a conflict of interest (actual or potential) between their duties to the

Company and their private interests and/or other duties.

The SLT is an operational body of the Company, which is responsible for reviewing the operating performance of the business segments and is

involved in the decision-making on certain operational matters; as such, it does not qualify as an executive committee according to the DCGC.

The Board remains accountable for the decisions of the SLT and has ultimate responsibility for the Company’s management and external

reporting. The SLT is supervised by the Non-Executive Directors of the Board. For this purpose, the SLT members, either directly or through the

Chief Executive Director, provide the Non-Executive Directors with all information the Non-Executive Directors require to fulfil their responsibilities.

During 2022, in addition to the reporting by and through the CEO, the leaders of the various departments and business units (all SLT members)

presented to the Board (in its full meetings or through its Committees) their operating results, defining and discussing the relevant indicators,

business plans, long-term value creation strategies as well as their top risks, and specific projects and initiatives. The presentations and

subsequent discussions allowed management to articulate their strategies for the achievement of the Company’s business (and ESG) objectives

and the mitigation of risks, while giving the Board of Directors the opportunity to challenge and give feedback on the management’s plans and

overall approach.

CODE OF CONDUCT

The Company has adopted a Code of Conduct that describes the Company’s values that contribute to a culture focused on long-term value

creation for the Group and all of its stakeholders, which is the Board’s responsibility to create and foster. The Company periodically reviews and

updates the Code of Conduct to ensure it is consistent with applicable laws and best practices. The Code of Conduct covers topics such as

environment, health and safety, antitrust/competition, anti-corruption, data privacy, management of human resources, communities and respect of

human rights. In a nutshell, it sets out the principles and the ethical values that contribute to the culture which the Company follows in the conduct

of its activities and the quality and integrity which it requires of all its collaborators.

The Code of Conduct forms an integral part of the internal control system and sets out the principles of business ethics to which Iveco Group

adheres and which Directors, officers, employees, consultants and all business partners are required to observe. Iveco Group uses its best

endeavors to ensure that suppliers, consultants and any third party with whom Iveco Group has a business relationship be informed of the

principles set forth in the Code of Conduct. In addition, the Company issued a Supplier Code of Conduct, which includes the Company’s

guidelines and expectations for suppliers with regard to such areas as labor and human rights, the environment, trade restrictions and export

controls, business ethics and anti-corruption, and reporting matters to the Company.

The Code of Conduct is available in seven languages on the Governance section of the Company’s website (www.ivecogroup.com), and on the

Company's intranet site. The Supplier Code of Conduct is available on the Governance section of the Company’s website and on the Company's

intranet site and is available in six languages.

The Company has established dedicated channels of communication to enable Iveco Group’s employees, customers, suppliers, and other third

parties to report alleged irregularities of a general, operational, and financial nature with the Company. The Company’s Compliance Helpline is

managed by an independent third party. Reports may be submitted through a dedicated web portal (www.ivecogroupcompliancehelpline.com), by

phone (to a call center managed by a third party), or in person to an authorized manager. Company employees are required to report compliance

issues. Where legally permissible, reports may be submitted on an anonymous basis. The Company investigates reports submitted and, in

appropriate cases, implements corrective and/or disciplinary actions.

The Group’s ethics and compliance program is managed by the Chief Legal & Compliance Officer (the “CLCO”). The Company’s CLCO reports to

the Company’s Chief Executive Officer. As a rule, the CLCO reports on (at least) a quarterly basis to the Audit Committee. The CLCO’s reports to

Board Report Corporate Governance 89

the Audit Committee include such things as compliance training and communications activities, material compliance and ethics trends and topics,

matters reported to the Compliance Helpline, the status of investigations, and the effectiveness of the compliance and ethics program. The CLCO

is responsible for, among other things, maintaining awareness across the organization about the Code of Conduct, and amending the same if and

as determined by the executive Directors or by the Board, creating and deploying compliance training, managing the Compliance Helpline

(including investigating reported matters), assessing legal and compliance risks and working with the relevant stakeholders to develop compliance

related policies, procedures and controls to effectively manage such risks.

The Group’s Code of Conduct is supplemented by additional corporate policies, guidelines and procedures. These cover specific areas of higher

risk given the nature and extent of the Company’s business such as: conflicts of interest, bribery and corruption, antitrust/competition law,

international trade compliance, and data privacy. Each year certain categories of employees (i.e. those deemed to have responsibilities

presenting potentially greater risk to the Company), as well as Board members, are required to certify that (i) they are aware – inter alia – of the

Code of Conduct and the Company’s Conflict of Interest Policy, and (ii) they have not violated, and are not aware of any violation of, the Code of

Conduct or the Conflict of Interest Policy.

RELATED PARTY TRANSACTIONS POLICY

The Board has a related party transaction policy in accordance with Dutch law and the DCGC, for the purpose of providing a procedure that

prevents related parties from unduly taking advantage of their position and provides adequate protection for the interests of the Company and its

stakeholders. The policy stipulates that transactions with related parties within the meaning of International Accounting Standard 24 are relevant

to the extent either (i) the information concerning the transaction qualifies as inside information (pursuant to the European Market Abuse

Regulation), or (ii) the counterparty is a Director or a qualified (over 10%) shareholder, and the transaction is of material significance (such

transaction to be agreed on terms that are customary to the market).

In particular, the related party transaction policy provides procedures for members of the Board to notify any potential related party transaction,

and specific disclosure requirements. The assessment whether the transaction actually qualifies as a relevant related party transaction is up to the

Board, and no transaction duly qualified as such shall be undertaken without approval of the Board (and the favorable vote of a majority of the

votes cast by Non-Executive Directors), subject to previous review by the Audit Committee and without interested Directors (if any) participating in

the decision-making process. The Related Party Transactions Policy is amended from time to time to ensure effectiveness of the relevant

provisions and compliance with applicable laws and regulations.

The current version of the Company’s Related Party Transactions Policy is available at the Company’s website at www.ivecogroup.com.

Agreements between the Company and CNH Industrial

Prior to the completion of the Demerger, the Company was a wholly-owned subsidiary of CNH Industrial. In the context of the Demerger, CNH

Industrial and the Company entered into agreements, primarily of commercial nature, but also covering general administrative and specific

technical matters as well as services provided by CNH Industrial and vice versa.

Master Service Agreements

In relation to services (related to lease of premises, IT services, promotion and marketing activities, warehouse management, human resources,

and other corporate functions) provided by either the Company to CNH Industrial and vice versa, in connection with the execution of the

Demerger Deed, the Company 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).

The reason for both parties of entering into the MSA is the result of the realization that in certain areas a complete duplication of the entire range

of in-house services existing before the Demerger would result in unnecessary costs. The MSA is intended to constitute an umbrella agreement

allowing both parties to continue receiving (or providing as the case may be) such services substantially at the same terms and conditions in place

before the Demerger for an interim period. The identification of each of the services and their peculiar terms and conditions is governed by ad hoc

Opt-in arrangements. Upon termination, the receiving party may be required either to purchase the line of business providing such services at fair

market value or to indemnify the service provider from any direct cost incurred as a result of such termination.

Engine Supply Agreement

In relation to the design and supply of off-road engines from the Company to CNH Industrial, the Company and CNH Industrial entered into a ten-

year Engine Supply Agreement (ESA) whereby the Company (through FPT Industrial) will sell to CNH Industrial diesel, CNG and LNG engines

and provide post-sale services. Prices of the current engines have been agreed in consistency with past practices and will be subject to revision

for raw material cost fluctuations, while the price of future engines will be agreed between the parties. The ESA provides for mechanisms

incentivizing both parties to maximize efficiencies and quality improvements.

Board Report Corporate Governance 90

Financial Service Agreement

In relation to financial services activities to be carried out post-Demerger by either the Company in favor of CNH Industrial or vice versa, the

Company and CNH Industrial entered into a Master Services Agreement (FS MSA), whereby each Party (and its subsidiaries) has agreed to

provide services to the other (and its subsidiaries) and/or financial services activities to their customers, distribution networks, and suppliers,

substantially at the same terms and conditions in place before the Demerger. Further, under the terms of the FS MSA, the servicing of the

receivable portfolios originated by captive activities will be performed by Iveco Group's Financial Services segment insofar as it relates to the

European operations of both groups, whereas CNH Industrial will provide financial services to Iveco Group companies in the rest of the world. The

FS MSA term is three years and it may be renewed for additional terms with the consent of both parties. Upon termination the party receiving

such services may be required either to purchase the line of business providing such services at fair market value or to indemnify the service

provider from any direct cost incurred as a result of such termination.

Agreements with Exor portfolio companies

Exor is an investment holding company and it is the major shareholder of CNH Industrial and the Company. As of the date of this Report, among

other things, Exor managed a portfolio that includes the investment in Stellantis.

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), a Master Services Agreement (the Stellantis MSA) was put in place, which set forth the

primary terms and conditions pursuant to which services were provided at cost plus a negotiated margin. As of 31 December 2022 the Stellantis

subsidiaries were continuing to provide the Company with certain administrative services such as accounting, maintenance of plant and

equipment, security, information systems and training under the terms and conditions of the Stellantis MSA and the applicable Opt-in letters. The

Stellantis MSA has a two-year term renewable upon agreement of both parties. Upon termination the party receiving such services may be

required either to purchase at fair market value the line of business dedicated to providing such services for the benefit of the Group or to

indemnify the service provider from any direct cost incurred as a result of such termination.

LOYALTY VOTING PROGRAM

The Company’s authorized share capital amounts to €8,000,000, divided into 400,000,000 Common Shares and 400,000,000 Special Voting

Shares, each having a par value of one euro cent (€0.01) and carrying the same voting rights. All Shares are in registered form and no certificates

were issued. As of 31 December 20222, the Company’s issued share capital amounted to €3,454,589.70 and was divided into 271,215,400

Common Shares and 74,243,570 Special Voting Shares.

According to the loyalty voting program the Company has in place, at any time, subject to meeting certain conditions, the Common Shares can be

registered in the Company’s Loyalty Register and all such Common Shares qualify as Qualifying Common Shares if held in such register for an

uninterrupted period of at least three years after registration. The holder of Qualifying Common Shares is entitled to receive without consideration

one Special Voting Share in respect of each such Qualifying Common Share. Pursuant to the Terms and Conditions of the Special Voting Shares,

and for so long as the Common Shares remain in the Loyalty Register, such Common Shares shall not be sold, disposed of, transferred, except in

very limited circumstances (i.e. transfers to affiliates or to relatives through succession, donation or other transfers (defined in the Terms and

Conditions of the Special Voting Shares as Loyalty Transferee)), but a Shareholder may create or permit to exist any pledge, lien, fixed or floating

charge or other encumbrance over such Common Shares, provided that the voting rights in respect of such Common Shares and any

corresponding Special Voting Shares remain with such Shareholder at all times. Shareholders who want to directly or indirectly sell, dispose of,

trade or transfer their Common Shares that are registered in the Company’s Loyalty Register to anyone other than a Loyalty Transferee, or

otherwise grant any right or interest therein, or create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over such

Common Shares with a potential transfer of voting rights relating to such encumbrances will need to submit a de-registration request. After de-

registration from the Loyalty Register, the holder of such Common Shares is required to offer and transfer the Special Voting Shares associated

with such Common Shares (if any) to the Company for no consideration (om niet). As a result, any transfer of Common Shares that are registered

on the Loyalty Register, other than to a Loyalty Transferee, will trigger the de-registration of such Common Shares from that register and any

associated Special Voting Shares will automatically be surrendered to the Company for no consideration and any voting rights attached to the

corresponding Special Voting Shares will be suspended with immediate effect.

The Special Voting Shares will not entitle the long-term Shareholder to any material additional economic entitlement. The entitlement to dividend

and other distribution will effectively be calculated on the basis of the number of Common Shares held by a Shareholder, irrespective of the

number of Special Voting Shares such a Shareholder may also hold. Nevertheless, holders of Special Voting Shares will be entitled to a minimal

dividend per Special Voting Share of 1% of the nominal value of such Special Voting Share, which is then allocated to the Special Dividend

Reserve. Only the holders of Special Voting Shares hold entitlement to the balance of the Special Dividend Reserve. The distribution of any

amounts from the Special Dividend Reserve can only be authorized with the approval of the general meeting of the holders of Special Voting

Shares upon proposal of the Board. The power to vote upon the distribution from the Special Dividend Reserve will be the only power that is

granted to that meeting. The Special Voting Shares will not have any other economic entitlement.

Further, pursuant to the Articles of Association, the Company shall maintain a special capital reserve to be credited against the share premium

exclusively for the purpose of facilitating any issuance or cancellation of Special Voting Shares. The obligation to pay up the Special Voting

Shares upon their issuance will be fully settled against the special capital reserve. There will not be any additional payments required from those

being issued the Special Voting Shares.

Pursuant to the Terms and Conditions, any amendment to the Terms and Conditions of the Special Voting Shares (other than merely technical,

non-material amendments and unless such amendment is required to ensure compliance with applicable law or regulations or the listing rules of

Board Report Corporate Governance 91

any securities exchange on which the Common Shares are listed) may only be made with the approval of the General Meeting.

Upon completion of the Demerger, on the Settlement Date, Monte Titoli credited the accounts of the financial intermediaries participating with

Monte Titoli with respect to the Common Shares distributed to beneficiaries holding CNH Industrial common shares pursuant to the Allotment

Ratio and Computershare registered the Special Voting Shares in the Loyalty Register in the name of the holders of CNH Industrial special voting

shares. In this regard, each CNH Industrial Shareholder that was registered in the CNH Industrial Loyalty Register immediately prior to the

Demerger becoming effective was registered in the Loyalty Register, for the corresponding number of Common Shares such CNH Industrial

Shareholder received pursuant to the Allotment Ratio. If such CNH Industrial shareholder also held CNH Industrial special voting shares, by

operation of law they received a number of Special Voting Shares equal to the number of Common Shares for which it was registered in the

Loyalty Register. If such CNH Industrial Shareholder was registered in the CNH Industrial Loyalty Register electing to receive CNH Industrial

special voting shares upon completion of the required holding period, it also was registered in the Company’s Loyalty Register electing to receive

Special Voting Shares upon completion of the required holding period, whereby the holding period to receive Special Voting Shares was

shortened with the period for which such holder of Common Shares had already been registered in the CNH Industrial Loyalty Register.

DISCLOSURES PURSUANT TO EU-DIRECTIVE ON TAKEOVERS

The following disclosures are provided as a consequence of the current status of the Company following the admission of its common shares to

trading on Euronext Milan.

