Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — Q2 2017 Earnings Presentation
29 slides from Volvo Ab Class A's earnings presentation, 2017
Slide 1: Second Quarter 2017
SECOND QUARTER 2017 Martin Lundstedt, President and CEO
Slide 2: Second quarter highlights
Volvo Group SECOND QUARTER HIGHLIGHTS Net sales +12% (+6% excl. NET SALES ADJUSTED OPERATING currency) SEK bn 12 months 317 bn MARGIN* 12 months 8.2% % 9.7% Continued improved profitability for the Group 88.4 7.8% 78.9 - Trucks’ adjusted operating margin 9.6% (10.0) - Construction Equipment’s ad
Slide 3: Volume development in the second quarter
Volvo Group VOLUME DEVELOPMENT IN THE SECOND QUARTER TRUCK DELIVERIES MACHINE DELIVERIES Units HD/MD 12 months 172,127 Units 12 months 54,211 +105 60000 0% +5,708 50000 +49% 20,000 40000 18,000 16,000 30000 14,000 Total Change Total Change 12,000 Volvo 28,510 +255 20000 10,000 8,000 UD 4,890 -17 6,0
Slide 4: Service sales development
Volvo Group SERVICE SALES DEVELOPMENT SERVICE SALES +9% 12 months SEK bn +3% ex FX 70.8 bn 20 18.0 18 16.7 16.6 16 14 12 10 8 6 4 2 CONSTRUCTION TRUCKS BUSES VOLVO PENTA 0 EQUIPMENT Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Volvo Group Headquarters Second quarter 2017 4
Slide 5: Trucks
Trucks • Good demand in Europe and China • Order pick-up in North America • Stretched supply chain • Important product launch for Volvo Trucks in North America Volvo Group Headquarters Second quarter 2017 5
Slide 6: Launch of the new Volvo VNL family in North America
Volvo Trucks LAUNCH OF THE NEW VOLVO VNL FAMILY IN NORTH AMERICA Volvo Group Headquarters Second quarter 2017 6
Slide 7: Voted number one and two among young truck drivers in Germany
Volvo Trucks and Renault Trucks VOTED NUMBER ONE AND TWO AMONG YOUNG TRUCK DRIVERS IN GERMANY Young Professionals Truck Award 2017 Volvo Group Headquarters Second quarter 2017 7
Slide 8: Trucks market environment
Trucks MARKET ENVIRONMENT NORTH AMERICA EUROPE HD 400 HD 400 300 300 200 100 2016: 305’ 200 Forecast 2017: 300’ 2016: 243’ 0 100 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Forecast 2017: 225’ 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 1400 ASIA BRAZIL 1200 HD+MD HD China 1000
Slide 9: Trucks market shares
Trucks MARKET SHARES HD% 2016 2017 EUROPE EU28, YTD MAY NORTH AMERICA 17,0 16,9 JAPAN 7,9 8,3 9,6 8,8 16,5 17,8 7,9 8,2 Volvo Renault Trucks Volvo Mack UD BRAZIL AUSTRALIA 19,2 18,1 15,4 14,9 SOUTH AFRICA 8,6 9,1 15,4 16,1 1,3 3,4 8,8 8,0 Volvo Volvo Mack UD Volvo UD Volvo Group Headquarters Second
Slide 10: Trucks HD/MD: orders +20% and deliveries 0%
Trucks HD/MD: ORDERS +20% AND DELIVERIES 0% NORTH AMERICA EUROPE Orders Deliveries Orders Deliveries Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Orders +11% Orders +30% Deliveries +7% Deliveries -11% SOUTH AMERICA AFRICA & OCEANIA ASIA Orders Deliveries Orders Deliveries Orders Deliveries
Slide 11: Construction Equipment
Construction Equipment • Transformation program yielding result • Growth in most major markets • Melker Jernberg new president as from January 1, 2018 Volvo Group Headquarters Second quarter 2017 11
Slide 12: Joining forces at Elmia Wood forestry trade show
Construction Equipment JOINING FORCES WITH VOLVO TRUCKS AND VOLVO PENTA AT ELMIA WOOD - WORLD’S LARGEST FORESTRY TRADE SHOW Volvo Group Headquarters Second quarter 2017 12
Slide 13: Construction Equipment market environment
Construction Equipment MARKET ENVIRONMENT NORTH AMERICA EUROPE CHINA 300 500 200 400 200 300 100 100 200 Forecast 2017: +5 to +15% 0 100 Forecast 2017: -5 to +5% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 Forecast 2017: +35 to +45% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 01 02
Slide 14: Construction Equipment orders +54% and deliveries +49%
Construction Equipment ORDERS +54% AND DELIVERIES +49% NORTH AMERICA EUROPE Orders Deliveries Orders Deliveries Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Orders +12% Orders +3% Deliveries +11% Deliveries +11% SOUTH AMERICA AFRICA & OCEANIA ASIA Orders Deliveries Orders Deliveries Orders
Slide 15: Buses
Buses • Mixed market development • Deliveries down 17% • Order intake +34%+7%, mainly across driven byregions North America Deliveries • Frame of the new agreement for 8- 360 litre chassis coaches platform - largest everforin Asian America North markets started •• Largest Order oforder ever of fully
Slide 16: Volvo Penta
