Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q3 2008 Earnings Presentation
30 slides from Volvo AB Class A's earnings presentation, Oct 24, 2008
Slide 1: Third Quarter 2008 Press Conference
Third Quarter 2008 Press Conference, October 24, 2008
Slide 2: Group Highlights
Group Highlights Third Quarter • Difficult quarter – Sales growth 2%, (+13% in Q2 & +26% in Q1) – Operating income down 37% – Rapid adjustment of production capacity • Business environment – Europe – falling volumes and heading towards downturn – North America and Japan, declining further – Still st
Slide 3: Volvo Group
Volvo Group Net sales Sales, up 2% (SEK bn) – Western Europe -4% (Q2 +7, Q1 +17) Asia – Eastern Europe +21% (Q2 +25, Q1 +37) 18% – North America -12% (Q2 +1, Q1 -4) – Asia +3% (Q2 +42, Q1 +27) – South America +35% (Q2 +35, Q1 +18) Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 68 85 77 80 70 269 285 301 310
Slide 4: Volvo Group sales growth year over year
Volvo Group Sales growth year over year (%) Asia 18% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Sales growth -3% 5% 13% 25% 26% 13% 2% AB Volvo Third quarter 2008 4
Slide 5: Trucks
Trucks Net sales Operating income SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 45,4 57,0 50,8 52,6 46,1 Quarter 3 507 4 144 4 432 4 825 2 653 12 Mth. rol. 175,9 187,9 199,5 205,8 206,5 12 Mth. rol. 14 624 15 193 15 914 16 908 16 054 Margin 7,7% 7,3% 8,7% 9,2% 5,8%
Slide 6: Heavy-duty truck market - Europe
Heavy-duty truck market - Europe (EU members + Switzerland and Norway) Units, Thousands (heavy trucks) Modification of definition 400 In 1991 (East Germany) and in 2000 (new member states) Forecast -08 In 2006 (new member states) + 0-5% 350 329 300 256 300 ? 250 200 178 229 150 100 116 50 0 90 91 92
Slide 7: Heavy-duty truck market – North America
Heavy-duty truck market – North America Units, Thousands (heavy trucks) 400 349 350 308 300 250 225 208 200 ? 194 150 171 Forecast -08 -10% 100 122 50 0 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 AB Volvo Third quarter 2008 7
Slide 8: Trucks
Trucks Volvo Trucks Renault Trucks z Market shares gained in Europe z Improving market shares in Europe z Production adjustments in Europe z Adjustment of production - temporary z Order book towards normalization workers staffing z New products launched in Europe z Product innovation - Good receptio
Slide 9: New Volvo FH, Volvo FH16 and Volvo FM
New Volvo FH, Volvo FH16 and Volvo FM AB Volvo Third quarter 2008 9
Slide 10: New Optifuel Concept
New Optifuel Concept AB Volvo Third quarter 2008 10
Slide 11: Mack Trucks
Mack Trucks “…the SCR technology has basically been transparent. The only thing we're really noticing is that we're getting better fuel mileage." Haines and Kibblehouse AB Volvo Third quarter 2008 11
Slide 12: Construction Equipment
Construction Equipment Net sales Operating income SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 839 1 035 1 301 1 629 134 Quarter 13,0 15,5 15,1 16,7 13,2 12 Mth. rol. 4 230 4 218 4 573 4 804 4 099 12 Mth. rol. 49,3 53,6 57,8 60,4 60,6 Margin 6,5% 6,7% 8,6% 9,7% 1,
Slide 13: Construction Equipment
Construction Equipment Volvo CE continue to target the forestry industry - 3 new feller bunchers launched AB Volvo Third quarter 2008 13
Slide 14: Buses
Buses Net sales Operating income SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter -73 93 -122 46 -72 Quarter 3,6 5,2 3,7 4,3 3,8 12 Mth. rol. 350 231 19 -57 -56 12 Mth. rol. 16,0 16,6 16,5 16,8 17,0 Margin -2,0% 1,8% -3,3% 1,1% -1,9% Highlights In Focus z Increased or
Slide 15: Buses
Buses Volvo 7700 Hybrid AB Volvo Third quarter 2008 15
Slide 16: Volvo Penta
Volvo Penta Net sales Operating income SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 258 178 318 458 198 Quarter 2,7 2,9 3,2 3,4 2,7 12 Mth. rol. 1 221 1 173 1 198 1 212 1 152 12 Mth. rol. 11,5 11,7 11,9 12,1 12,0 Margin 9,5% 6,2% 10,0% 13,7% 7,4% Highlights In Foc