In accordance with Dutch rules implementing the EU Takeover Directive, the Company makes the following disclosures:

a.For information on the rights attached to the common shares, please refer to the Articles of Association which are posted on the

Company’s website. To summarize, the rights attached to common shares comprise pre-emptive rights upon issue of common shares,

the entitlement to attend the general meeting of shareholders and to speak and vote at that meeting and the entitlement to distributions

of such amount of the Company’s profit as remains after allocation to reserves. For information on the rights attached to the special

voting shares, refer to the Articles of Association and the Terms and Conditions for the Special Voting Shares which can both be found

on the Company’s website and more in particular to the paragraph “Loyalty Voting Program” of this Report. As at 31 December 2022,

the issued share capital of the Company consisted of 271,215,400 common shares, representing 78.51% of the aggregate issued

share capital, and 74,243,570 special voting shares, representing 21.49% of the aggregate issued share capital.

b.The Company has imposed no limitations on the transfer of common shares. The Articles of Association provide in Article 11 for

transfer restrictions for special voting shares. The Company is not aware of any depository receipts having been issued for shares in its

capital.

c.For information on participations in the Company’s capital in respect of which pursuant to the Dutch Financial Supervision Acts (Wet op

het financieel toezicht) notification requirements apply, refer to the chapter "Major Shareholders" of this Report. There you will find a list

of shareholders who are known to the Company to have holdings of 3% or more.

d.No special control rights or other rights accrue to shares in the capital of the Company.

e.Current equity incentive plans adopted by the Company are administered by the Human Capital and Compensation Committee.

f.No restrictions apply to voting rights attached to shares in the capital of the Company, nor are there any deadlines for exercising voting

rights. The Articles of Association do not allow the Company to cooperate with the issue of depository receipts for shares.

g.The Company is not aware of the existence of any agreements with shareholders which may result in restrictions on the transfer of

shares or limitation of voting rights.

h.The rules governing the appointment and dismissal of members of the board of directors of the Company are stated in the Articles of

Association of the Company. All members of the Board of Directors are appointed by the general meeting of shareholders. The term of

office of all members of the Board of Directors is for a period expiring on the day the first Annual General Meeting of Shareholders is

held in the following calendar year. The general meeting of shareholders has the power to dismiss any member of the Board of

Directors at any time. The rules governing an amendment of the Articles of Association are stated in the Articles of Association and

require a resolution of the general meeting of shareholders which can only be passed pursuant to a prior proposal of the Board of

Directors of the Company.

i.The general powers of the Board of Directors are stated in the Articles of Association of the Company. For a period of five years from

3 January 2022 up to and including 3 January 2027, the Board of Directors has been irrevocably authorized through article 5,

paragraph 8 of the Articles of Association to issue special voting shares up to the maximum aggregate amount of special voting shares

as provided for in the Company’s authorized share capital as set forth in Article 3, paragraph 1 of the Articles of Association. For a

period of five years from 1 January 2022 and therefore ending 1 January 2027, the Board of Directors has been authorized by the

general meeting of shareholders by way of written resolution adopted on 30 December 2021 as authorized body to issue common

shares and to grant rights to acquire common shares in the capital of the Company, which authorization is limited to the issuance of

15% of the total number of common shares issued in the capital of the Company as of 1 January 2022. By way of a written resolution

adopted by shareholders on 30 December 2021 for a period of five years starting from 1 January 2022 and therefore ending 1 January

2027, the Board of Directors has been also authorized by the shareholders as authorized body to limit or exclude the statutory

preemptive rights of shareholders in connection with the issuance of common shares or rights to acquire shares in the capital of the

Company, pursuant the share issuance authorization described above. The Board of Directors is authorized to acquire special voting

shares in the capital of the Company for no consideration. Further rules governing the acquisition of shares by the Company in its own

share capital are set out in article 5 of the Articles of Association of the Company.

Board Report Corporate Governance 92

j.The Company is not a party to any significant agreements which will take effect, will be altered or will be terminated upon a change of

control of the Company as a result of a public offer within the meaning of the Dutch Financial Supervision Act (Wet op het financieel

toezicht), provided that some of the loan agreements guaranteed by the Company contain clauses that, as it is customary for such

financial transactions, may require early repayment or termination in the event of a change of control of the guarantor or the borrower.

In certain cases, that requirement may only be triggered if the change of control event coincides with other conditions, such as a credit

rating downgrade.

k.Under the terms of the Iveco Group Equity Incentive Plan (“Iveco Group EIP”) and the terms of engagement entered into with certain

executive officers, executives may be entitled to receive severance payments of up to one (1) times their annual cash compensation

and accelerated vesting of awards under plans issued under the Iveco Group EIP if, within twenty-four months of a Change of Control

(as defined therein), the executive’s employment is involuntarily terminated (other than for Cause, as defined therein) by the relevant

entity of the Iveco Group or is terminated by the participant for Good Reason (as defined therein).

COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE

While the Company endorses the principles and best practice provisions of the DCGC, its current corporate governance structure deviates from

the following best practice provisions as follows:

▪Under best practice provision 5.1.1, in case of a one-tier governance structure, the majority of the management board should be made up of

non-executive directors and the requirements for independence stipulated in best practice provisions 2.1.7 and 2.1.8 should apply to the

non-executive directors. In its initial composition after the Demerger, the Board of Directors was composed of two Executive Directors and

six Non-executive Directors, out of which four qualified as independent. The April 2022 General Meeting redefined the composition of the

Board, by appointing as a seventh Non-executive Director Mr Ribadeau-Dumas, who does not qualify as independent pursuant to the DCGC

criteria and can be considered to be affiliated with the Company’s over 10% shareholder Exor (where he is a partner). Considering also Mr.

Nasi (another non-independent Non-executive Director) can be considered to be affiliated with Exor (where he serves as Vice Chairman of

the board of directors) and its parent company Giovanni Agnelli B.V. (where he serves as a Director, such entity qualifying as the ultimate

reporting entity with the AFM of the interest in the Company), the Company acknowledges it is not in compliance with best practice provision

2.1.7 (i) and 2.1.7 (iii). Nevertheless the Company is of the opinion that (i) in light of the major shareholding of Exor (and Giovanni Agnelli

B.V.), it is appropriate that more than one affiliate with Exor (including a member of the family, which controls Giovanni Agnelli B.V.) has a

seat in its Board as a Non-Executive Director, while (ii) the present composition of the Board (focused on expertise and experience more

than formal independence) remains correctly balanced and can assure an effective supervision by fully accountable Non-executive Directors

of the correct discharge of the duties entrusted to the executive ones, as the evaluation performed by the Board assessed and confirmed.

▪Under best practice provision 2.3.4, more than half of the members of the committees should be independent within the meaning of best

practice provision 2.1.8. For the ESG Committee and the Human Capital and Compensation Committee the majority of the members in

those two committees is not independent. The Company is of the opinion that this composition will enhance the effectiveness and constitute

a fair and adequate representation of persons having the necessary expertise and experience, even if those persons would not, formally

speaking, be considered ‘independent’ within the meaning of provision 2.3.4.

▪The Board has not appointed a vice-chairman in the sense of best practice provision 2.3.7 of the DCGC. Nevertheless, the Board

Regulations provide that in the absence of the Non-Executive Director entrusted with the duties attributed by the DCGC to the chair of the

management board in one-tier companies any other Non-Executive Director chosen by a majority of the Directors present at a meeting shall

preside at meetings of the Board of Directors. The Company considers the above sufficient to ensure that the role and function assigned by

the DCGC to the vice-chairman is properly discharged.

▪Pursuant to best practice provision 4.1.8 of the DCGC, every Executive and Non-Executive Director nominated for appointment should

attend the Annual General Meeting at which votes will be cast on his/her nomination. Since, pursuant to the Articles of Association, the term

of office of Directors is approximately one year, such period expiring on the day the first Annual General Meeting of Company shareholders

is held in the following calendar year, all members of the Board of Directors are nominated for (re)appointment each year. By publishing the

relevant biographical details and curriculum vitae of each nominee for (re)appointment, the Company ensures that the Company's general

meeting of shareholders is well informed in respect of the nominees for (re)appointment and in practice only the Executive Directors will

therefore – as a rule – attend the Annual General Meeting.

▪The Company does not have a retirement schedule as referred to in paragraph 2.2.4 of the DCGC. Pursuant to the Articles of Association,

the term of office of Directors is approximately one year, such period expiring on the day the first Annual General Meeting of Company

shareholders is held in the following calendar year.

▪Under best practice provision 5.1.3, the chairperson of the board should be an independent Non-Executive Director. In accordance with

section 14(2) of the Articles of Association, the Board entrusted to an independent Non-Executive Director the duties attributed by the DCGC

to the chair of the management board in one-tier companies (or to the chairman of the supervisory board in two-tier companies) and granted

to such independent Non-Executive Director the title of ‘Senior Non-Executive Director’ (so as to distinguish such Director from the

Chairperson of the Company, who is an Executive Director). As a consequence, despite the difference in corporate titles, the Company

believes it complies with best practice provision 5.1.3, as the current Senior Non-Executive Director satisfies the requirements described in

best practice provision 5.1.3 of the DCGC.

Board Report Corporate Governance 93

REPORT OF THE NON-EXECUTIVE DIRECTORS

Supervision

The Board of the Company is structured as a one-tier board, made up of Executive Directors and Non-Executive Directors. Details of the current

composition and the actual functioning of the Board in 2022 (including the participation by individual members to the meetings) are set forth in the

section “Board of Directors”.

The Non-Executive Directors are responsible for the supervision of the policy and the general course of affairs of the Company and its affiliated

enterprise, including the implementation of the Company’s long-term value creation strategy, as carried out on a day-by-day basis by the

Executive Directors. The Non-Executive Directors perform this task independently and critically vis-à-vis one another, the Executive Directors, and

any particular interest involved.

With a view of exercising their supervisory role, in 2022 the Non-Executive Directors regularly discussed the Company’s business plans and

strategy, their implementation and evolution, and the risks associated with them with the Executive Directors and the SLT. In so doing, they

focused on performance and strategy of the single Business Units, cash flow and debt management, tax, ESG related matters (including the

Company’s purpose and mission), compliance matters and regulatory developments, investment opportunities and relevant transactions,

executive compensation, major litigations, the effectiveness of the Company’s internal risk management and control systems, as well as the

integrity and quality of the financial reporting, reviewing the Company’s periodic disclosure. In this connection, it is customary that a portion of

each meeting of the full Board is organized as an executive session of the Non-Executive Directors, which gives them opportunity of unbiased

analysis of the Company’s general affairs.

According to the Articles of Association, the Board of Directors has allocated certain specific responsibilities to the Audit Committee, the ESG

Committee and the Human Capital & Compensation Committee, which are entirely made up of Non-Executive Directors. Details on the manner in

which these Committees have carried out their duties, their composition, the numbers of meetings which took place in 2022 and the main topics

discussed are set forth in the corresponding sections of this Report.

Independence

The non-executive directors are required by Dutch law to act solely in the interest of the issuer. The Dutch Corporate Governance Code further

recommends that its requirements for independence of the supervisory board apply to the non-executive members of a one-tier board.

The Non-Executive Directors of the Company have determined that only four (Mr. Erginbilgic, Ms. Kairisto, Mr. Persson and Mr. Simonelli) out of

the seven Non-Executive Directors in charge qualify as independent in accordance with the Dutch Corporate Governance Code. In addition, two

Non-Executive Directors (Mr. Nasi and Mr. Ribadeau-Dumas) can be considered to be affiliated with Exor, which owns over 10% of the

Company’s outstanding shares.

Whilst the Company acknowledges that this is not in compliance with best practice provision 2.1.7 of the DCGC (as discussed in the section

“Compliance with the Dutch Corporate Governance Code” of this Report), the Non-Executive Directors are of the opinion that the Company

otherwise meets the independence requirements set forth in best practice provision 2.1.10 of the DCGC.

Evaluation

In 2022 the evaluation of the Board, its Committees and individual members (Executive Directors and Non-Executive Directors alike), consisted of

a self-assessment, performed through a written questionnaire, addressing an array of items (under the captions Profile, Responsibilities and

Functioning), with an invitation to comment on the various topics. The response rate was 100%.

The replies were tabulated by the Board Secretary and represented the basis for subsequent one-to-one conversations with the Chairperson and

final collective discussion.

For a more comprehensive overview of the evaluation process (how it was carried out and what its conclusions have been), reference is made to

the ad hoc paragraph included in the section “Board practice”.

RESPONSIBILITY STATEMENT UNDER THE DUTCH FINANCIAL MARKETS SUPERVISION ACT

The Board of Directors is responsible for preparing the Annual Report, inclusive of the Consolidated and Company Financial Statements and

Board Report, in accordance with Dutch law and International Financial Reporting Standards as issued by the International Accounting Standards

Board and as adopted by the European Union (IFRS).

In accordance with Section 5:25c, paragraph 2 of the Dutch Financial Markets Supervision Act, the Board of Directors states that, to the best of its

knowledge, the Consolidated and Company Financial Statements prepared in accordance with IFRS as adopted by the European Union provide a

true and fair view of the assets, liabilities, financial position and profit or loss for the year of the Company and its subsidiaries and that the Board

Report provides a true and a fair view of the performance of the business during the financial year and the position at balance sheet date of the

Company and its subsidiaries, together with a description of the principal risks and uncertainties that the Company and the Group face.

Board Report Corporate Governance 94

RESPONSIBILITY STATEMENT UNDER THE DUTCH CORPORATE GOVERNANCE CODE

Based on the assessment performed, the Board of Directors believes that, as of 31 December 2022, the Group’s and the Company’s Internal

Control over Financial Reporting is considered effective and that (i) the Board Report provides sufficient insights into any material weaknesses in

the effectiveness of the internal risk management and control systems (please refer to section “Risk Management and Internal Control System” of

this Annual Report), (ii) the internal risk management and control systems are designed to provide reasonable assurance that the financial

reporting does not contain any material inaccuracies (please refer to section “Iveco Group Internal Audit and Internal Control System” of this

Annual Report), (iii) based on the current state of affairs, it is justified that the Group’s and the Company’s financial reporting is prepared on a

going concern basis (refer to the Notes to the Consolidated Financial Statements of this Annual Report and the Notes to the Company Financial

Statements of this Annual Report for additional information on the basis of preparation), and (iv) the Board Report states those material risks and

uncertainties that are, in the Board of Director’s judgment, relevant to the expectation of the Company’s continuity for the period of twelve months

after the preparation of the Board Report (please refer to the chapter “Risk Factors” of this Annual Report).

The above, however, does not imply that Iveco Group can provide certainty as to the realisation of strategic business and financial objectives, nor

can the Company’s Internal Control over Financial Reporting be expected to prevent or detect all misstatements, errors, fraud or violation of laws

or regulations.

2 March 2023

Suzanne Heywood

Chair

Gerrit Andreas Marx

Chief Executive Officer

RESPONSIBILITY STATEMENT UNDER THE DUTCH FINANCIAL MARKETS SUPERVISION ACT

The Board of Directors is responsible for preparing the Annual Report, inclusive of the Consolidated and Company Financial Statements and

Board Report, in accordance with Dutch law and International Financial Reporting Standards as issued by the International Accounting Standards

Board and as adopted by the European Union ("EU-IFRS").