Volvo Penta • Sales growth in both industrial and marine segments • Order increase by 9%, delivery increase by 11% • Majority owner of innovative outboard motor manufacturer Seven Marine Volvo Group Headquarters Second quarter 2017 16
Slide 17: Second Quarter 2017 - Jan Gurander, deputy CEO and CFO
SECOND QUARTER 2017 Jan Gurander, deputy CEO and CFO
Slide 18: Net sales per market
Volvo Group NET SALES PER MARKET NET SALES Currency +4.5 bn SEK bn +3.6 +0.7 88.4 +1.5 +0.7 +3.1 78.9 Q 2016 Europe North South Asia Africa & Q2 2017 America America Oceania Volvo Group Headquarters Second quarter 2017 18
Slide 19: Adjusted operating income per business area
Volvo Group ADJUSTED OPERATING INCOME PER BUSINESS AREA ADJUSTED OPERATING INCOME* Currency +350 M SEK M +446 8,540* +1,650 +7 +90 +22 6,130* +195 Q2 2016 Trucks Volvo CE Buses Volvo Financial Group Q2 2017 Penta Services Functions & Other *Adjustments, see note 6 in Q2 report: Q2 2016: Provision fo
Slide 20: Adjusted operating income contributors
Volvo Group ADJUSTED OPERATING INCOME CONTRIBUTORS ADJUSTED OPERATING INCOME* Currency +350 M SEK M +2,914 -53 -398 -583 +607 8,540* -77 + Sales (CE) + Capacity utilization (CE) 6,130* + Gross margin in services + Product mix - Higher selling and admin. cost - Lower R&D capitalization - Stretched su
Slide 21: Cash flow
Volvo Group – Industrial Operations CASH FLOW OPERATING CASH FLOW INVESTMENTS IN PPE SEK bn SEK bn 12 months SEK 20.4 bn 12 months SEK 6.3 bn CASH FLOW EFFECT FROM CHANGES IN WORKING CAPITAL SEK bn 5.5 11.9 3.6 8.6 1.6 1.4 1.5 6.9 1.1 -2.3 -1.2 receivable Total change Inventories Other Trade payable
Slide 22: Trucks net sales
Trucks NET SALES NET SALES 12 months 206.1 bn SEK bn +8% 57.1 56.4 52.3 • Delivered HD/MD trucks 0%: - North America -11% - Europe +7% • Net sales currency- adjusted +2%: - vehicles +2% - services +1% Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Volvo Group Headquarters Second quarter 2017 22
Slide 23: Trucks adjusted operating income
Trucks ADJUSTED OPERATING INCOME ADJUSTED OPERATING INCOME* SEK M ADJUSTED OPERATING INCOME* ADJUSTED OPERATING MARGIN* SEK bn 12 months 18.8 bn 5,417 % 12 months 9.1% 5,222 Currency 276 M + Gross margin in services 5.2 5.4 + Product mix 10.0% 9.6% 4.4 + JV income 7.7% - Selling and admin. cost - Lo
Slide 24: Construction Equipment net sales
Construction Equipment NET SALES NET SALES 12 months 59.3 bn SEK bn +36% • Delivered machines +49%: - Volvo +13% 18.5 - SDLG +174% 15.4 13.6 - large and medium +54% - compact +35% • Net sales currency- adjusted +29%: - machines +33% - services +7% Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Volvo G
Slide 25: Construction Equipment adjusted operating income
Construction Equipment ADJUSTED OPERATING INCOME ADJUSTED OPERATING INCOME* ADJUSTED OPERATING INCOME* 2,460 ADJUSTED OPERATING MARGIN* SEK M 12 months 5,172 M SEK M % 12 months 8.7% Currency 160 M + Sales (machines and services) 2,460 13.3% + Capacity utilization 8.8% 1,353 + Credit losses in China
Slide 26: Buses net sales and adjusted operating income
Buses NET SALES & ADJUSTED OPERATING INCOME NET SALES ADJUSTED OPERATING • Net sales currency- SEK bn 12 months 25.9 bn INCOME* adjusted +0%: SEK M 12 months 919 M - vehicles -1% Currency -37 M - services +5% 6.7 7.0 • Adjusted operating 6.1 320 313 income: + product and market mix + efficiency init
Slide 27: Volvo Penta net sales and adjusted operating income
Volvo Penta NET SALES & ADJUSTED OPERATING INCOME NET SALES ADJUSTED OPERATING SEK bn 12 months 10.7 bn INCOME* • Net sales currency- SEK M 12 months 1,412 M adjusted +10%: Currency 31 M - engines +13% - services +2% 3.1 2.6 2.7 • Adjusted operating 479 income: 389 + higher volumes 353 • Adjusted op
Slide 28: Financial Services new financing and profitability
Financial Services NEW FINANCING AND PROFITABILITY ADJUSTED OPERATING NEW FINANCING ROE* INCOME* SEK bn 12 months 56.0 bn 12 months, % SEK M 12 months 2,147 M 521 15.0 15.3 13.5% 14.0% 13.5 13.3% 497 499 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 *Adjustments, s
Slide 29: Second quarter highlights
Volvo Group SECOND QUARTER HIGHLIGHTS Net sales +12% (+6% excl. NET SALES ADJUSTED OPERATING currency) SEK bn 12 months 317 bn MARGIN* 12 months 8.2% % 9.7% Continued improved profitability for the Group 88.4 7.8% 78.9 - Trucks’ adjusted operating margin 9.6% (10.0) - Construction Equipment’s ad