Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — Q4 2017 Earnings Presentation
31 slides from Volvo Ab Class A's earnings presentation, January 2018
Slide 1: Fourth Quarter 2017
FOURTH QUARTER 2017 Martin Lundstedt, President and CEO
Slide 2: Fourth Quarter Highlights
Volvo Group FOURTH QUARTER HIGHLIGHTS Net sales +11% (+16% excl. NET SALES ADJUSTED OPERATING currency) SEK bn 12 months 335 bn MARGIN* 12 months 8.9% % 91.7 Continued improved profitability 82.6 8.0% 6.9% for the Group - Trucks’ adjusted operating margin 9.5% (8.7) - Construction Equipment’s ad
Slide 3: Volume Development in the Fourth Quarter
Volvo Group VOLUME DEVELOPMENT IN THE FOURTH QUARTER TRUCK DELIVERIES MACHINE DELIVERIES Units HD/MD 12 months 186,294 Units 12 months 64,127 +8,597 +19% 60,000 +5,216 50,000 +49% 20,000 40,000 18,000 16,000 30,000 14,000 Total Change 12,000 Total Change Volvo 34,293 +6,359 20,000 10,000 8,000 UD 5,
Slide 4: Service Sales Development
Volvo Group SERVICE SALES DEVELOPMENT SERVICE SALES +3% 12 months SEK bn +8% ex FX 71.7 bn 20 17.8 18.3 18 16.3 16 14 12 10 8 6 4 2 CONSTRUCTION TRUCKS BUSES VOLVO PENTA 0 EQUIPMENT Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Volvo Group Headquarters Fourth quarter 2017 4
Slide 5: Trucks
Trucks • Good demand • Stretched supply chain • New trucks in NA well received – production change-over underway • Sales start of medium- duty electric trucks in 2019 Volvo Group Headquarters Fourth quarter 2017 5
Slide 6: Great reception of the new trucks in North America
Trucks GREAT RECEPTION OF THE NEW TRUCKS IN NORTH AMERICA - CHANGE-OVER IN PRODUCTION UNDERWAY Volvo VNL North America Mack Anthem North America Volvo Group Headquarters Fourth quarter 2017 6
Slide 7: Trucks Market Environment
Trucks MARKET ENVIRONMENT NORTH AMERICA EUROPE HD 400 HD 400 300 300 200 200 100 2017: ~307’ Forecast 2018: 310’ 0 100 2017: 244’ 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Forecast 2018: 280’ 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 1 600 ASIA BRAZIL 1 400 China HD+M
Slide 8: Trucks Market Shares
Trucks MARKET SHARES HD% 2016 2017 EUROPE EU28, YTD NOVEMBER NORTH AMERICA 16,9 16,8 JAPAN 8,0 8,6 9,9 17,0 19,0 8,3 7,8 7,3 Volvo Renault Trucks Volvo Mack UD BRAZIL AUSTRALIA 18,9 18,4 16,1 15,4 SOUTH AFRICA 9,4 8,5 2,0 3,3 14,0 15,3 8,7 10,3 Volvo Volvo Mack UD Volvo UD Volvo Group Headquarters F
Slide 9: HD/MD: Orders +28% and Deliveries +19%
Trucks HD/MD: ORDERS +28% AND DELIVERIES +19% NORTH AMERICA EUROPE Orders Deliveries Orders Deliveries Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Orders +22% Orders +84% Deliveries +14% Deliveries +28% SOUTH AMERICA AFRICA & OCEANIA ASIA Orders Deliveries Orders Deliveries Orders Deliveri
Slide 10: Construction Equipment
Construction Equipment • Market growth across all regions • Orders up 48% and deliveries up 49% • Transformation program continues to yield result Volvo Group Headquarters Fourth quarter 2017 10
Slide 11: New Range of Volvo Branded Rigid Haulers
Construction Equipment NEW RANGE OF VOLVO BRANDED RIGID HAULERS Volvo Group Headquarters Fourth quarter 2017 11
Slide 12: Construction Equipment Market Environment
Construction Equipment MARKET ENVIRONMENT NORTH AMERICA EUROPE CHINA 300 500 200 400 200 300 100 100 200 Forecast 2018: 0% to +10% 0 100 Forecast 2018: 0% to +10% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 0 Forecast 2018: +10% to +20% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Slide 13: Orders +48% and Deliveries +49%
Construction Equipment ORDERS +48% AND DELIVERIES +49% NORTH AMERICA EUROPE Orders Deliveries Orders Deliveries Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Orders +86% Orders +8% Deliveries +6% Deliveries +14% SOUTH AMERICA AFRICA & OCEANIA ASIA Orders Deliveries Orders Deliveries Orders D
Slide 14: Buses
Buses • Mixed market development • Order decrease by -28%, • Order intake +34% delivery increase by 1% across regions • 50 hybrid buses to • Deliveries of the new 8- Singapore litre chassis platform for • Partnership Asian markets to test started • electric Largest autonomous order ever of buses com
Slide 15: Volvo Penta
Volvo Penta • Sales growth in both industrial and marine segments • Order increase by 17%, delivery increase by 11% • Good inroads into the agricultural segment Beet harvester powered by Volvo Penta Volvo Group Headquarters Fourth quarter 2017 15
Slide 16: Fourth Quarter 2017 - Jan Gurander, CFO
FOURTH QUARTER 2017 Jan Gurander, deputy CEO and CFO