In accordance with Section 5:25c, paragraph 2 of the Dutch Financial Markets Supervision Act, the Board of Directors states that, to the best of its

knowledge, the Consolidated and Company Financial Statements prepared in accordance with EU-IFRS provide a true and fair view of the

assets, liabilities, financial position and profit or loss for the year of the Company and its subsidiaries and that the Board Report provides a true

and a fair view of the performance of the business during the financial year and the position at balance sheet date of the Company and its

subsidiaries, together with a description of the principal risks and uncertainties that the Company and the Group face.

2 March 2023

The Board of Directors

Suzanne Heywood

Gerrit Andreas Marx

Tufan Erginbilgic

Essimari Kairisto

Linda Knoll

Alessandro Nasi

Olof Persson

Benoît Ribadeau-Dumas

Lorenzo Simonelli

Board Report Corporate Governance 95

REMUNERATION REPORT

Letter from the Human Capital and Compensation Committee Chair

Dear Stakeholders,

With this annual Remuneration Report, the objective is to provide you with clear and comprehensive disclosure of the Company’s executive

compensation policies and decisions during the year with respect to our Executive and Non-Executive Directors. This first full-year report for the

newly formed Iveco Group recognises the strong performance our senior leaders demonstrated during the first year of operations while laying a

solid foundation for continued growth, profitability, and sustainable long-term value creation.

New Beginning

On 1 January 2022, Iveco Group successfully separated from CNH Industrial N.V. (the “Demerger”), establishing a stand-alone entity publicly

traded on the Euronext Milan stock exchange (MI: IVG) consisting of Commercial and Specialty Vehicles, Powertrain and related Financial

Services businesses.

Iveco Group’s purpose is to be: Home of unique people and brands that power your business and mission to advance a more sustainable society.

This purpose reflects the reason the Company exists and illustrates how the products and services positively impact customers, stakeholders, and

the communities where it operates.

The eight brands are each a major force in its specific business: IVECO, a pioneering commercial vehicles brand that designs, manufactures, and

markets heavy, medium, and light-duty commercial trucks; FPT Industrial, a global leader in a vast array of advanced powertrain technologies in

the agriculture, construction, marine, power generation, and commercial vehicles sectors; IVECO BUS and HEULIEZ, mass-transit and premium

bus and coach brands; IDV, for highly-specialised defence and civil protection equipment; ASTRA, a leader in large-scale heavy-duty quarry and

construction vehicles; MAGIRUS, the industry-reputed firefighting vehicle and equipment manufacturer; and IVECO CAPITAL, the financing arm

which supports them all.

The Demerger allowed Iveco Group to make a new beginning, focusing on core businesses and customers and developing its own strategic

roadmap with more flexibility to address global trends, market outlooks, and competitive dynamics that uniquely impact its businesses. Although

Iveco Group began the year as a new separate public entity, its businesses and brands have long and impressive histories, are known for their

innovative products, and are well-positioned to successfully compete against their peers. As an independent industrial powerhouse, Iveco Group

is better able to realise its full potential in terms of financial performance, shareholder and broader stakeholder value generation, and sustainability

commitments.

With the advantage of a deep-rooted shared culture, Iveco Group defined corporate values which express the way the approximately 34,000

employees around the world work: 1) We go beyond the obvious 2) We contribute diverse strengths 3) We take ownership 4) We do what is right

5) We collaborate to win. These values, through the 2022 Performance Management Process (“PMP”), are translated into how our employees are

evaluated (in addition to the achievement of individual and team performance objectives) and in turn are rewarded.

A key element of our compensation philosophy is to drive organisation-wide alignment with shared Company goals and values, and to reward

achievement of those goals in a manner consistent with our purpose and values. These values are reinforced through the Company’s

Remuneration Policy and pay programmes.

Executive and Non-Executive Directors in 2022

The Board of Directors of Iveco Group N.V. is a one-tier Board structure consisting of two Executive Director roles with managerial

responsibilities: the Chair, Suzanne Heywood, and the CEO, Gerrit Marx. In addition, there are seven Non-Executive Directors with supervisory

Board responsibilities. All were appointed effective 1 January 2022 except for Mr. Benoît Ribadeau-Dumas who was appointed at the 2022

Annual General Meeting (AGM) on 13 April 2022. The term of office of all Directors is for the period expiring on the day of the first Annual General

Meeting of shareholders to be held in 2023, subject to reappointment upon shareholder approval.

Mr. Marx was the former President of the Commercial & Specialty Vehicles segment in CNH Industrial, and during the Demerger transition in

2021, he was the acting CEO of the “On-Highway” businesses, which included Powertrain technologies. Mr. Marx brought relevant experience

and proven successes to lead the newly formed Iveco Group. Lady Heywood, with her in-depth understanding of CNH Industrial, brought

extensive experience to Iveco Group and provides adept guidance. Together, the Executive Directors led Iveco Group to successfully execute its

strategic objectives for 2022.

Going beyond

“We go beyond” is a mindset shared throughout the organisation to move forward together towards a more connected and increasingly automated

net-zero future, with the common goal of ensuring access to reliable and sustainable mobility. The approach calls for taking courageous steps

with like-minded partners to better meet the current and future needs of customers. At the core of all the Company does, this mindset represents

everyone in such way as to become the corporate tagline: Iveco Group – We go beyond.

The same concept was the underlying theme extensively presented and illustrated at ‘BEYOND – Iveco Group Days’, a 5-day event held in July

2022 to showcase Iveco Group’s ability to innovate both its product and service offerings in a fast-changing landscape that requires unravelling

the future of road transport and urban mobility with emerging powertrain technologies, smart factories, and completely new business models. At

Board Report Remuneration Report 96

BEYOND – Iveco Group Days, the Company introduced three focus areas to its stakeholders: Technology, Sustainability, and Partnership.

The event allowed the Group to show how it fully embraces change, seeing it as an opportunity to aim higher, think bolder, and question

established industry paradigms for the greater good of a more sustainable society. All the brands put their latest products and services on display

to give visitors a first-hand look at the mobility of tomorrow.

Sustainability is at the foundation of every Group initiative and this event was no exception. The brands highlighted solutions that are advancing a

carbon zero future and the event itself was as environmentally friendly as possible. Any residual CO2 emissions generated by the week-long

programme were offset through collaboration with LifeGate Zero Impact, an organisation dedicated to activities of reforestation and safeguarding

of natural parks and reserves.

BEYOND – Iveco Group Days was also an opportunity to discuss and exchanged ideas with valuable partners, a tangible result of our “Iveco

Group Way”, an approach that calls us to collaborate with game-changing organisations who can help us drive the energy transition forward.

Sharing the stage with our leaders were representatives from companies that have joined us in mutually beneficial strategic partnerships, such as

Hyundai, Nikola, Amazon, Shell, PLUS, Air Liquide, Microvast, and Enel X, among many others. All shared their wide breadth of know-how for the

ultimate benefit of our joint customers.

2022 Business Context

While still driving towards the future, Iveco Group successfully balanced its operational goals for 2022, despite numerous challenges. The

Company closed its first year with a solid performance, on the back of favourable volume and mix and net price realization more than offsetting

higher year over year production cost due to increased energy costs and inflation representing the main challenge for our operations. In addition,

the Company successfully launched several new products including the eDAILY, the Nikola Tre BEV in its European configuration, the new E-

WAY, our 100% electric city bus, the FPT Cursor XC13 engine, a new generation of e-axles for medium and heavy commercial vehicles, and a

new battery pack for buses. Innovative products like these confirm our commitment to offering industry changing innovations and creating

increased value for our customers.

The solid 2022 results came despite difficulties on the supply side. Component shortages, in particular with semiconductors, put considerable

pressure on cost and delivery commitments. Diligent supply chain management kept the disruption to a minimum, especially in the first half of the

year. Commercial operations were successful with price recovery to offset the product cost increases. Laser focus on inventory levels with tight

control on working capital throughout the year also helped preserve relative profitability. Furthermore, available liquidity was maintained at levels

that allowed Iveco Group to keep investing in its new energy future.

We, the Human Capital and Compensation Committee (“the Committee”), believe the Executive Directors’ remuneration in 2022 is consistent with

the Company’s achievements of its strategic objectives to create sustainable long-term value for all stakeholders. Throughout this report, we aim

to show the clear link between performance and the executive compensation actions taken in 2022.

On behalf of my fellow members on the Committee, Tufan Erginbilgic and Alessandro Nasi, I would like to express our appreciation for both Gerrit

and Suzanne’s leadership and the accomplishments delivered by the entire Iveco Group team in 2022.

With this, I present to you our 2022 Remuneration Report.

Sincerely,

Linda Knoll

Chair of the Human Capital and Compensation Committee

Remuneration Policy Available on the Website

The Remuneration Policy is designed to competitively reward the achievement of both short-term and long-term performance goals, to help drive

cultural transformation organisation-wide, and to attract, motivate, and retain highly qualified senior executives who are committed to performing

their roles in the long-term interest of our shareholders and other stakeholders. Within the scope of the Remuneration Policy, the remuneration of

the Executive Directors is determined by the Board of Directors, at the recommendation of the Committee. This annual Remuneration Report

describes how the pay programmes and practices of the Executive and Non-Executive Directors were implemented in 2022, in accordance with

the Remuneration Policy which was last approved by shareholders in December 2021. A copy of the Remuneration Policy is available on the

Company’s website, www.ivecogroup.com. In 2022, there was no deviation from the Remuneration Policy.

Lastly, in 2022, the Company submitted its first Remuneration Report (in a simplified form) to the General Meeting of Iveco Group Shareholders

for an advisory vote and 99.98% of the share capital represented at the meeting voted in favour. A full Remuneration Report for 2021 was not

published given the “On-Highway” businesses were still part of CNH Industrial during 2021 and the Demerger and the subsequent listing on the

Milan stock exchange took place on 3 January 2022.

Company Highlights

The foundation of Iveco Group’s Remuneration Policy is pay for performance. The key 2022 Company achievements, successes, and

developments were driven by a pay philosophy that rewards the achievement of the goals.

Board Report Remuneration Report 97

Highlights of financial performance in 2022 (*)

Iveco Group registered a very solid 2022 financial performance, despite a challenging environment with ongoing supply chain issues, increased

raw material and energy costs, and political instability.

The positive results of the following key performance indicators* demonstrate this solid performance:

▪Net revenues of Industrial Activities were €14,165 million, up 13.1% compared to 2021, mainly due to higher volumes and positive price

realization.

▪Adjusted EBIT of €527 million, a €151 million increase compared to 2021, with positive price realization, higher volumes and better mix more

than offsetting higher raw material and energy costs. Adjusted EBIT margin at 3.7%, up 70 basis points compared to 2021.

▪Adjusted Net Income of €225 million (€85 million increase compared to 2021), which primarily excludes a negative impact in connection with

our operations in Russia and in Ukraine, due to the impairment of certain assets, spin-off costs, a negative impact from the first-time

adoption of the hyperinflationary accounting in Türkiye, and the gain on the final step of Chinese joint ventures’ restructuring. Adjusted net

income also excludes the effects deriving from the gain on the disposal of certain fixed assets in Australia, as well as from the loss for the

impairment of certain research and development costs and other assets, primarily related to the bus business, because of the acceleration

in emission-related technological transition.

▪Adjusted diluted Earnings Per Share (“Adjusted diluted EPS”) of €0.78, up €0.35 compared to 2021.

▪Net cash of Industrial Activities at €1,727 million, up €664 million compared to 31 December 2021, mainly due to the operating performance

and working capital improvement.

The 2022 results of the variable pay plan metrics similarly show a positive Company performance, over-achieving the targets set. Details on the

Annual Bonus Plan results are outlined in the Short-Term Incentives section of this report.

(*) Includes EU-IFRS and non-IFRS financial measures derived from financial information prepared in accordance with IFRS. Refer to the “Annex” at the end of the

Remuneration Report for the definition of the non-IFRS financial measures mentioned in this report. Reconciliations of non-IFRS metrics referenced in the above list

to EU-IFRS metrics can be found on the Board Report, Section “Report on Operations – Operating and Financial Review”, in the Annual Report.

Environmental, Social and Corporate Governance (ESG) Highlights

Iveco Group is committed to a better future, integrating sustainability in its day-to-day activities. The full combination of environmental and social

considerations with economic objectives enables the Company to identify potential risks and additional development opportunities, resulting in a

process of continuous improvement that creates long-term value.

The Company is driven by a deeply rooted commitment to help stop and reverse climate change, a challenge accepted and to work towards. The

Group has ambitious plans in terms of ESG, and it is raising the bar regarding its commitment to a sustainable future. The Group is inclusive in its

approach, seeks diversity of mindset and experience, and is committed to integrity - always and everywhere - to ensure that it makes a difference.

Iveco Group has identified its sustainability priorities, guaranteeing better alignment with its core business. The four priorities that underpin the

strategy are:

▪Carbon Footprint: to reduce CO2 emissions from manufacturing processes along the entire value chain (supply and logistics) and from the

product range, aiming for net zero carbon emissions by 2040.

▪Workplace and Product Safety: to minimise the risk of workplace injuries through effective preventive and protective measures, and to

ensure Company products have the highest safety standards.

▪Lifecycle Thinking: to implement solutions that efficiently minimise the impact of products and processes through a circular product lifecycle

approach.

▪Inclusion and Engagement: to build ever-stronger relationships with stakeholders, continuing to work proactively and effectively to create an

inclusive work environment.

Working to strengthen our journey towards a sustainable future, Iveco Group intends to achieve its 4 strategic priorities by setting clear objectives

along the entire value chain, with specific reference to its people, its direct operations, its products and services, and its valued partners. The

Sustainability Strategic Targets the Iveco Group has defined are also a part of its Strategic Business Plan.

Among the four priorities, those connected with the performance incentive plan are related to:

Carbon Footprint

Conscious of the urgency of the climate change challenge and the major role that decarbonisation will play, Iveco Group has set the ambitious

goal of reaching net zero carbon by 2040 – ten years before the target set by the Paris Agreement – in accordance with The Climate Pledge that it

signed. Emissions reduction starts with energy usage (Scope 1 and Scope 2 CO2 emissions): its plants have specific systems and processes

designed to reduce energy consumption and limit the use of fossil fuels, favouring electricity from renewable sources.

A 20% reduction in Scope 1 & 2 emissions by 2024 is an objective for the 2022-2024 LTI performance share unit awards, with a weight of 20% of

the overall award opportunity which provides a significant incentive to internally align to meet the SBP carbon footprint commitment.

