Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q4 2012 Earnings Presentation
24 slides from Volvo AB Class A's earnings presentation, 2013
Slide 1: Volvo Group Fourth quarter 2012
Volvo Group Fourth quarter 2012
Slide 2: Q4 in a snapshot - a destocking quarter
VOLVO GROUP Q4 in a snapshot - a destocking quarter Main activities... Resulting in... 1. Low order intake in Q3 and • Under-production compared heavy destocking in Q4 to sales in Q4 • Low capacity utilization and under absorption of cost of SEK 1.7 bn • Inventories cut by SEK 5.4 bn 2. High investm
Slide 3: Lower earnings driven by SEK 1.7 bn in under absorption and net one-offs
VOLVO GROUP Lower earnings driven by SEK 1.7 bn in under absorption and net SEK 0.7 bn in one-offs * Q412: Excluding restructuring charges of SEK - 990 M and gain from the sale of Volvo Aero SEK 254 M * Q312; Excluding restructuring in UD Trucks and one-off increase in warranty provisions, in total
Slide 4: Restructuring and destocking in a weak economic environment
VOLVO GROUP Restructuring and destocking in a weak economic environment OPERATING NET SALES INCOME MARGIN VOLVO GROUP 72 bn 1,121 M 1.6% 2.6%* TRUCKS 48 bn 880 M 1.8% 3.7%* VOLVO CE 13 bn 363 M 2.9% BUSES 5.6 bn -129 M - 2.3% -0.3%* VOLVO PENTA 1.8 bn 14 M 0.8% FINANCIAL SERVICES 12 bn new financing
Slide 5: SEK 15 bn lower sales – maintained market shares
VOLVO GROUP SEK 15 bn lower sales – maintained market shares * Industrial operations Volvo Group Headquarters Fourth quarter 2012 5
Slide 6: Cash flow driven by SEK 6.7 bn release of working capital
VOLVO GROUP Cash flow driven by SEK 6.7 bn release of working capital – continued high investment activity in future products * Industrial operations Volvo Group Headquarters Fourth quarter 2012 6
Slide 7: Inventory levels reduced by 5.4 bn in the quarter
VOLVO GROUP Inventory levels reduced by 5.4 bn in the quarter Capital efficiency – CCC at 30 days * Industrial operations Volvo Group Headquarters Fourth quarter 2012 7
Slide 8: Net financial debt reduced by 12 bn
VOLVO GROUP Net financial debt reduced by 12 bn 2010 2011 2012 Volvo Group Headquarters Fourth quarter 2012 8
Slide 9: Trucks in Q4 - SEK 9 bn lower sales and low capacity utilization
TRUCKS Trucks in Q4 - SEK 9 bn lower sales and low capacity utilization * Q412: Excluding restructuring charges of SEK -880 M * Q312; Excluding restructuring charges & one-off increase in warranty provisions, in total SEK -1,060 M Volvo Group Headquarters Fourth quarter 2012 9
Slide 10: Trends and actions in Q4 – Trucks
TRUCKS Trends and actions in Q4 – Trucks Trends in Q4 Actions implemented in Q4 • Demand in Europe and US: • Successful inventory reduction improving trend over Q3 program focusing on cash flow Brazil: strong pick-up – inventories reduced by 5,300 • Lowered inventory levels, trucks primarily for Ren
Slide 11: Low production rates in Q4 - orders 15% higher than in Q3
TRUCKS Low production rates in Q4 - orders 15% higher than in Q3 New truck inventory reduced by 3,700 trucks affecting BtB-ratio in Q4 Volvo Group Headquarters Fourth quarter 2012 11
Slide 12: Markets expected to move sideways in 2013
TRUCKS Markets expected to move sideways in 2013 Volvo Group Headquarters Fourth quarter 2012 12
Slide 13: Construction Equipment in Q4 – 23% drop in sales
VOLVO CE Construction Equipment in Q4 – 23% drop in sales Volvo Group Headquarters Fourth quarter 2012 13
Slide 14: Trends and actions in Q4 – Volvo CE
VOLVO CE Trends and actions in Q4 – Volvo CE Trends in Q4 Actions implemented in Q4 • Slow construction equipment • Production in Q4 28% lower markets, particularly within than Q4 last year – utilization mining, China declined by 37% at 40% • All-time-high 15%-market share • Successful reduction of
Slide 15: Markets expected to move sideways in 2013
VOLVO CE Markets expected to move sideways in 2013 Units, thousands Volvo Group Headquarters Fourth quarter 2012 15
Slide 16: A quarter heavily impacted by planned production reductions and restructuring
VOLVO GROUP A quarter heavily impacted by planned production reductions and restructuring • Substantial reduction in production rates – low capacity utilization and under absorption of costs amounting to SEK 1.7 bn • Inventories successfully reduced by SEK 5.4 bn • Continued high investments in R&D,
Slide 17: Massive product renewal
VOLVO GROUP Massive product renewal VOLVO FH BRIC-LOADER VOLVO L105 NEW RENAULT NEW TIER 4f ENGINES NEW VOLVO I-TORQUE EU6 NEW VALUE TRUCK PLATFORM BANGALORE, INDIA KALUGA, RUSSIA BANGKOK, THAILAND Volvo Group Headquarters Fourth quarter 2012 17
Slide 18: 35 roadmaps and 400 main activities defined to support the strategic objectives
VOLVO GROUP 35 roadmaps and 400 main activities defined to support the strategic objectives Consolidate industrial foot print in Japan Acquisition of 45% of DFCV including the major part of Dongfeng’s medium and heavy commercial vehicles business New sales and marketing organization for Trucks in Eu
Slide 19: Acquisition of 45% in DFCV
VOLVO GROUP Acquisition of 45% in DFCV – Further strengthening of China as one of our home markets • Major shareholding in China’s leading manufacturer of commercial vehicles – DFCV • Strong foothold in and share of the world’s largest truck market: DFCV delivered 142,000 HD trucks and had a 16% mar
Slide 20: VOLVO
VOLVO
Slide 21: Appendix
APPENDIX AB Volvo Fourth quarter 2012 21
Slide 22: Reporting changes in 2013
VOLVO GROUP Reporting changes in 2013 R&D capitalization and amortization Change in accounting for pensions IAS19 • High capitalization in 2011-2012 due to • Corridor method removed product renewal • Use of discount rate for plan assets • Capitalization will decline gradually in 2013 as • Recognized
Slide 23: Currency effects – On operating income
Currency effects – On operating income SEK M Q4-12 vs Q4-11 Trucks - 285 Volvo CE + 172 Buses + 21 Volvo Penta + 13 Group functions and other - 97 Volvo Group - 175 AB Volvo Fourth quarter 2012 23
Slide 24: Upcoming events
Upcoming events INVESTOR DAY Feb 28 New York ANNUAL REPORT March AGM April 4 Göteborg Q1 REPORT April 25 Stockholm www.volvogroup.com/IR AB Volvo Fourth quarter 2012 24