Slide 17: Net Sales per Market
Volvo Group NET SALES PER MARKET NET SALES Currency -3.7 bn SEK bn +3.5 -0.0 91.7 +2.0 +0.5 +3.2 82.6 Q4 2016 Europe North South Asia Africa & Q4 2017 America America Oceania Volvo Group Headquarters Fourth quarter 2017 17
Slide 18: Adjusted Operating Income per Business Area
Volvo Group ADJUSTED OPERATING INCOME PER BUSINESS AREA ADJUSTED OPERATING INCOME* Currency -778 M SEK M +1,322 +22 +31 +21 -765 7,334* +1,042 5,660* Q4 2016 Trucks Volvo CE Buses Volvo Financial Group Q4 2017 Penta Services Functions & Other *Adjustments, see note 6 in Q4 report: Q4 2016: Gain on s
Slide 19: Adjusted Operating Income Contributors
Volvo Group ADJUSTED OPERATING INCOME CONTRIBUTORS ADJUSTED OPERATING INCOME* Currency -778 M SEK M +1,655 -203 -112 +995 7,334* -299 -362 5,660* + Truck and construction volumes - Higher selling and admin. cost - R&D - Stretched supply chain Q4 2016 Gross Cash R&D Selling Admin. Other Q4 2017 incom
Slide 20: Cash Flow
Volvo Group – Industrial Operations CASH FLOW OPERATING CASH FLOW INVESTMENTS IN PPE SEK bn SEK bn 12 months SEK 28.4 bn 12 months SEK 5.7 bn CASH FLOW EFFECT FROM CHANGES IN WORKING CAPITAL SEK bn 14.7 2.5 7.6 14.4 2.2 6.6 1.9 0.5 1.4 4.9 -2.9 Total change Other receivable Inventories Trade payable
Slide 21: Trucks Net Sales
Trucks NET SALES NET SALES 12 months 216.5 bn SEK bn +12% 60.8 55.1 54.5 • Delivered HD/MD trucks +19%: - North America +28% - Europe +14% • Net sales currency- adjusted +16%: - vehicles +18% - services +9% Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Volvo Group Headquarters Fourth quarter 2017 21
Slide 22: Trucks Adjusted Operating Income
Trucks ADJUSTED OPERATING INCOME ADJUSTED OPERATING INCOME* SEK M ADJUSTED OPERATING INCOME* 5,796 ADJUSTED OPERATING MARGIN* SEK bn 12 months 20.4 bn % 12 months 9.4% Currency -377 M 4,754 + Higher volumes 5.8 4.4 4.8 8.7% 9.5% 7.9% - Selling cost - Higher R&D cost - Stretched supply chain Q4 2016
Slide 23: Construction Equipment Net Sales
Construction Equipment NET SALES NET SALES 12 months 66.5 bn SEK bn +28% • Delivered machines +49%: - Volvo +27% 16.7 - SDLG +89% - large and medium +51% 13.1 - compact +41% 11.0 • Net sales currency- adjusted +34%: - machines +39% - services +11% Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Volvo G
Slide 24: Construction Equipment Adjusted Operating Income
Construction Equipment ADJUSTED OPERATING INCOME ADJUSTED OPERATING INCOME* ADJUSTED OPERATING INCOME* 1,816 ADJUSTED OPERATING MARGIN* SEK M 12 months 7,917 M SEK M % 12 months 11.9% Currency -324 M 10.9% 1,816 + Higher volumes + Capacity utilization 3.8% 494 494 -1.7% -191 Q4 2016 Q4 2017 *Adjustm
Slide 25: Buses Net Sales & Adjusted Operating Income
Buses NET SALES & ADJUSTED OPERATING INCOME NET SALES ADJUSTED OPERATING SEK bn 12 months 26.1 bn INCOME* • Net sales currency- SEK M 12 months 928 M adjusted -8%: Currency -89 M - vehicles -11% 8.0 - services +8% 7.3 7.0 294 288 • Adjusted operating 266 income: + service sales + operational efficie
Slide 26: Volvo Penta Net Sales & Adjusted Operating Income
Volvo Penta NET SALES & ADJUSTED OPERATING INCOME NET SALES ADJUSTED OPERATING INCOME* • Net sales currency- SEK bn 12 months 11.1 bn SEK M 12 months 1,439 M adjusted +14%: Currency -30 M - engines +17% - services +6% 2.7 2.2 2.4 • Adjusted operating income: + Higher sales + Product mix 156 187 140
Slide 27: Financial Services New Financing and Profitability
Financial Services NEW FINANCING AND PROFITABILITY ADJUSTED OPERATING NEW FINANCING ROE 1 INCOME* SEK bn 12 months 57.9 bn 12 months, % SEK M 12 months 2,192 M 567 588 534 17.1 14.9 15.6 13.7% 14.3% 13.4% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1) Excluding p
Slide 28: Full Year 2017
VOLVO Volvo Group Full Year 2017
Slide 29: Adjusted Operating Income FY2017
Volvo Group ADJUSTED OPERATING INCOME FY2017 ADJUSTED OPERATING INCOME* Currency -362 M SEK M +9,855 -502 -965 -1,715 +2,681 29,928* -521 + Higher volumes in Volvo CE + Higher truck volumes 21,094* + Higher service sales + JV profitability - Higher S&A expenses - R&D - Stretched supply chain FY2016
Slide 30: FY2017 Highlights
Volvo Group FY2017 HIGHLIGHTS Highest Net sales and EBIT so far: NET SALES ADJUSTED OPERATING SEK bn MARGIN* - Net sales: SEK 335 bn % 8.9% - EBIT: SEK 30 bn 335 273 Operating cash flow: SEK 28 bn 3.4% Net cash position: SEK 26 bn 2013 2014 2015 2016 2017 Proposed dividend of SEK 4.25 2013 2
Slide 31: Volvo Group
VOLVO Volvo Group