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Inclusion and Engagement

The pursuit of a fully inclusive environment, where diversity – in all its forms – is truly valued and everyone is encouraged to fulfil their potential, is

the basis of a more effective, attractive and resilient organisation. Iveco Group is committed to building ever-stronger relationships with

stakeholders, continuing to work proactively and effectively to create an inclusive work environment

The increase the number of women in management roles to at least 23% by 2026 is a strategic ESG goal to add diversity in decision making and

leadership roles, and it is a KPI in the 2022 Company Bonus Plan to provide goal alignment and incentive to progress towards reaching the 2026

objective.

For additional information please refer to the section “Our Commitment to Sustainability”.

Business Highlights

The Company’s financial performance in 2022 reflected the commitment of its businesses to meet the needs of customers with innovative

products launched across all segments. Additionally, strategic acquisitions strengthened its position in the different industries even further. The

business segments’ product and service achievements were vital to the overall performance of Iveco Group in 2022 and will remain so for the

future. Below are some highlights from 2022.

Commercial and Specialty Vehicles

▪An agreement for the supply of fuel cells by HTWO, a Hyundai brand, was signed for future IVECO BUS hydrogen buses. Relevant

advantages are expected in terms of performance and emissions.

▪IVECO BUS committed to restarting production in Italy of vehicles that have state-of-the-art technologies, including those linked to electric

battery and hydrogen propulsions. The plant’s opening is scheduled for spring 2023 and will result in forecasted incremental volumes versus

expectations outlined in our Strategic Business Plan: more than 3,000 low- and zero-emission buses in the first few years.

▪A new bus production line was inaugurated in Türkiye, marking another important milestone in the Bus business development for the

production of additional volumes for the Crossway range and of the new Streetway, the efficient city bus optimised for sustainable urban

mobility.

▪The plant in Výsoké Mýto, Czech Republic, home of the IVECO BUS Crossway range, reached the milestone of 150,000 buses produced.

▪IVECO BUS won the bid to provide up to 253 buses for the renewal of the Prague Public Transit Company fleet.

▪The launch of mild-hybrid Urbanway CNG expanded IVECO BUS urban offer with a more attractive, economical, and environmentally

efficient bus.

▪IVECO BUS won the bid to deliver 130 DAILY Scudato CNG buses to the city of Valledupar in Colombia, marking a major step forward for

the brand in Latin America.

▪The ‘Sustainable Bus of the Year’ award was given to IVECO BUS for the Crossway Low Entry Hybrid Natural Gas, biomethane compatible

bus.

▪A Memorandum of Understanding was signed by IVECO BUS and Via, a transit tech company, to offer IVECO BUS customers the

possibility to purchase tailored software for on-demand transport solutions through the dealer network.

▪The launch of new IVECO eDAILY at IAA Transportation 2022 in September generated tremendous excitement and interest, resulting in

impressive initial and on-going order bookings. This light commercial vehicle will be an ideal option for short-haul journeys.

▪The order books for the European configuration of the Nikola Tre Battery Electric Vehicle (BEV) were opened at IAA Transportation 2022.

The truck will be built by IVECO in the Ulm, Germany plant and is based on the IVECO S-WAY heavy-duty truck. Deliveries are scheduled in

the first half of 2024.

▪Also at IAA Transportation 2022, a working prototype of the eDAILY Fuel Cell Electric Vehicle (FCEV) was unveiled. This represents the

future potential of IVECO’s bestselling and longest production-running large van. The eDAILY FCEV will be equipped with Hyundai’s 90 kW

hydrogen fuel cell system and 140 kW e-motor, and a battery pack by FPT Industrial.

▪The beta version of the Nikola Tre Fuel Cell Electric Vehicle (FCEV), which will enter the European market in 2024, was also unveiled in

Hanover at the IAA trade fair. Like the Nikola Tre BEV, the FCEV model is based on the first-ever electric modular platform for articulated

heavy-duty trucks, for missions of approximately 800 km in its initial launch configurations.

▪At the Fenetran trade fair in Brazil, the Group announced development of the Euro VI engine line, which meets requirements of the Program

for the Control of Air Pollution by Motor Vehicles which will become mandatory in the country in 2023. The Euro VI portfolio includes the

IVECO Daily 35-160, the first Euro VI commercial vehicle presented to the Brazilian market, the Daily Hi-Matic, the first light cargo vehicle

with an automatic gearbox, and the eDAILY, a fully electric version aimed at urban missions. In the heavy-duty segment, the IVECO S-WAY

launched in Brazil days before the show included a model that ensures up to 15% reduction in fuel consumption versus the previous truck

range. The S-WAY powered by biomethane also debuted with its best-in-class gas engine and related autonomy in the market, while

significantly reducing CO2 emissions.

▪IVECO joined Plus, a global provider of self-driving truck technology, to integrate Plus autonomous trucking technology into IVECO's latest-

generation S-WAY heavy-duty truck for a pilot in Europe and China. Proof of concept for Level 2 Autonomy (partial driving automation) was

completed in China and is underway in Europe.

▪The Valladolid plant produced its 700,000th IVECO Daily, an important milestone reached within 30 years of operations. As a pioneer in light

transport at its origin, the Iveco Daily truck continues to enjoy great success.

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▪IVECO and Gruber Logistics introduced the IVECO-S WAY LNG for transporting abnormal loads weighing up to 50 tonnes. This is the first

alternative fuel-powered vehicle for these exceptional missions.

▪MAGIRUS delivered Central Europe’s first CNG-powered tank pumper to the Radeberg fire brigade on the final stop of the brand’s

“Experience the Future” roadshow.

▪MAGIRUS delivered the first FireBull to Brazil. The FireBull is the world's first tracked fire engine, a MultiStar combination vehicle with

several portable fire pumps that combines the highly efficient AirCore extinguishing technology, flexible set-up options and the extremely all-

terrain PowerBully chassis from Kässbohrer Geländefahrzeug AG to form a unique, versatile special firefighting vehicle.

▪MAGIRUS introduced its “Next Generation Firefighting” portfolio at the SICUR trade fair in Madrid. The lineup included the MAGIRUS M32L-

AT NB with SmartControl which offers a telescoping arm on its articulated turntable ladder to open up areas of application that conventional

ladders cannot reach. The new turntable ladder generation with SmartControl represents a further, fundamental step in user-friendliness,

precise control, and ergonomic operation.

▪Iveco Defence Vehicles launched its new IDV logo, bolstering its brand identity and recognition in the specialised Defence Vehicles

segment.

▪IDV launched the Modular Military Range vehicle which ranges from 4x4 to 10x10 on a common chassis design, and can be installed with

either military type or militarised/civilian type unprotected cabins for a wide variety of applications.

Powertrain

▪FPT Industrial launched an all new, multi-fuel-capable heavy-duty engine: the XC13. The XC13 engine combusts a range of liquid as well as

gaseous fuels, including bio-methane, hydrogen, and a blend of both called Hythane. The base engine was designed with multiple versions

to offer maximum component standardisation and easy integration into the final product. The new engine features a unique DNA for on-road

multi-applications and is immediately compatible with a range of different market requirements and emission regulations, serving as a

primary contributor to achieving short- and mid-term fleet CO2 emissions targets.

▪Installed with the latest sustainable and smart factory technology, the ePowertrain plant was inaugurated in Turin at the end of 2022 to

produce:

◦Electric transfer boxes and battery packs for Light Commercial Vehicles, such as our new eDAILY

◦Electric axles for Heavy-Duty Vehicles, such as the Nikola Tre

◦Battery packs for buses, such as the Crossway Low Entry

◦Electric rear and front axles for sports cars

▪FPT Industrial reached an agreement with Blue Energy Motors to supply natural gas engines for LNG heavy-duty trucks in the India market.

This was followed by the announcement that our brand had entered into an agreement to make a minority investment in Blue Energy

Commercial Vehicles, the zero-emission truck technology company headquartered in Pune, India.

▪FPT Industrial marked the production of 10,000 units of high quality After Treatment Systems (ATS) in Chongqing, China, achieving zero

defects in all the deliveries, a testament to the team’s strict adherence to quality control measures throughout the entire product

manufacturing process. The ATS component enables FPT Industrial to comply with the latest emission standards implemented in China.

▪FPT Industrial celebrated 150,000 engines in Argentina, a proud manufacturing milestone which confirms the dedication and commitment of

the production team to pursue excellence in quality and efficiency in its production processes.

▪World Biogas Expo 2022, the world’s leading trade show dedicated to the biogas industry which opens the way to energy independence for

farmers, was held and FPT Industrial showcased its solution for Power Generation fueled by renewable resources: the Smart Hybrid Hub.

This is the world’s first variable-speed low-pressure natural gas, hybrid, multi-mode, genset concept designed and built entirely by FPT

Industrial.

▪FPT Industrial unveiled its new keel-cooled C16 600 Hp marine engine at Nor-Shipping in Oslo. Keel cooling is a solution to effectively cool

engines operating in sandy, muddy or shallow water, which leads to reduced downtime and financial and operational advantages.

▪FPT Industrial began powering CASE Construction Equipment’s new E-Series crawler excavators with powerful and efficient Stage V

engines, ensuring optimal combustion efficiency and low running costs. To allow the use of renewable fuels, the NEF Stage V engines fitted

on all the E-Series models are compatible with EN15940-compliant fuels, such as the increasingly popular HVO (Hydrogenated Vegetable

Oils).

Financial Services

▪IVECO CAPITAL celebrated 25 years of collaboration with CNH Industrial Capital Europe in the European Joint Venture, an effort that brings

together Iveco Group, CNH Industrial, and BNP Paribas Leasing Solutions to offer finance, lease, rental, and insurance solutions to the

Iveco Group brands, customers, and dealers.

▪Through IVECO CAPITAL, Iveco Group announced the creation of a new entity, GATE – Green & Advanced Transport Ecosystem, a long-

term, all -inclusive rental model for electric trucks and vans, which will powerfully support the industry’s energy transition. The GATE

roadmap involves exploring, designing, developing, and implementing new ways to bundle services, including an all-inclusive, pay-per-use

concept where customers lease electric vehicles. With green equipment at its core, the ecosystem will deliver sustainable solutions to

customers, who can define the level of support and flexibility they require to run their business and make the most of all the services GATE

will make available, including maintenance & repair, connectivity and telematics, financing, insurance, energy, and additional ancillary

services.

Board Report Remuneration Report 100

▪An active Financial Services Community was established on the Company Intranet to provide Financial Services team members the tools

and training required to continuously develop skills in this area. Best practices, industry news, and tips for increasingly efficient work habits

are discussed on this interactive tool that aims to increase engagement across the Function.

▪Iveco Capital participated in trade shows to highlight the solutions it offers for tomorrow’s innovations. As a major player in the energy

transition of the truck and commercial vehicle industry, Iveco Capital solutions for efficient and sustainable logistics were showcased in key

cities around the world.

Corporate Initiatives

▪The Group launched Driving Operations Together (DOT), its new operational performance programme to reinforce accountability and drive

continuous operational efficiencies. DOT sums up the core of the Manufacturing Function and aims to reach outstanding levels of

performance and organisational excellence as a unified team. The Group’s 28 plants around the world were involved in the roll out of DOT

and manufacturing colleagues join together with non-manufacturing team members to ensure best-in-class standards, faster delivery, and

continuous improvement.

▪A new Platform Management model was launched as the single-entry point for everything related to the product line lifecycle. The heads of

the Platforms are at the centre not only of the product lines, but of the entire way in which the Business Units interact around products with

Operations and Technology, maintaining full BU accountability for all past, present, and future product lines. The Platform teams ensure

delivery of the best in quality, cost, and customer-centric technology on-time, partnering with subject matter experts from the various

functions that jointly contribute to a great product and customer experience.

▪The DRIVE Transformation programme was kicked off. This comprehensive programme aims to accelerate the transformation of the

Company and deliver on the Strategic Business Plan initiatives. To ensure effective implementation of the related initiatives, training was

extended to 313 employees worldwide; 97 initiatives and projects are already in force.

▪With Gallup, in March a Company-wide survey was administered: Voice Engagement Survey. 86% of the Iveco Group people voiced their

opinions and submitted their responses to the questionnaire. The input provided contributed to the defining of the Company Purpose and

Values by the Senior Leadership Team and CEO, reflecting Executives’ willingness to give everyone the opportunity to shape the culture of

the Group and increase engagement across the Company.

▪Iveco Group continued to collaborate with Politecnico di Torino in the University’s 2nd edition of the High-Level Apprenticeship Master's

Programme in "Digitalisation and Autonomous Commercial Vehicles for Carbon-Free Logistics". The Master’s programme lasts 24 months

and is geared towards the recruitment on a long-term basis of young talent. It is an important investment in specific skills designed to face

new freight transport challenges. Selected candidates attend the course and work with IVECO and FPT Industrial brand experts.

▪As part of Iveco Group’s sustainability journey, the Company joined Open-es, a free, open platform to monitor the sustainable development

of supply chains. Suppliers were invited to take part in a dedicated workshop to help them understand the platform’s features and

demonstrate their readiness to collaborate with Iveco Group and the Open-es community, further improving mutual sustainability

performances.

▪The new San Mauro Parts Logistics Centre officially opened and within the first months the depot doubled volumes to receive spare parts

from over 800 suppliers and Iveco Group production plants and to manage 50,000 different products. By the end of 2022, the Centre was

packaging 1.5 million units per month.

▪Iveco Group committed to a new R$1 billion (nearly €200 million) 5-Year investment cycle in Latin America, strengthening the Company’s

sustainable growth prospects in the region.

▪Over the year, Iveco Group provided support to the victims of the war in Ukraine, beginning with assisting employees and their families to

get to safe locations and giving them what they needed to live comfortably. The Group also donated a combined total of over €570,000 to

non-profit organisations working in the field to help over 30,000 victims of the war. The Company’s brands donated vehicles and equipment

to different organisations assisting refugees and first responders in the conflict zone. Finally, together with contributions from Iveco Group

employees, three non-profit organisations received funding to provide medical care, basic needs, and emotional support for children and

vulnerable people impacted by the war.