Slide 17: Volvo Penta product news
Volvo Penta product news Absolute 70 with quad IPS – up to 50% improvement in fuel efficiency AB Volvo Third quarter 2008 17
Slide 18: Volvo Aero
Volvo Aero Net sales Operating income SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 148 196 136 4 78 Quarter 1,8 2,0 1,9 1,7 1,6 12 Mth. rol. 444 529 573 484 414 12 Mth. rol. 7,8 7,6 7,6 7,4 7,2 Margin 8,0% 9,8% 7,2% 0,2% 4,8% Highlights In Focus • Air traffic grow
Slide 19: Volvo Aero
Volvo Aero Successful Fan Blade Out Test with new composite technology AB Volvo Third quarter 2008 19
Slide 20: Financial Services
Financial Services New retail financing Operating income and return on equity SEK bn SEK M Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Quarter 9,8 12,2 9,9 11,8 10,9 Quarter 454 378 381 387 391 12 Mth. rol. 39,3 41,4 42,6 43,7 44,8 ROE 14,1% 15,9% 16,2% 15,4% 13,9% Highlights In Focu
Slide 21: Financial Services
Financial Services Total managed assets Penetration on new financing Managed assets in: (SEK bn) Volvo Aero & Volvo Penta (SEK M) North W Europe International Volvo Volvo Renault Mack America Buses CE Trucks Trucks Trucks Volvo Aero Volvo Penta Q307 41 29 19 Q308 49 31 26 Q307 37% 31% 14% 18% 22% Q3
Slide 22: Key objectives
Key objectives • Support Business Areas • Maximize customer satisfaction • Stability in earnings over a business cycle • Controlled and profitable asset growth • Sound portfolio structure/asset diversification Volvo Financial Services Third quarter 2008 22 Date
Slide 23: Managing the business cycle
Managing the business cycle High volume, minimum credit losses Margin pressure Volume Downturn Activities: increase • Maintain credit discipline & selectivity Falling Increasing • Strengthen collection activities overdue overdue • Price maximization • Prepare for the next upturn Competition enters V
Slide 24: Customer offering
Customer offering Insurance/ Insurance/ Service Service & & Maintenance Maintenance Contracts Contracts (Non (Non risk risk based) based) Operational Operational Receivables Receivables Lease Lease Management Management (10.3%) (10.3%) (0.8%) (0.8%) Installment Installment Dealer Finance Finance Lea
Slide 25: Managed Assets
Managed Assets By Region 10% 2% 13% Europe North America 46% Eastern Europe Asia South America 29% By Product By Credit Rating 4% 1% 9% 27% Volvo Trucks 23% Renault Trucks Mack Trucks A 29% B Volvo CE 49% Volvo Buses C Other D 7% 16% 35% Volvo Financial Services Third quarter 2008 25
Slide 26: Credit and Risk Management
Credit and Risk Management • Collateral based lending of readily marketable assets – Disciplined transaction structuring – Supported by well developed remarketing networks • Consistent underwriting – Global credit policies – Local/region/executive credit committees • Monitor portfolio performance &
Slide 27: Financial discipline
Financial discipline • Clear financing strategy – Match funding by market • Interest, liquidity, currency – Execution with Volvo Group Treasury • Detailed financial & business reporting: – Globally, regionally, market and by product – Reserve methodology – 180 day write off policy • Strong CFO netwo
Slide 28: Summary
Summary Benefits Provided to The Volvo Group • Sustainable profitability throughout the business cycle • Increased Business Area sales • Enhanced customer loyalty & retention • Strengthen brand recognition • Ongoing access to customers • Superior customer & dealer service • Sole focus on Volvo Group
Slide 29: Group Summary
Group Summary Earnings per share Difficult quarter SEK • Sales down 13% compared to Q2 • Operating income down 37% • Competitive new products In focus Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 • Rapidly adjust production capacity and Quarter 1,54 2,00 2,07 2,53 0,98 cost 12 Mth. roll. 7,20 7,37 7,59 8,14 7,58 •
Slide 30: Third quarter 2008
VOLVO Third quarter 2008