Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — Q2 2014 Earnings Presentation
23 slides from Volvo AB Class A's earnings presentation, 2014
Slide 1: Volvo Group Second quarter 2014
Volvo Group Second quarter 2014 OLOF PERSSON, CEO AB Volvo
Slide 2: Mature markets growing – growth markets declining
VOLVO GROUP Mature markets growing – growth markets declining • Low activity in developing economies in parts of Asia and South America – BRIC down 21% • Solid development in mature markets like North America, Europe and Japan • Considerable negative impact on earnings from lower volumes in China (C
Slide 3: Improving order intake in the latter part of the quarter
TRUCKS EUROPE Improving order intake in the latter part of the quarter • Gradual improvement in demand, orders up by 16% compared with Q1 - Strong markets in Germany, UK and Spain - Weak development in France and Russia • Good reception of the new product ranges with good pricing • Market shares for
Slide 4: Good momentum in US truck demand
TRUCKS NORTH AMERICA Good momentum in US truck demand • Good freight environment – customers gradually moving from replacement to expansion • Low book-to-bill ratio in Q2 but good order book from earlier quarters • Moderate production increase at the end of the quarter at the Macungie and New River
Slide 5: A re-balancing quarter to meet lower demand
TRUCKS SOUTH AMERICA A re-balancing quarter to meet lower demand • Orders in Brazil down by 27% vs Q1, production cut in Q2 • Positive price realization but not enough to offset high cost inflation • Inventories, including dealers’, successfully reduced to match current demand • Continued strong com
Slide 6: Strong market in Japan
TRUCKS ASIA Strong market in Japan Japan • Continued strong demand – total HD/MD market up by 27% • HD market share improved to 19.6% (18.6%) • UD Quon facelift launched, 4-5% lower fuel consumption Asia • Mining remains slow • Positive reception of the new Volvo range AB Volvo Second quarter, 2014
Slide 7: Considerable decline in China
VOLVO CONSTRUCTION EQUIPMENT Considerable decline in China • Total market in China in rapid decline, our deliveries declined by 32% in Q2 – revised outlook • Maintained number 1 position in China • Market growth in North America and Europe • Weak development in emerging markets driven by low mining
Slide 8: Buses and Volvo Penta
BUSES VOLVO PENTA • Early signs of recovery for Marine engines • Slow market recovery from low levels - in Europe order intake up by 3% • Continued weak demand for industrial • Deliveries increased by 7% engines in emerging markets • Increasing demand for hybrid and electric- • Strong inflow of new
Slide 9: Growth in Europe and North America offset by decline in South America and Asia
VOLVO GROUP Growth in Europe and North America offset by decline in South America and Asia AB Volvo Second quarter 2014 9
Slide 10: Volvo Group Second quarter 2014 – Jan Gurander, CFO
Volvo Group Second quarter 2014 JAN GURANDER, CFO AB Volvo
Slide 11: Improvements in Trucks not enough to offset low earnings in Volvo CE
VOLVO GROUP Improvements in Trucks not enough to offset low earnings in Volvo CE + Trucks + Buses + Corporate & other - Divestment of real estate 815 M - Volvo Rents 226 M - Volvo CE - Volvo Penta - Customer Finance AB Volvo Second quarter 2014 11
Slide 12: Price realization on new truck ranges offset by negative market mix
VOLVO GROUP Price realization on new truck ranges offset by negative market mix + Price realization on new truck ranges + Lower selling expenses + Lower R&D spending + Lower warranty costs + Real estate divestment - Negative market mix - China for Volvo CE - Brazil for Trucks - Reduced R&D capitaliz
Slide 13: Sales growth in the US and Japan partly offset by decline in South America
TRUCKS Sales growth in the US and Japan partly offset by decline in South America AB Volvo * Excluding restructuring charges Second quarter 2014 13
Slide 14: Price realization partly offset by negative development in Brazil
TRUCKS Price realization partly offset by negative development in Brazil AB Volvo
Slide 15: Low sales volumes due to considerable decline in China
VOLVO CE Low sales volumes due to considerable decline in China AB Volvo * Excluding restructuring charges Second quarter 2014 15
Slide 16: Weak second quarter earnings
VOLVO CE Weak second quarter earnings AB Volvo 16
Slide 17: Buses and Volvo Penta
BUSES VOLVO PENTA AB Volvo * Excluding restructuring charges Second quarter 2014 17
Slide 18: Strong new business volume
CUSTOMER FINANCE Strong new business volume AB Volvo * Excluding restructuring charges Second quarter 2014 18
Slide 19: Reduced investments following product renewal
VOLVO GROUP Reduced investments following product renewal AB Volvo * Industrial Operations Second quarter 2014 19
Slide 20: Reduction of white-collar employees and consultants according to plan
VOLVO GROUP Reduction of white-collar employees and consultants according to plan AB Volvo * Excluding Volvo Rents ** Acquisition of Terex Hauler Business added 142 persons Second quarter 2014 20
Slide 21: Increased focus to reduce operating expenses
VOLVO GROUP Increased focus to reduce operating expenses AB Volvo Second quarter 2014 21
Slide 22: Strategic Program 2013-2015 Status Q2 2014
18 months to go STRATEGIC PROGRAM 2013-2015 Status Q2 2014 ACTIVITIES NOW START TO SHOW RESULTS, QUARTERLY EFFECT Q1 2014 Q2 2014 Cash R&D reduction - 213 M - 76 M Selling cost reduction - 143 M - 365 M Admin cost reduction + 75 M - 122 M IS/IT cost reduction - 100 M - 276 M White collar employee re
Slide 23: Second quarter summary
VOLVO GROUP Second quarter summary NEGATIVE FACTORS Sales decline for Construction Equipment in China Sales decline for Trucks in Brazil Low capacity utilization in parts of our industrial system Continued high costs for R&D due to reduced capitalization POSITIVE FACTORS Cost savings throu