Business strategy and remuneration connections

To ensure that the Remuneration Policy remains well aligned with the Group' strategic and operational priorities, the Company has developed

variable remuneration systems, both short- and long-term, based on metrics that reflect the ambitious business strategy pillars to be achieved in

upcoming years. The Remuneration Policy focuses on four key areas:

1.Profitability

2.Financial strength

3.Value creation

4.Environment and Diversity

Board Report Remuneration Report 101

The performance measures of the Short-Term Incentives ("STI") and Long-Term Incentives ("LTI"), and the link to strategy for the 2022

performance year are set out below:

STI performance measures


Metrics		Link to Company strategy
Profitability
	Adjusted EBIT	Aligned with the Company’s goal of economic and financial sustainability in the short term
Financial strength
	Cash Conversion Ratio	Aligned with the Company’s financial priorities, reflecting the ability to generate cash to service and reduce debt, pay dividends, repurchase shares, and fund investment in our future business
Environment & Diversity
	YOY % increase of women graded Manager/Sr Professional and above	Consistent with the Company’s ESG strategies to create a more inclusive and diverse work environment where all employees feel empowered, engaged, and valued

LTI performance measures


Metrics		Link to Company strategy
Profitability
	Adjusted EBIT Margin %	Aligned with the Company’s goal of economic and financial sustainability in the long term
Value creation
	Relative TSR	The ultimate goal of the Company is to be able to create a sustainable and lasting value over time for shareholders
Environment & Diversity
	CO2 reduction %	Consistent with the Company’s ESG strategies to reduce CO2 emissions from manufacturing processes along the entire value chain (supply and logistics) and from the product range, aiming for net zero carbon emissions by 2040

Compensation philosophy

The quality of Iveco Group leaders and their commitment to the Company are fundamental for success. The compensation philosophy supports

the business strategy and growth objectives in a diverse and ever-evolving global market. The Remuneration Policy is designed to competitively

reward the achievement of long-term performance goals and to attract, motivate and retain highly qualified senior executives who are committed

to performing their roles in the long-term interests of the Company, its shareholders, and other stakeholders in line with our purpose and values.

The Remuneration Policy, which balances both European and Global pay practices, supports the need to compete internationally for top talent

and leaders, given our extensive worldwide presence, and does not discriminate based on gender, age, nationality, social status or cultural

background.

The Company has instilled a strong performance culture over the years largely through a longstanding pay for performance philosophy and

rigorous performance management process that the leaders’ model, instruct, and coach throughout the organisation. A key element of the

compensation philosophy is to use incentive pay to drive organisation-wide alignment with shared company goals and values, and to reward

achievement of those goals in a manner consistent with the purpose and values.

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Remuneration Principles

The following principles guide efforts to provide compensation to Directors, and other senior leaders, consistent with the Group's business goals

and core values:


Alignment with Iveco Group’s Strategy	Pay for Performance	Competitiveness	Long-Term Shareholder Value Creation	Compliance	Risk Prudence
Compensation is strongly linked to the achievement of targets aligned with the Company’s publicly disclosed objectives	Compensation must reinforce a performance- driven culture, based on merit. As such, the majority of pay is linked directly to the Company’s performance through short-term and long-term variable pay instruments for Executive Directors and other senior leaders	Compensation will be competitive relative to the comparable market and at a level to attract, retainy, and motivate very effective leaders and highly qualified executives in a global Company	Targets triggering any variable compensation payment should align with the interests of shareholders and other stakeholders	Compensation policies and plans are designed to comply with applicable laws and corporate governance requirements	The compensation structure will avoid incentives that encourage unnecessary or excessive risk taking that could adversely impact the Company


Iveco Group prioritises:		Iveco Group avoids:
•	a simple and transparent remuneration structure at all levels of the organisation	•	Executive Director contracts that contain separation payments in excess of 12 months’ pay
•	pay for performance and scenario analyses to test the link between pay and performance	•	remuneration that encourages Executive or Non-Executive Directors to take any unnecessary or excessive risks or to act in their own interests
•	pay ratios within the Company in establishing Executive Directors’ pay	•	rewarding below threshold performance
•	appropriate incentive pay programmes to balance the short-term and long-term focus and drive the achievement of short-term and long-term goals	•	granting loans or give guarantees to Executive or Non-Executive Directors
•	aligned goals and values organisation-wide through incentive pay and rigorous performance management
•	predetermined stretch goals for incentive pay programmes
•	robust stock ownership and share retention guidelines
•	claw-back policies incorporated into the incentive plans
•	a double trigger for change of control provisions, meaning both 1) a change of control and 2) an involuntary termination of employment without “Cause” (as defined in the Iveco Group N.V. Equity Incentive Plan) must apply

Compensation Peer Group

A key principle of the compensation philosophy is to provide a competitive compensation structure that will attract, motivate, and retain highly

qualified senior executives.

The Company periodically benchmarks its executive compensation programme and the compensation offered to Executive Directors against peer

companies, and it monitors compensation levels and trends in the market. The Committee strives to develop a compensation peer group that best

reflects all aspects of Iveco Group’s business and considers, among other things, public listing, related industries, geographic reach, and revenue

proximity.

Given the structure of Iveco Group’s Executive Director roles, two separate peer groups were identified for the best compensation comparison of

each role. For the CEO role, the selected peers are predominately based in Europe except for direct competitors who are U.S. based. Specific to

the Executive Chair role, an all-European peer group was selected for the compensation benchmark.

The selected groups shown in the table below provide meaningful comparisons to the relevant talent market for the respective Executive Director

roles:

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CEO Peer Group		Chair Peer Group
Company	Country	Company	Country
Cummins	USA	ACS- Actividades de Construccion y Servicios	Spain
Daimler Truck Holding	Germany	Ariston Group	Italy
Faurecia	France	Atlantia	Italy
Knorr-Bremse	Germany	Brembo	Italy
Oshkosh	USA	Compagnie de Saint Gobain	France
Paccar	USA	Dassault Systems	France
Plastic Omnium	France	De’Longhi	Italy
Rheinmetall	Germany	EssilorLuxottica	France
Schaeffler	Germany	Ferrari	Italy
Traton	Germany	Ferrovial	Spain
Valeo	France	Volvo	Sweden
Volvo	Sweden

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Overview of Remuneration Elements

The Executive Directors’ 2022 compensation was consistent with key principles of the Remuneration Policy, competitively set compared to the

relevant benchmarks and structured to reinforce the pay for performance compensation philosophy.

The following table summarises the primary remuneration elements for the CEO and Chair, Executive Directors, as specified in the Remuneration

Policy.


Remuneration Element		Description		Terms & Conditions		2022 Implementation
Base Salary	•	Fixed cash compensation set competitively relative to appropriate peer group when attracting new talent and maintaining competitive levels in line with internal increases and other moderating factors on-going	•	Base salary takes into consideration the Executive Director’s skills, experience, scope of responsibilities, and the competitive market	•	CEO annual base salary of €750,000
					•	Chair annual base salary of €250,000
Short-Term Variable	•	Subject to the achievement of annually pre- established, challenging financial and other designated performance objectives		CEO		CEO
Short-Term Variable				Annual bonus linked to the following objectives	•	Target bonus is 110% of his base salary (€825,000) and maximum is 2 times target or 220% of base salary (€1,650,000)
			•	Adjusted EBIT MM Euro – 50%	•	Per the Company Bonus Plan (CBP) design and the predetermined goals, the overall company performance achieved in 2022 was 176%. The 2022 performance bonus to be paid in 2022 is €1,452,000 (see the specific short-term variable section below, for details of goals achieved and payout earned)
			•	Cash Conversion Ratio % - 35%
			•	YOY % increase of women graded Manager/Sr Professional and above) – 15%
			•	Chair does not participate in the short-term incentive plan, given long-term strategy- focus of the role
Long-Term Variable	•	To align Executive Directors’ interests with Company strategic goals and reward for sustained long-term value creation		CEO		CEO
Long-Term Variable			•	The 2022-2024 LTI award was valued at four times the annual base salary:	•	€3,000,000 annual target (400% of base salary); maximum 2 times the target.
	•	100% based on Company performance awards (Performance Share Units or PSUs)	•	The Company performance share units (PSUs) are capped at 200% of target.	•	All PSUs
	•	The Company performance component is subject to the achievement of predetermined challenging performance and market objectives, covering a 3-year performance period	•	Based on the 3-year average Adjusted EBIT %, the 3- year cumulative relative TSR and the CO2 emission reduction	•	A higher LTI leverage than peer group results in total direct compensation in upper quartile
	•	Equity holding period of five years from grant aligns with Dutch Corporate Governance Code ("DCGC")		Chair	•	The CEO’s grants were effective in May 2022. No vesting occurred in 2022. The final payout is determined only at the end of the vesting period,
	•	In conjunction with the Demerger, outstanding CNH Industrial equity awards, which included a split of PSUs and RSUs, were converted to IVG share units.	•	The 2022-2024 LTI award was valued at three times the annual base salary		Chair
			•	The Company performance share units (PSUs) are capped at 200% of target	•	€750,000 annual target (300% of base salary); maximum 2 times the target.
					•	All PSUs
					•	The Chair’s LTI is higher than the peer group, reflecting our bias towards performance based compensation, but her total direct compensation, including this, still remains in the bottom quartile compared to similar roles
					•	The Chair’s LTI grant was made on 5 May 2022.
					•	No vesting occurred during 2022.
Post- Employment Benefits	•	Retirement benefits to provide future income security	•	Benefits for CEO and Chair are in-line with the Remuneration Policy.	•	CEO:
Post- Employment Benefits		Retirement benefits to provide future income security	•		•	Retirement benefits in line with other Germany salaried employees
	•	Severance protection regulates the indemnity to be recognised in case of early involuntary employment termination	•	The CEO’s non- compete and non-solicitation period is 12 months to align with the limit of the severance protection	•	Severance protection of 12 months' base salary,consistent with DCGC best practice.
						Chair
					•	No retirement benefits or severance provisions
Other Benefits	•	Retain executives through a total reward approach	•	Benefits for our CEO and Chair are consistent with the Remuneration Policy and market practice		CEO:
	•	Enhance executive security and productivity			•	Company car, health, life, accident, and disability insurance, and tax assistance.
					•	Tax equalization for any non-German sourced employment income

Board Report Remuneration Report 105


Remuneration Element		Description		Terms & Conditions		2022 Implementation
Share ownership guidelines	•	Our Board recognises the critical role that executive share ownership has in aligning the interests of management with those of shareholders	•	Iveco Group’s share ownership guidelines require Executive Directors to acquire IVG common shares with a value of 5-times base salary within five years of appointment to the Board		CEO
Share ownership guidelines					•	As of the end of 2022, the CEO’s IVG shareholdings of 80,698 shares represent 0.60 times the base salary as of the end of 2022.
						Chair:
					•	As of the end of 2022, the Chair’s IVG shareholdings of 64,338 shares represent 1.43 times her base salary as of the end of 2022.

2022 Realized Pay

The tables below show the key components of total direct compensation realized in 2022, base salary, and short- and long-term incentives, to

provide additional perspective.

CEO

The CEO’s realized compensation related to the 2022 performance year compared to his annual Total Direct Compensation (TDC) at target

variable pay levels is shown below:


Pay Element (Euro)	2022 Realized and paid	2022 at Target
Base Salary	750,000	750,000
2022 STI (1)(2)	1,452,000	825,000
2022 LTI (3)	—	3,000,000
Total Direct Compensation (4):	2,202,000	4,575,000
Notes:
(1) Target was 110% and maximum 220% of base salary. The actual % achieved for 2022 Company performance is 176% of target.
(2) Note that the realized STI will be paid in March 2023.
(3) In 2022, 518,850 PSUs were granted but none vested.
(4) Not included in the total realized compensation are the Company provided fringe benefits and pension or similar benefits, which are included in the Summary Remuneration table.

Chair

The Chair's realized compensation related to the 2022 performance year:


Pay Element (Euro)	2022 Realized and paid	2022 at Target
Base Salary	250,000	250,000
2022 STI	—	—
2022 LTI (1)	—	750,000
Total Direct Compensation (2):	250,000	1,000,000
Notes:
(1) In 2022, 129,710 PSUs were granted but none vested.
(2) Not included in the total realized compensation are the Company provided fringe benefits and pension or similar benefits, which are included in the Summary Remuneration table.

In accordance with the Dutch Corporate Governance Code, the Committee discussed with the CEO and the Chair their respective 2022

compensation, and each are fully aligned with the compensation awarded.

Internal Pay Ratios

When setting the Executive Directors’ compensation, the Committee considers both the appropriate external benchmark as well as the internal

pay ratios within the Company. Although the primary consideration is market competitiveness to attract and retain highly qualified senior

executives in a large, global, complex organisation, a baseline internal comparison is set for tracking future year pay trends between executives’

compensation and employees’ compensation.

In line with the guidance under the DCGC, the pay ratio and trend are disclosed in the annual Remuneration Report. The basis of the pay ratio

comparison uses the prevalent Dutch methodology of determining the ratio between the total annual remuneration of the CEO, including all

remuneration components, and the average employee compensation (including all labour costs, using the accounting value of equity awards).

The average employee compensation corresponds to the total personnel costs reported in the Annual Report, which excludes Executive Director

compensation, divided by the average year Full-Time Equivalent (“FTE”) reported in the Annual Report, less the CEO who is included in the total

Board Report Remuneration Report 106

average year FTE.

The first year of Iveco Group’s history, 2022, is shown in the table, which will set the trend for future years’ reports.


Internal Pay Ratio	2022(1)
CEO compensation €	5,784,778
Average Employee compensation €	56,252
CEO Pay Ratio	102.8
Notes:
(1) The compensation is as reported in the Summary Remuneration table.

For perspective, the Company`s key performance metrics for 2022 are shown below:


Selected Performance Data (1)	2022	2021
Adjusted EBIT (€ million)	527	376
Adjusted Net Income (€ million)	225	140
Adjusted Diluted Earnings/(Loss) per share (€)	0.78	0.43
Notes:
(1) Includes non-IFRS metrics derived from financial information prepared in accordance with EU-IFRS. Refer to the "Annex" at the end of the Remuneration Report for the definition of the non-IFRS financial measures mentioned in this report.

2022 Remuneration of the Executive Directors

The following is intended to expand on the general implementation of the Remuneration Policy in 2022 and provide additional context for

understanding the actual compensation paid in 2022.

Base Salary

The base salary for the Executive Directors takes into consideration the executive’s skills, scope of job responsibilities, experience, competitive

market, and compensation peer group pay comparisons.

For 2022, Mr. Marx’s base salary was €750,000. In determining Mr. Marx’s salary, the Committee considered factors such as leadership,

development of people and new culture, prior experience, and potential at Iveco Group. The base salary is currently positioned below the first

quartile of our compensation peer group, but with total direct compensation at target positioned slightly above the third quartile, leveraging the

variable incentive component of pay to align to strategic objectives.

The Chair`s salary was defined effective 1 January 2022, at €250,000 annually.

Base salary increases are not guaranteed for Executive Directors and their agreements do not contemplate automatic base salary increases.

Salary increases will be made considering those awarded to the Company’s wider employee population. No increases in base salary are planned

for either Executive Director in 2023.

Variable Pay

The variable components of the Executive Directors’ remuneration, both the short- and the long-term incentives, where applicable, demonstrate

our commitment to shareholders and sustainable long-term value creation by using metrics that align with our business strategy of delivering

exceptional operating performance and shareholder returns.

Eligible variable compensation of the Executive Directors is contingent on the achievement of pre-established, challenging financial and other

designated performance objectives.

Board Report Remuneration Report 107

The Executive Chair’s and CEO’s compensation packages are structured as follows:

As the two graphs show, a significant portion of the compensation opportunities is delivered in equity recognized through long-term performance,

the vesting and value of which are intended to align the executives’ interests with shareholder returns.

