Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — AB Volvo — Investor Day (November 2010)
21 slides from Volvo Ab Class A's investor day presentation, November 2010
Slide 1: Investor Day 2010
Investor Day 2010 Mikael Bratt SVP AB Volvo and CFO Volvo Group AB Volvo Investor Day NY - November 2010 1
Slide 2: Third Quarter 2010
Third Quarter 2010 Earnings per share Third quarter SEK • Sales 32% higher, +33% fx-adjusted • Operating income SEK 4.9 bn, operating margin 7.7% • Cost reductions maintained • Seasonal build-up in working capital Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Quarter -1,44 -0,99 0,83 1,55 1,38 12 Mth. roll. -6,95 -
Slide 3: Back on track
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 3
Slide 4: 2009 Downturn Management Summary
2009 2009 DOWNTURN DOWNTURN MANAGEMENT MANAGEMENT SUMMARY SUMMARY Targets achieved 2009 S&A - SEK 21 bn cost reduction in place R&D - Competitive future product portfolio Inventory - Working capital reduced PPE Overdues Headcount reduction - Reduction of 18,000 employees Make improvements sustainabl
Slide 5: Upturn Management
UPTURN UPTURN MANAGEMENT MANAGEMENT f Hold on to implemented cost reductions f Increased focus on efficiency f Build flexibility in cost structure f Increase working capital turn-over AB Volvo Investor Day NY - November 2010 5
Slide 6: Operating leverage through cost-control
Operating leverage through cost-control Industrial operations 80 70 + 35% 60 50 40 30 20 10 + 2.5% 0 09Q3 09Q4 10Q1 10Q2 10Q3 Net sales Operating expenses AB Volvo Investor Day NY - November 2010 6
Slide 7: Operating margin & Net sales 2004-2010Q3
Operating margin & Net sales Development 2004-2010Q3 Operating margin & Net Sales 2004-2010Q3 15% 100 90 10% 80 2004 2005 2006 2007 2008 2009 10Q1 10 Q2 10 Q3 70 Net Sales Bn SEK Op income % 5% 60 0% 50 40 -5% 30 20 -10% Operating Margin 10 Net Sales -15% 0 AB Volvo Investor Day NY - November 2010 7
Slide 8: Increased efficiency
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 8
Slide 9: Focus in 2010-2012
Focus in 2010-2012 INCREASED EFFICIENCY • Reducing Selling & Admin costs further • Strict control of capital expenditures • Maintain inventory levels • Improve R&D efficiency AB Volvo Investor Day NY - November 2010 9
Slide 10: Volvo IT
Volvo IT Sourcing over the business cycle 2008 – 2009 Recession Management Reducing IT cost base for Volvo Group by FTE’s sourced to India and corresponding savings SEK 1.8 bn run-rate in only 6 months -still safeguarding strategic initiative and keeping quality in deliveries and services 2010 – 201
Slide 11: R&D efficiency – A competitive edge in our Industry
R&D efficiency – A competitive edge in our Industry • Global environmental demands • Competitive global products R&D Spend ~ SEK 13.0 • Shorter time to market bn Increased project output (efficiency) • Project RnD30 R&D spending, - Improve R&D efficiency by 30% new theoretical level 2009 2010 2011 2
Slide 12: Flexibility
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 12
Slide 13: Cost flexibility
Cost flexibility R&D Manufacturing Sales & Aftermarket Consistent Local adaptation to Rapid local demand adaptation AB Volvo Investor Day NY - November 2010 13
Slide 14: Workforce cost flexibility
Workforce cost flexibility Fixed employees and consultants + 89% 105 000 100 000 95 000 90 000 + 1% 85 000 80 000 2009 Q4 2010 Q3 Fixed employees Consultants AB Volvo Investor Day NY - November 2010 14
Slide 15: Cash flow
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 15
Slide 16: Volvo Group – Cash Flow
Volvo Group – Cash Flow Industrial Operations 12-months, SEK bn 20 15 10 5 0 -5 -10 -15 -20 -25 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 08 09 09 09 09 10 10 10 2010 Cash Flow 11 8,2 10 1 1,9 4,9 5,2 13
Slide 17: Cash Conversion Cycle
Cash Conversion Cycle 6-months average, days 100 90 80 Trade payables 70 Inventories 60 50 40 Receivables 30 CCC-days 20 Target: 20 days 10 0 09Q3 09Q4 10Q1 10Q2 10Q3 AB Volvo Investor Day NY - November 2010 17
Slide 18: Volvo Group funding
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 18
Slide 19: Volvo Group – Net Financial Debt
Volvo Group – Net Financial Debt Industrial Operations Net debt, • Good access to financing SEK bn 85.8% of equity • Amortization of debt 60 50 • Competitive funding for VFS 61.7% 40 • Liquidity position: (52.6%) - Liquid funds SEK 26.9 bn 30 Target: 40% - Committed facilities SEK 34 bn 20 10 0 Q1 0
Slide 20: Conclusions
Back on track Increased efficiency Flexibility Cash flow Volvo Group funding Conclusions AB Volvo Investor Day NY - November 2010 20
Slide 21: Going Forward
GOING GOING FORWARD FORWARD fCost control in upturn fTight working capital management AB Volvo Investor Day NY - November 2010 21