Scenario Analyses

Scenario analyses are carried out annually to examine the relationship between the performance criteria chosen and the possible outcomes of

variable remuneration of the Executive Directors. Such analyses reviewed the link of pay for performance for the full range of outcomes, at

threshold results for any payout, at target results, and outstanding results where the variable pay opportunity is capped. The analyses are done at

target setting, monitored throughout the year and upon determining the final payout. For the 2022 financial year, the Company found a strong link

between remuneration and performance and concluded that the chosen performance criteria supported the Company’s strategic objectives, and

the resulting earned awards were appropriate under both the short-term and long-term incentive components, where applicable, of total

remuneration.

The following table and chart describe compensation levels that the Executive Chair and the CEO could receive in 2023 under the approved

Remuneration Policy and different scenarios in a calendar year, assuming a constant share price (i.e., no appreciation).


Executive Director	Element of remuneration	Performance scenario
Executive Director	Element of remuneration	Threshold	Target	Maximum
Executive Chair	Fixed remuneration	€250,000
	Short-term Incentive	n.a.	n.a.	n.a.
	Long-term Incentive	90%	300%	600%
CEO	Fixed remuneration	€750,000
	Short-term Incentive	37.4%	110%	220%
	Long-term Incentive	120%	400%	800%

Board Report Remuneration Report 108

In the event of performance below the set threshold, both in the short- and long-term, the Chair and CEO will be recognized with fixed

remuneration only.

Short-Term Incentives

The primary objective of short-term variable incentives is to focus on the business priorities for the current or following year. The CEO is eligible

for participation in the annual incentive plan. The Chair is not eligible for participation. The CEO’s short-term variable incentive compensation is

based on achieving short-term (annual) financial and other designated goals proposed by the Human Capital and Compensation Committee and

approved by the Chair and Non-Executive Directors each year.

2022 Company Bonus Plan

The Human Capital and Compensation Committee approved the 2022 Company Bonus Plan design which included financial measures of

consolidated Adjusted EBIT, cash conversion ratio %, and one ESG measure: % increase of women in management positions to improve the

Gender Balance in decision making and leadership roles.

The table below shows the metrics, weighting, and predetermined goals:


KPIs	Weighting	Threshold	Target	Max
Adjusted EBIT MM Euro	50%	410	456	592
Cash Conversion Ratio %	35%	80%	100%	130%
YOY % increase of women graded Manager/Sr Professional and above	15%	n/a	1.0%	1.5%
Note: Refer to the “Annex” at the end of the Remuneration Report for the definition of the non-IFRS financial measures mentioned in this report.

For performance below the threshold level (target level as regards the ESG metric), no pay-out will occur.

▪The target incentive for the CEO’s annual bonus programme is 110% of base salary, linked to approved targets each year.

▪Achieving threshold performance earns 40% of target incentive for 44% of base salary (except for the ESG metric which has the threshold

set at target).

▪Maximum payout is 200% of target incentive, equal to 220% of base salary.

▪No individual performance adjustment factor applies to the CEO’s annual bonus.

In cases where the Company performance falls between the Threshold, Target, and Maximum levels, linear interpolation will be used to calculate

the award.

Board Report Remuneration Report 109

CEO’s 2022 Company Bonus Plan Performance Factor Calculations:


Corporate Measures		Weight	Threshold	Target	Maximum	Results	Results vs. Targets	Overall
Adjusted EBIT MM Euro	a)	50%	410	456	592	527	115.6%	76.0%
2022 Bonus Euro	b)		165,000	412,500	825,000	627,000

Cash Conversion Ratio %	a)	35%	80%	100%	130%		257.8%	70.0%
2022 Bonus Euro	b)		115,500	288,750	577,500	577,500

% increase of women graded Manager/Sr Professional and above	a)	15%	n/a	1.0%	1.5%		3.5%	30.0%
2022 Bonus Euro	b)		—	123,750	247,500	247,500

TOTAL %	a)	100%
2022 Bonus Euro	b)		280,500	825,000	1,650,000	1,452,000		176.0%

Per the Company Bonus Plan (CBP) design and the predetermined goals, the overall Company performance achieved in 2022 was 176% for a

payout of €1,452,000 for the CEO.

Background on the 2022 Results

As previously illustrated, Iveco Group successfully balanced its operational goals for 2022, despite numerous challenges. The Company closed its

first year with a solid performance on the two financial metrics of the CBP, Adjusted EBIT and Cash Conversion Ratio.

The above-target achievement on Adjusted EBIT was driven by favourable volume and mix and net price realization more than offsetting higher

year over year production cost due to increased energy costs and inflation representing the main challenge for our operations.

The Iveco Group achieved an outstanding result on the cash conversion goal through the strong Adjusted EBIT results and laser focus on

inventory levels with tight control on working capital throughout the year. Furthermore, available liquidity was maintained at levels that allowed

Iveco Group to keep investing in its new energy future.

The excellent achievement on the % increase of women in managerial positions demonstrates the commitment of our leaders towards Diversity to

achieve our 2026 target.

Long-Term Incentives

The Committee and the Board of Directors believes that the equity awards are competitive in the market and consistent with our compensation

philosophy. Along with the share ownership and share retention requirements in place for the Executive Directors, the plan design links the

Executive Directors’ compensation opportunity to increasing shareholder value, which is core to our “pay for performance” compensation

philosophy.

Iveco Group offers long-term incentives to the Executive Directors and key leaders to drive sustainable long-term value creation. This key element

of the Company’s compensation philosophy is used with the aim to drive organisation-wide alignment with shared strategic Company goals and

values, and to reward achievement of those goals in a manner consistent with the Company’s purpose and values. Aligning to the Company’s

strategic targets and transforming the culture are vital to successfully executing the business strategy.

Equity-based compensation is critical to achieving this alignment because it (1) directly ties compensation to the long -term goals established in

the strategy, (2) links senior management and employees’ long-term performance and interests with those of our shareholders and (3)

discourages imprudent risk-taking. Equity-based compensation is also integral to the Company’s Remuneration Policy and a key component of

the pay for performance philosophy.

On 25 February 2022, the Board of Directors approved an equity incentive plan in which employees and executive directors may participate. This

Iveco Group N.V. Equity Incentive Plan (the “EIP”) is an umbrella programme defining the terms and conditions for any subsequent long-term

incentive programme. A copy of the EIP is available on the Company’s website (www.ivecogroup.com).

The Board of Directors also approved a new Long-Term Incentive Programme (“LTIP”) tied to the Company’s five-year Strategic Business Plan

which spans in total over a five-year performance period, 2022 through 2026, consistent with the Company’s strategic time horizon presented at

the Company’s Investors’ Day event on 18 November 2021. Shareholders at the 13 April 2022 AGM voted in favour to allow up to a maximum of

16 million common shares which may be issued under the LTIP, of which 4 million (rights to subscribe for) common shares are reserved for

issuance to the Executive Directors.

Awards under the LTIP are intended to consist of three consecutive annual grants:

▪The initial grant in 2022 covers the performance period 2022 -2024 (“LTIP 2022-2024 Award”), followed by

▪a grant in 2023 covering the 2023-2025 performance period (“LTIP 2023-2025 Award”) and ending with

Board Report Remuneration Report 110

▪a grant in 2024 covering the 2024-2026 performance period (“LTIP 2024-2026 Award”).

Under the LTIP, performance share rights (“PSUs”), representing the right to receive one common share in the capital of the Company, will be

awarded to the Chair and to the Chief Executive Officer. A combination of Performance Share Rights (PSUs) and Restricted Share Rights

(RSUs), each representing the right to receive one common share in the capital of the Company, will be awarded to members of the Senior

Leadership Team (SLT) and other key members of the Group.

The PSUs will be subject to the achievement of certain performance targets as further described below, while the RSUs will be subject only to the

participant’s continuing service as officer, director, or employee of the Company; both PSUs and RSUs are also subject to acceptable individual

performance.

2022 -2024 LTIP Awards

On 5 May 2022, the Company awarded the first annual cycle of awards under the LTIP for the 2022-2024 performance period.

Executive Directors’ Awards

2022-2024 LTIP Awards

The following was awarded to the Executive Directors under the LTIP on 5 May 2022:


		Number of Share Units Granted
		CEO	Chair
2022-2024 LTIP PSUs		518,850	129,710
Average Annual Target
*	% of Salary	400%	300%
*	€ (€5.78/unit FV@ Grant)	€3,000,000	€750,000

Maximum Award (2X target)
*	% of Salary	800%	600%
*	euro	€6,000,000	€1,500,000

The PSU awards vest subject to achievement of Company performance goals for the performance period.

Awards forfeit in full upon any type of termination, except in the case of an involuntary termination other than for Cause within 24 months of a

change of control as defined in the EIP. Executive Directors must hold shares earned under the award for a period of 5 years from grant date.

Company Performance Metrics

Company Performance is measured against pre-defined performance goals, reinforcing sustainable long-term value creation, and linked to our

Strategic Business Plan.

For the three-year period, 2022-2024, the three independent metrics, weighting, target goals and pay-out are shown in the table below:


KPIs	Weight	Measurement	Performance / Payout	Threshold	Target	Outstanding
Adjusted EBIT Margin %	40%	3-year average	Performance	3.8%	4.2%	5.5%
Adjusted EBIT Margin %	40%	3-year average	Payout	50%	100%	200%
Relative TSR (1)	40%	3-year cumulative	Performance	below median ( < 5th place)	Median ranking (5th in peer group of 9 )	1st place ranking
Relative TSR (1)	40%	3-year cumulative	Payout	—%	100%	200%
CO2 reduction %	20%	3-year cumulative	Performance	18.0%	20.0%	22.0%
CO2 reduction %	20%	3-year cumulative	Payout	50%	100%	200%
Note: Refer to the “Annex” at the end of the Remuneration Report for the definition of the non-IFRS financial measures mentioned in this report.

(1) The peer group includes Iveco Group N.V. and the following companies: AB Volvo, Cummins Inc., Daimler Truck Holding AG, Deutz AG, Nikola, PACCAR, Inc.,

Rheinmetall AG, Traton SE. The Relative TSR peer group may be adjusted by the Committee in its sole discretion during the Performance Period as a result of

mergers and acquisitions, de-listings, takeover offers, etc. In this event, an-appropriate benchmark peer would be identified and proposed for inclusion in the peer

group.

Board Report Remuneration Report 111

Stretch objectives have been set for each of the metrics reflecting the Company’s long- term priorities to deliver strong, profitable growth, increase

shareholder value and contribute to a more sustainable environment. The payout ranges from 50% of target award to a cap of 200% of target

award. The Adjusted EBIT Margin % and CO2 Reduction % metrics payout 50% of target award at threshold, 100% at target achievement and

capped at 200% of target award for outstanding performance. No payout below threshold results. Relative TSR only pays out at or above target

(median ranking) and is also capped at 200% of target award for 1st place ranking among the comparator companies.

In cases where the Company performance falls between the Threshold, Target and Outstanding levels, linear interpolation will be used to

calculate the award.

For performance below the threshold level (target level as regards the relative TSR) no pay-out will occur.

Vesting period

The PSUs vest on 28 February 2025 after the end of the Performance Period and subject to the level of achievement of the performance criteria

of each metric.

The Executive Directors have only been awarded PSUs. The 2022-2024 LTI Plan offers an RSU component for other key leaders participating

which vest in full on 28 February 2025, subject to acceptable individual performance and remaining in an eligible position throughout the vesting

period.

CNH Industrial Legacy Awards -- 2021-2023 LTIP Awards from the Demerger

Executive Directors, the Senior Leadership Team, and other key executives participated in the CNH Industrial Long-Term Incentive Plan prior to

the Demerger and formation of Iveco Group as a stand-alone public entity.

Provisions under the CNH Industrial N.V. Equity Incentive Plan (“CNHI EIP”) required adjusting outstanding equity awards on an equitable basis in

the event of a change in the capital structure of the Company, such as the Demerger. As anticipated in the prospectus of the Demerger to

shareholders, the outstanding awards under the CNHI EIP were rolled over to Iveco Group N.V. as per the effective date of the Demerger, after

which such awards entitle the holder, subject to its terms, to Iveco Group Common Shares. The rollover included appropriate adjustment

mechanisms to ensure that the value of the unvested awards granted to all the beneficiaries under such plan remained unchanged, in accordance

with the CNHI EIP.

For Iveco Group participants, the Committee approved converting the unvested awards granted under the CNHI EIP at the time of the Demerger

to Iveco Group equity awards with an adjustment factor of 1.5578.

The equitable adjustment, which was done in early 2022, considered post-Demerger share prices of both Iveco Group and CNH Industrial using a

10-day volume weighted average price. The conversion ratio for Iveco Group participants’ awards compared the combined Iveco Group and CNH

Industrial share prices (before the 5:1 Demerger Allotment Ratio) to the Iveco Group share price.


IVG price:	€10.63
CNHI price:	€14.43
Combined Price	€16.56 = €2.13 (€10.63 IVG ÷5) + €14.43
Iveco Group Conversion Ratio	€16.56/€10.63 = 1.5578

This adjustment applied as well to Gerrit Marx’s legacy 2021-2023 LTIP equity awards granted in December 2020 by CNH Industrial for his role in

CNH Industrial as President of Commercial & Specialty Vehicles business segments.

The treatment of the 2021-2023 LTIP awards for the CEO was done in the same manner as all other CNH Industrial LTIP participants at the time

of the Demerger who were transferred to Iveco Group.

No legacy awards held by the Chair were transferred to Iveco Group as those continue with CNH Industrial in her continued role with CNH

Industrial.

Company Performance Metrics

For the PSUs, as the performance period, 2021-2023, spanned pre- and post-Demerger periods, the Company performance goals were aligned

to Iveco Group only goals as approved by the Committee and by the Board of Directors.


Metric	Weighting
Adjusted diluted Cumulative EPS €	50%
Industrial ROIC % (3 years average)	50%
Note: Refer to the “Annex” at the end of the Remuneration Report for the definition of the non-IFRS financial measures mentioned in this report.

The payout of the two independent metrics ranges from 50% at threshold results to a cap of 200% at or above outstanding results.

The PSU metrics also include a Relative TSR multiplier per the ranking among an industry peer group that will adjust the shares earned per the

Board Report Remuneration Report 112

achievement of the Adjusted diluted EPS and Industrial ROIC objectives, by +/- 25%. The Committee approved measuring the multiplier on a

prorated basis with one-third (Year 2021 out of the 3-year 2021-2023 period) weighting based on CNH Industrial’s ranking among the original

CNH Industrial peer group and two-thirds (Year 2022 and 2023) weighting based on a new Iveco Group only peer group.

The two periods’ peer group are the following:

The PSUs awarded under the 2021-2023 LTIP performance cycle will vest on 28 February 2024, based on the achievement of each target of

Adjusted diluted EPS and Industrial ROIC, determined independently, and as adjusted according to the TSR multiplier. The RSUs will vest in two

equal installments on 30 April 2023 and 30 April 2024. Both awards are subject to favourable individual performance and remaining with the

Company through the respective vesting dates.

Post-Employment and Other Benefits

The CEO receives customary pension and other benefits in-line with the Remuneration Policy, which provide basic assurances of loss income

protection and retirement income. No post-employment benefits are available to the Chair.

Pension and Retirement Savings

The CEO participates in the same Company-sponsored retirement savings programmes available to all German salaried employees.

Other Benefits

For the CEO, the Group offers customary perquisites and fringe benefits, such as a Company car, medical insurance, accident insurance, tax

preparation assistance, relocation, and limited personal usage of aircraft but did not use this benefit in 2022. Furthermore, in the event of an

involuntary termination of employment other than for Cause, the CEO is entitled to twelve months’ base salary, while remaining subject to

restrictive covenants, such as non-competition and non-solicitation for a period of one year.

The Chair does not have severance protection nor participates in Iveco Group benefit programmes. The Chair does have limited personal usage

of corporate-provided aircraft but did not use this benefit in 2022.

For any personal use of corporate aircraft, the Executive Directors are responsible for taxes on the benefit.

Tax Equalisation

The CEO, as a function of the global nature of the role in the Company, may be subject to tax on employment income in multiple countries and

will be subject to the Company’s tax equalisation policy on all employment earnings. For the Chair, no tax equalisation is applicable.

Board Report Remuneration Report 113

Stock Ownership

Our Board recognises the critical role that Executive Director stock ownership has in aligning the interests of management with those of

shareholders. Accordingly, the Executive Directors are subject to share ownership guidelines which require each Executive Director to own Iveco

Group shares with an aggregate value of at least 5x base salary within five (5) years from the start of their respective assignments. The

Committee assesses on an annual basis the Executive Directors’ progress toward meeting this objective. As of 31 December 2022, the CEO

owned 80,698 shares of which 38,400 were acquired through market purchases, and the Chair owned 64,338 shares of which 38,461 were

acquired through market purchases. With a share price of €5.56 on 31 December 2022, the fair market value of the at year-end 2022 was

€448,519 and €357,591, respectively. The CEO’s shareholdings represent 0.60 times his annual base salary, and the Chair’s represents 1.43

times her annual base salary.

In addition, the Executive Directors are subject to a holding period of five years from grant date for all awards granted to them which aligns with

Dutch Corporate Governance Code ("DCGC").

Recoupment of Incentive Compensation (Clawback Policy)

The Board is dedicated to maintaining and enhancing a culture focused on integrity and accountability. The Recoupment Policy in the Company’s

Equity Incentive Plan, which defines the terms and conditions for any subsequent long-term incentive programme, and the Company Bonus Plan,

which defines the short-term incentive programme, as well as in any executive employment agreements, authorises the Company to recover, or

“claw back” incentive compensation with the ability to retroactively make adjustments if any cash or equity incentive award is predicated upon

achieving financial results and the financial results are subject to an accounting restatement.

No recoupment of incentive compensation was warranted under any incentive plan during 2022.

Terms of engagement

Each of the Executive Directors is engaged by the Company pursuant to a written agreement for an indefinite period of time and are employed at

will, meaning either party can terminate the engagement at any time. The Executive Directors are also appointed by shareholders annually.

Remuneration for Non-Executive Directors

The remuneration of Non-Executive Directors is governed by the Iveco Group N.V. Remuneration Policy. The current remuneration structure for

the Non- Executive Directors is consistent with the Remuneration Policy, as shown in the table below.


Non-Executive Director Compensation			Annual Fees
Annual Cash Retainer		EUR	110,000
	Additional retainer for Audit Committee member	EUR	22,000
	Additional retainer for Audit Committee Chair	EUR	30,000
	Additional retainer for member of other Board committees	EUR	18,000
	Additional retainer for Chair of other Board committees	EUR	22,000

The Non-Executive Directors receive their annual retainer fee, committee membership, and committee chair fee payments (collectively, “Fees”)

only in cash Remuneration of Non-Executive Directors is fixed and not dependent on the Company’s financial results. Non-Executive Directors

are not eligible for variable compensation and do not participate in any Company incentive plans. Consistent with the Remuneration Policy, Non-

Executive Directors do not receive benefits upon termination of their service as directors.

Upon the recommendation of the Human Capital and Compensation Committee, the Board resolved to implement share ownership guidelines for

the Non-Executive Directors. Non-Executive Directors are required to own Company shares in an aggregate amount of not less than 1x their

annual retainer fee, which is €110,000, within 24 months of appointment to the Board. The Non-Executive Directors are expected to hold

Company shares as a long-term investment and, as such, are expected to hold their Company shares while on the Board and for an additional

three months after their Board service terminates.

IMPLEMENTATION OF REMUNERATION POLICY IN 2022

The following table summarises remuneration paid or awarded (in Euro) to Iveco Group N.V. Directors for the year ended 31 December 2022 (the

“Summary Remuneration Table”):

Board Report Remuneration Report 114


Board of Directors	Position	Year	Fixed Remuneration			Variable Remuneration				Extraordinary Items	Pension & Similar Benefits		Total	Proportion of fixed to variable remuneration
Board of Directors	Position	Year	Base Salary or Fees	Fringe Benefits	(1)	One-year Variable	(2)	Multi- year Variable	(3)	Extraordinary Items	Pension & Similar Benefits	(4)	Total	Proportion of fixed to variable remuneration	(5)
HEYWOOD ,	Chair	01/01/2022	250,000	—		—		118,431		—	44,033		412,464	248%
Suzanne	Chair	31/12/2022	250,000	—		—		118,431		—	44,033		412,464	248%

MARX,	CEO	01/01/2022	750,000	57,882		1,452,000		3,466,936		—	57,960		5,784,778	18%
Gerrit	CEO	31/12/2022	750,000	57,882		1,452,000		3,466,936		—	57,960		5,784,778	18%

ERGINBILGIC,	Director	01/01/2022	146,000	—		—		—		—	25136		171,136	N/A
Tufan		31/12/2022	146,000	—		—		—		—	25136		171,136	N/A

KAIRISTO,	Director	01/01/2022	140,000	—		—		—		—	—		140,000	N/A
Essimari		31/12/2022	140,000	—		—		—		—	—		140,000	N/A

KNOLL,	Director	01/01/2022	150,000	—		—		—		—	—		150,000	N/A
Linda		31/12/2022	150,000	—		—		—		—	—		150,000	N/A

NASI,	Director	01/01/2022	150,000	—		—		—		—	—		150,000	N/A
Alessandro		31/12/2022	150,000	—		—		—		—	—		150,000	N/A

PERSSON,	Director	01/01/2022	132,000	—		—		—		—	22,776		154,776	N/A
Olof		31/12/2022	132,000	—		—		—		—	22,776		154,776	N/A

RIBADEAU- DIMAS,	Director	01/01/2022	79,260	—		—		—		—	—		79,260	N/A
Benoit		31/12/2022	79,260	—		—		—		—	—		79,260	N/A

SIMONELLI,	Director and	01/01/2022	132,000	—		—		—		—	—		132,000	N/A
Lorenzo	Senior Non- Executive Director	31/12/2022	132,000	—		—		—		—	—		132,000	N/A

Notes
(1) The amount includes the use of transportation (Company car and personal usage of aircraft) and company cost of life and health insurance benefits.
(2) The 2022 amount represents the bonus approved for the performance year and paid in 2023.
(3) The amounts represent the Company's share-based compensation (SBC) expense under applicable accounting standards relating to grants issued to the Executive Directors.
(4) For the CEO, the amount includes Company contributions to company and national social security (retirement) programs.
(5) Ratio of the percentage of fixed pay elements over the percentage of variable pay elements. Variable elements include variable incentives, extraordinary items, and the pension benefits derived from variable remuneration and extraordinary items. The Non-Executive Directors have no variable compensation elements, so this ratio is not applicable.

Board Report Remuneration Report 115

The following table summarises remuneration paid or awarded (in Euro) to Directors of Iveco Group N.V. for roles held in subsidiaries of Iveco

Group N.V. for the year ended 31 December 2022:


Board of Directors	Position	Year	Fixed Remuneration		Variable Remuneration		Extraordinary Items	Pension & Similar Benefits	Total Remuneration	Proportion of fixed to variable remuneration
			Fees	Fringe Benefits	One-year Variable	Multi-year Variable
NASI,	Chairman	2022	150,000	—	—	—	—	3,321	153,321	n/a
Alessandro	Iveco Defence S.p.A.

Year-Over-Year Remuneration

As 2022 is the first year for the newly formed Iveco Group, there is no past remuneration of Directors to disclose.

Share Ownership

Collectively, the Executive Directors and Non-Executive Directors own less than one percent of our outstanding common shares. The Company

has established share ownership guidelines for both the Executive Directors and Non-Executive Directors. The following table summarises the

number of Iveco Group common shares owned by Directors as of 31 December 2022.


Directors	Common Shares	Special Voting Shares
Gerrit Marx	80,698 (1)	—
Suzanne Heywood	64,338 (2)	—
Alessandro Nasi	69,798	—
Essimari Kairisto	7,535	—
Linda Knoll	29,465	—
Lorenzo Simonelli	2,865	—

(1) of which 38,400 were acquired through market purchases.
(2) of which 38,461 were acquired through market purchases.

Board Report Remuneration Report 116

SHARE AWARDS

The following table summarises unvested performance share units and restricted share units held by Executive Directors and Non-Executive

Directors as of 31 December 2022 with reference to the 2022-2024 LTIP :

Table - Shares awarded or due to the Directors for the reported financial year

Information regarding the reported financial year

The main conditions of share option plans

Opening

Balance(3)

During the year

Closing Balance(3)

Accounting

Expense

(1)(3)

Name of

Director,

position

Award

Name

Performance

Period

Award Date

Vesting Date

End of

Holding

Period

Awarded at

the

Beginning of

the Period

Awarded

Forfeited

Vested

Share Subject

to a

Performance

Condition

Shared

Unvested

Subject to a

Holding

Period (1)

€000s

FMV at

Grant

(€000s)

FMV at

Grant

(€000s)

MARX Gerrit,

CEO

2022-2024

01/01/2022

05/05/2022

28/02/2025

05/05/2027

—

518,850

—

518,850

PSU(2)

31/12/2024

2,027,000

—

473,732

HEYWOOD

Suzanne,

Chair

2022-2024

01/01/2022

05/05/2022

28/02/2025

05/05/2027

—

129,710

—

129,710

PSU(2)

31/12/2024

507,000

—

118,430

Total Shares:

—

648,560

—

648,560

Total FMV (€000s)

2,534,000

—

592,162

Notes:

(1) Share-based compensation (SBC) expense recorded in 2022 under applicable accounting standards relating to grants awarded to the Executive Directors under the 2022-2024

LTI Plan.

(2) The first 3-year LTIP performance cycle as solely Iveco Group began 1 January 2022 and covers performance through 31 December 2024. The Executive Directors have only

PSU awards, so all is subject to performance conditions.

(3) Under the CNHI Legacy Plan, the 2021-2023 performance cycle began pre-Demerger as CNH Industrial and awards were converted to Iveco Group share unit awards at time of

Demerger based on the relative share price of CNH Industrial and Iveco Group shares post-spin (10-day volume weighted share price). The awards consist of a Company

performance component, with potential vesting of 696,759 PSUs, and an individual performance component, with potential vesting of 167,713 RSUs. The PSUs vest at the end of the

performance cycle and the RSUs vest in two equal annual installments in 2023 and 2024.

Executive Officers’ Compensation

The aggregate amount of compensation paid to or accrued for Executive Officers that held office during 2022 was approximately €14.9 million,

including €1.8 million in pension and similar benefits paid or set aside by us. The aggregate amounts included those paid to or accrued for 13

Executives as of 31 December 2022.

Independence of Compensation Consultant

The Human Capital and Compensation Committee’s charter provides that the Committee has sole authority to engage the services of

independent compensation external advisors. While the Committee did not engage independent compensation external advisors in 2022, the

Committee was occasionally advised by representatives of Mercer, Freshfields Bruckhaus Deringer LLP, and Legance on executive

compensation matters. The Committee found that the information provided by such advisors provided important perspectives about market

practices for executive compensation, the levels and structure of the compensation programme, and compensation governance.

During 2022, the foregoing advisors performed services such as:

a.Provided regulatory education to the Committee

b.Provided benchmarking on peer Company analysis and selection

c.Provided information and advice relating to executive compensation matters

During 2022 the Committee reviewed the factors influencing independence and determined that no conflict of interest exists with respect to

Mercer, Freshfields Bruckhaus Deringer, and Legance.

Board Report Remuneration Report 117

Changes to 2023 Remuneration

The following table summarises the Executive Directors’ current remuneration effective since January 2022. No changes are expected for 2023.


Remuneration Element	CEO	Chair
Annual Base Salary	€750,000	€250,000
	▪ Effective 1 January 2022	▪ Effective 1 January 2022
	▪ Positioned below lower quartile of peer group for comparable CEO role	▪ Positioned below lower quartile of peer group for comparable Executive Chair only role
Short-Term Variable	▪ 110% of base salary at target; 220% of base at maximum	▪ No participation in annual bonus plan
Long-Term Variable	▪ €3,000,000 annual target (400% of base salary); maximum 2X target.	▪ €750,000 annual target (300% of base salary); maximum 2X target
	▪ All PSUs	▪ All PSUs
	▪ Higher LTIP leverage than peer group results in total direct compensation in upper quartile	▪ The Chair's LTIP is higher than the peer group, reflecting our bias towards performance based compensation, but her total direct compensation, including this, still remains in the bottom quartile compared to similar roles
Post-Employment Benefits	▪ Retirement savings benefits available to German- based salaried employees
	▪ Qualifying termination in an amount equal to 12 months' base salary, consistent with Dutch Corporate Governance Code best practice
Other Benefits	▪ German benefits including company car, health, life, accident, and disability insurance, and tax assistance	▪ Limited personal usage of private aircraft service; taxable benefit will be the Chair’s tax responsibility
	▪ Tax equalization for any non-German sourced employment income
	▪ Limited personal usage of private aircraft service; taxable benefit will be the CEO’s tax responsibility

2023 Pay Element – Euro Annualised


	CEO		Chair
	at Target	at Maximum	at Target	at Maximum
Base Salary	750,000	750,000	250,000	250,000
2022 STI	825,000	1,650,000	N/A	N/A
2022 LTI	3,000,000	6,000,000	750,000	1,500,000
Total Direct Compensation	4,575,000	8,400,000	1,000,000	1,750,000

Board Report Remuneration Report 118

ANNEX

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 charges 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 we provide guidance for adjusted diluted EPS, we do 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 EBIT Margin % is Adjusted EBIT divided by Net Revenue.

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 Iveco Group 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.

Average Industrial Invested Capital: is defined as the average of the ending balance of the current year plus the prior for Industrial Activities’ (x)

third party debt plus (y) equity (excluding non-controlling interests) less goodwill.

Cash Conversion Ratio %: resulting ratio (in %) of Free Cash flow of Industrial Activities (numerator) over Adjusted Net Income Iveco Group

(denominator).

Industrial Return on Invested Capital (Industrial ROIC): Industrial ROIC is a ratio of Adjusted EBIT (after-tax) over Average Industrial Invested

Capital. For the 3 year period, the measurement for Industrial ROIC is the 3 year average. Adjusted EBIT (after-tax) is defined as Adjusted EBIT

less JV income multiplied by (1 – estimated long term tax rate), with JV income then added back.

CO2 Emissions Reduction % (“CO2 Reduction %”): The CO2 emissions reduction will measure the percentage change of the CO2 Emissions

levels at the end of 31 December 2024 versus the baseline at the end of 2019. The absolute CO2 emissions is measured in tons of CO2 emissions

per hours of production in the manufacturing processes from Scope 1 and Scope 2 sources as defined:

▪Scope 1 emissions are direct emissions from owned or controlled sources

▪Scope 2 emissions are indirect emissions from the generation of purchased energy

Gender Balance: Year over Year % improvement of women graded Manager/Senior Professional & above.

Relative Total Shareholder Return (“Relative TSR”): for the 2022-2024 Plan is the annualised rate of return, reflecting stock price performance

(adjusted for dividends paid) over the cumulative performance period, beginning 1 January 2022 and ending 31 December 2024, using a 30-day

average. Iveco Group N.V.’s Total Shareholder Return (“TSR”) is compared to the TSR of the comparator group, to determine the percentile

ranking over the Performance Period.

Total Shareholder Return (TSR): for the 2021-2023 Plan with respect to a corporation means the annualized rate of return reflecting stock price

performance (adjusted for dividends paid) over the same cumulative performance period, beginning 1 January 2021 and ending 31 December

2023. The TSR peer group may be adjusted by the Committee in its sole discretion during the performance period as a result of mergers and

acquisitions, de-listings, takeover offers, etc. In this event, an appropriate benchmark peer would be identified and proposed for inclusion in the

peer group.

Board Report Remuneration Report 119

MAJOR SHAREHOLDERS

Following the Demerger becoming effective on 1 January 2022, the Company’s issued share capital was divided into 271,215,400 Common

Shares and 74,243,570 Special Voting Shares. No further changes occurred in 2022, but 26,164 Special Voting Shares were surrendered to the

Company following the de-registration of the corresponding Qualifying Common Shares from the Loyalty Register and are held as treasury

shares by the Company.

The following table sets forth information with respect to ownership of the Company’s share capital of 3% or more as of 31 December 2022

based on public regulatory filings by direct and indirect shareholders and other sources available to the Company.


Holder	Number of Common Shares held		Number of Special Voting Shares held	Percentage of overall issued shares held (1)	Percentage of total voting rights (2)
Giovanni Agnelli B.V. (3)	73,385,580.00		73,385,580.00	42.49%	42.49%
Norges Bank	21,980,948.00	(4)	—	6.36%	6.36%
Morgan Stanley (5)	12,637,055.00	(6)	—	3.66%	3.66%
Southpoint Capital Advisors LP	11,442,687.00	(7)	—	3.32%	3.32%

(1) For the purpose of this column of the table, the percentages refer to both the Iveco Group Common Shares and the Iveco Group Special Voting Shares

(2) For the purpose of this column of the table, the percentages refer to both the Iveco Group Common Shares and the Iveco Group Special Voting Shares. The percentages of the total

voting rights are calculated based on the number of issued shares excluding treasury shares, since no voting rights may be exercised for any share held by the Company.

(3) Held via Exor N.V.

(4) Based on regulatory filings with the AFM, on 19 July 2022, Norges Bank held (i) directly (actual) 19,567,544 Common Shares and (ii) directly (potential) 2,413,404 Common Shares.

(5) Held via Morgan Stanley & Co. LLC, Morgan Stanley & Co. International plc, and Morgan Stanley Smith Barney LLC.

(6) Based on regulatory filings with the AFM, on 1 December 2022, Morgan Stanley held (i) indirectly (actual) 1,402,642 Common Shares, (ii) indirectly (potential) 11,234,412 Common

Shares, and (iii) indirectly (short) 1 Common Share.

(7) Based on regulatory filings with the AFM, on 11 March 2022, Southpoint Capital Advisors LP held as part of an equity swap 11,452,687 Common Shares.

The Company’s Common Shares are listed on the Euronext Milan. They are accepted for clearance through the book-entry facilities of Monte

Titoli S.p.A. which has its offices at Piazza degli Affari 6, Milan, Italy.

The Special Voting Shares are neither listed nor tradable and are transferable only in very limited circumstances and only together with the

Common Shares to which they are associated (see Section Corporate Governance of the present Report).

Board Report Major Shareholders 120

SUBSEQUENT EVENTS AND OUTLOOK

SUBSEQUENT EVENTS

Iveco Group has evaluated subsequent events through 2 March 2023, which is the date the financial statements were authorized for issuance,

and identified the following:

▪On 24 January 2023, 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.

OUTLOOK

Based on current industry outlook, solid order backlog and no signs of increasing order cancellations, Iveco Group is expecting the following

preliminary financial outlook for 2023:

▪Consolidated Adjusted EBIT between €550 million and €590 million

▪Net revenues of Industrial Activities(**) up from 2% to 3% versus full year 2022

▪Adjusted EBIT of Industrial Activities between €460 million and €500 million

▪SG&A costs of Industrial Activities ~ 6% of net revenues

▪Net cash of Industrial Activities(***) ~ €2.0 billion

▪Investments of Industrial Activities(****) up from 10% to 15% versus full year 2022.

(*)Financial Outlook based on current visibility. A significant escalation or expansion of economic disruption due to COVID-19 pandemic, Russia/Ukraine war, supply chain issues, and

energy price and supply could have a material adverse effect on Iveco Group financial results.

(**)Including currency translation effects.

(***)Excluding share buy-backs and extraordinary transactions.

(****)Investments in property, plant and equipment, and intangible assets (excluding assets sold under buy-back commitments and assets under operating leases).

Board Report Subsequent Events and Outlook 121

2 March 2023

The Board of Directors

Suzanne Heywood

Gerrit Andreas Marx

Tufan Erginbilgic

Essimari Kairisto

Linda Knoll

Alessandro Nasi

Olof Persson

Benoît Ribadeau-Dumas

Lorenzo Simonelli

Board Report Subsequent Events and Outlook 122

IVECO GROUP

CONSOLIDATED

FINANCIAL STATEMENTS

At 31 December 2022

Iveco Group Consolidated Financial Statements at 31 December 2022 123

CONSOLIDATED INCOME STATEMENT


(€ million)	Note	2022	2021
Net revenues	(1)	14,357	12,651
Cost of sales	(2)	12,389	10,881
Selling, general and administrative costs	(3)	936	825
Research and development costs	(4)	473	481
Result from investments:	(5)	(5)	27
Share of the profit/(loss) of investees accounted for using the equity method		(5)	27
Gains/(losses) on the disposal of investments	(14)	33	8
Restructuring costs	(6)	15	36
Other income/(expenses)	(7)	(106)	(168)
EBIT		466	295
Financial income/(expenses)	(8)	(206)	(115)
PROFIT/(LOSS) BEFORE TAXES		260	180
Income tax (expense) benefit	(9)	(101)	(104)
PROFIT/(LOSS) FOR THE PERIOD		159	76

PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the parent		147	52
Non-controlling interests		12	24

(in €)
BASIC EARNINGS/(LOSS) PER COMMON SHARE	(11)	0.54	0.19
DILUTED EARNINGS/(LOSS) PER COMMON SHARE	(11)	0.54	0.19

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 124

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME


(€ million)	Note	2022	2021
PROFIT/(LOSS) (A)		159	76

Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss:
Gains/(losses) on the remeasurement of defined benefit plans	(21)	77	42
Net change in fair value of equity investments at fair value through other comprehensive income	(21)	(172)	(95)
Tax effect of Other comprehensive (loss)/income that will not be reclassified subsequently to profit or loss	(21)	(15)	(1)
Total Other comprehensive income/(loss) that will not be reclassified subsequently to profit or loss, net of tax (B1)		(110)	(54)
Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss:
Gains/(losses) on cash flow hedging instruments	(21)	(14)	7
Exchange gains/(losses) on translating foreign operations	(21)	(11)	17
Share of Other comprehensive income/(loss) of entities accounted for using the equity method	(21)	(36)	(17)
Tax effect of Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss	(21)	7	(4)
Total Other comprehensive income/(loss) that may be reclassified subsequently to profit or loss, net of tax (B2)		(54)	3
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX (B) = (B1) + (B2)		(164)	(51)

TOTAL COMPREHENSIVE INCOME/(LOSS) (A)+(B)		(5)	25

TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO:
Owners of the parent		(19)	(8)
Non-controlling interests		14	33

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 125

CONSOLIDATED STATEMENT OF FINANCIAL

POSITION


(€ million)	Note	At 31 December 2022	At 31 December 2021
ASSETS
Intangible assets	(12)	1,511	1,314
Property, plant and equipment	(13)	3,097	3,055
Investments and other non-current financial assets:	(14)	237	582
Investments accounted for using the equity method		150	310
Equity investments measured at fair value through other comprehensive income		62	224
Other investments and non-current financial assets		25	48
Leased assets	(15)	70	58
Defined benefit plan assets	(22)	—	15
Deferred tax assets	(9)	700	646
Total Non-current assets		5,615	5,670
Inventories	(16)	2,838	2,651
Trade receivables	(17)	341	318
Receivables from financing activities	(17)	4,378	2,909
Current tax receivables	(17)	95	110
Other current receivables and financial assets	(17)	339	3,902
Prepaid expenses and other assets		68	47
Derivative assets	(18)	50	50
Cash and cash equivalents	(19)	2,288	897
Total Current assets		10,397	10,884
Assets held for sale	(20)	1	6
TOTAL ASSETS		16,013	16,560

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 126

CONSOLIDATED STATEMENT OF FINANCIAL

POSITION

(CONTINUED)


(€ million)	Note	At 31 December 2022	At 31 December 2021
EQUITY AND LIABILITIES
Issued capital and reserves attributable to owners of the parent		2,354	2,289
Non-controlling interests		37	22
Total Equity	(21)	2,391	2,311
Provisions:		2,108	1,931
Employee benefits	(22)	510	621
Other provisions	(23)	1,598	1,310
Debt:	(24)	4,433	5,785
Asset-backed financing	(24)	3,149	1,926
Other debt	(24)	1,284	3,859
Derivative liabilities	(18)	46	43
Trade payables	(25)	3,690	3,133
Tax liabilities	(9)	107	49
Deferred tax liabilities	(9)	25	11
Other current liabilities	(26)	3,213	3,297
Total Liabilities		13,622	14,249
TOTAL EQUITY AND LIABILITIES		16,013	16,560

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 127

CONSOLIDATED STATEMENT OF CASH FLOWS


(€ million)	Note	2022	2021
A) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	(19)	897	463
B) CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES:
Profit/(loss)		159	76
Amortization and depreciation (net of vehicles sold under buy-back commitments and operating leases)		560	567
(Gains)/losses on disposal of:
Property plant and equipment and intangible assets (net of vehicles sold under buy-back commitments)		(96)	(1)
Investments		5	(8)
Other non-cash items	(33)	13	11
Dividends received		4	16
Change in provisions	(33)	277	126
Change in deferred income taxes		(11)	43
Change in items due to buy-back commitments(a)	(33)	18	49
Change in operating lease items(b)	(33)	(29)	3
Change in working capital	(33)	507	(343)
TOTAL		1,407	539
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)		(777)	(564)
Consolidated subsidiaries and other equity investments		(30)	(44)
Proceeds from the sale of non-current assets (net of vehicles sold under buy-back commitments)		75	14
Net change in receivables from financing activities	(33)	(1,320)	(117)
Change in current securities		29	85
Other changes		683	581
TOTAL		(1,340)	(45)
D) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
Issuance of other medium-term borrowings (net of repayment)		442	63
Net change in other financial payables and derivative assets/liabilities	(33)	904	(151)
Dividends paid		(1)	—
TOTAL		1,345	(88)
Translation exchange differences		(21)	28
E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS		1,391	434
F) CASH AND CASH EQUIVALENTS AT END OF YEAR	(19)	2,288	897

(a) Cash generated from the sale of vehicles under buy-back commitments, net of amounts included in Profit/(loss), is recognized under operating activities in a single line item, which

includes changes in working capital, capital expenditure, depreciation and impairment losses. The item also includes gains and losses arising from the sale of vehicles subject to buy-

back commitments.

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

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 128

CONSOLIDATED STATEMENT OF CHANGES IN

EQUITY


	Attributable to the owners of the parent
(€ million)	Invested capital and earnings reserves (*)	Share capital	Treasury shares	Capital reserves	Earnings reserves	Cash flow hedge reserve	Cumulative translation adjustment reserve	Defined benefit plans remeasu rement reserve	Equity investmen ts at FVTOCI	Cumulative share of OCI of entities consolidated under the equity method	Non- controlling interests	Total equity
AT 31 DECEMBER 2020	2,572					2	(256)	(190)	87	53	68	2,336
Dividends distributed	—					—	—	—	—	—	(76)	(76)
Total comprehensive income/(loss) for the period	52					3	9	39	(94)	(17)	33	25
Other changes(1)	29					—	—	—	—	—	(3)	26
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	—	—	—	—	—	—	—
Dividends distributed	—	—	—	—	—	—	—	—	—	—	(1)	(1)
Share-based compensation expense	—	—	—	17	—	—	—	—	—	—	—	17
Total comprehensive income/(loss) for the period	—	—	—	—	147	(8)	(8)	58	(172)	(36)	14	(5)
Other changes(2)	—	—	—	—	63	—	—	4	—	—	2	69
AT 31 DECEMBER 2022	—	3	—	2,311	566	(3)	(255)	(89)	(179)	—	37	2,391

(1) Other changes of "Earnings reserves" 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. This item also includes minor

changes related to share-based compensation expense.

(2) 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 years ended 31 December 2021 and 2020, Iveco Group did not comprise a separate parent company or group of entities. The amounts at 31 December 2021 and 2020,

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.

The accompanying notes are an integral part of the Consolidated Financial Statements

Iveco Group Consolidated Financial Statements at 31 December 2022 129

NOTES TO THE CONSOLIDATED FINANCIAL

STATEMENTS

BACKGROUND