Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — Q4 2014 Earnings Presentation
26 slides from Volvo Ab Class A's earnings presentation, 2015
Slide 1: Volvo Group Fourth quarter 2014
Volvo Group Fourth quarter 2014 OLOF PERSSON, CEO Volvo Group Headquarters
Slide 2: Fourth quarter summary
VOLVO GROUP Fourth quarter summary POSITIVE FACTORS Trucks - Improved underlying profitability on lower volumes Restructuring on plan – traction in cost savings Good cash flow and strengthened balance sheet NEGATIVE FACTORS Volvo CE - Lower volumes, -30% - Low capacity utilization - Provisio
Slide 3: Improved momentum in truck orders and deliveries
TRUCKS Improved momentum in truck orders and deliveries • Orders increased by 16% • Deliveries declined by 9% • Book-to-bill 109% Volvo Group Headquarters Fourth quarter 2014 3
Slide 4: Slightly improved momentum in Europe
TRUCKS EUROPE Slightly improved momentum in Europe • Total truck market declined by 5% in 2014, • Market shares 2014: - Volvo 16.6% (+0.3) - Renault Trucks 7.8% (-0.2) • Net order intake improved by 49% in Q4 - Renault Trucks +70% - Volvo +35% • Introducing the world’s first heavy-duty dual-clutch t
Slide 5: Taking share in a strong market
TRUCKS NORTH AMERICA Taking share in a strong market • Total market improved by 14% in 2014 • Market shares 2014: - Mack 8.2% (+0.3) - Volvo 11.9% (+1.0) • Net order intake improved by 48% in Q4 - Mack +122% - Volvo +10% • Introducing mDrive transmission as standard on vocational range Volvo Group H
Slide 6: Low GDP growth and decreased business confidence
TRUCKS SOUTH AMERICA Low GDP growth and decreased business confidence • Total heavy-duty truck market in Brazil declined by 11% in 2014 • Volvo’s market share in Brazil improved to 21.3% (+1.3) in 2014 • Less favorable terms and conditions in the financing program, FINAME, for 2015 • Net order intak
Slide 7: Mixed market development
TRUCKS ASIA PACIFIC Mixed market development • Demand in Japan supported by infrastructure investments • UD Trucks’, HD market share in Japan improved to 18.8% (+0.1%) in 2014 • China: CN4 pre-buy effect fading • Recovering demand in India • Dongfeng JV established in January 2015 Volvo Group Headqu
Slide 8: Continued headwind in BRIC markets
VOLVO CONSTRUCTION EQUIPMENT Continued headwind in BRIC markets • Order intake down 33% in Q4 driven by China and Russia • Volumes down by 50% in BRIC - capacity utilization 21% • Total deliveries down 30% in Q4 • Controlling pipeline inventory – low capacity utilization in Q4 and Q1 • Good progress
Slide 9: Buses and Volvo Penta
BUSES VOLVO PENTA • Global bus market remained on low level in • Global marine market demand remains 2014 flat overall, cautious optimism in Europe • Deliveries down 12% in Q4 and North America • Good market share development in core • Order book increased by 14% in Q4 markets • IPS-equipped Pilot B
Slide 10: Good growth in North America partly offset by decline in Europe
VOLVO GROUP Good growth in North America partly offset by decline in Europe Volvo Group Headquarters Fourth quarter 2014 10
Slide 11: Volvo Group Fourth quarter 2014 - CFO
Volvo Group Fourth quarter 2014 JAN GURANDER, CFO Volvo Group Headquarters Fourth quarter 2014
Slide 12: Progress in Trucks but headwind for Construction Equipment
VOLVO GROUP Progress in Trucks but headwind for Construction Equipment + Trucks + Customer Finance + Volvo Penta - Volvo CE - Buses Volvo Group Headquarters * Excluding restructuring charges Fourth quarter 2014 12
Slide 13: Progress in Trucks but headwind for Construction Equipment
VOLVO GROUP Progress in Trucks but headwind for Construction Equipment + Trucks + Customer Finance + Volvo Penta - Volvo CE - Buses Volvo Group Headquarters * Excluding restructuring charges, write-down of Volvo Rents in 2013, Fourth quarter 2014 EU anti-trust provision and credit provision in China
Slide 14: Maintained traction in cost savings
VOLVO GROUP Maintained traction in cost savings + Increased gross margins in Europe and North America on both new products and aftermarket + Lower selling & administrative expenses + Lower cash R&D spending - Lower volumes - Lower gross margins in Brazil - Lower capacity utilization - Reduced R&D ca
Slide 15: Improved profitability on lower volumes, deliveries down 5,500 trucks
TRUCKS Improved profitability on lower volumes, deliveries down 5,500 trucks (-9%) Volvo Group Headquarters Fourth quarter 2014 15
Slide 16: Improved profitability on lower volumes
TRUCKS Improved profitability on lower volumes OPERATING INCOME* + Improved margins & volumes in North OPERATING INCOME* SEK M America SEK M + Price realization on new Volvo ranges + Reduced operating expenses 3,248 2,965 + Aftermarket margins + Currency +398 M - Lower volumes, 5,500 fewer trucks in
Slide 17: Operating loss due to low volumes
VOLVO CE Operating loss due to low volumes – deliveries down by 5,200 units (-30%) Volvo Group Headquarters Fourth quarter 2014 17
Slide 18: Significant volume drop – production cut-backs to control inventory
VOLVO CE Significant volume drop – production cut-backs to control inventory OPERATING INCOME* OPERATING INCOME* SEK M SEK M 272 - Lower volumes, deliveries down 30% in Q4, of which China -44% - Lower industrial capacity utilization -155 Q4 2013 Q4 2014 Volvo Group Headquarters * Excluding restructu
Slide 19: Buses Volvo Penta
BUSES VOLVO PENTA Volvo Group Headquarters Fourth quarter 2014
Slide 20: Strong results – profitable portfolio growth
CUSTOMER FINANCE Strong results – profitable portfolio growth Volvo Group Headquarters * Excluding restructuring charges Fourth quarter 2014
Slide 21: Positive cash flow trend and reduced investments
VOLVO GROUP Positive cash flow trend and reduced investments Volvo Group Headquarters * Industrial Operations Fourth quarter 2014 21
Slide 22: Reduction of white-collar employees and consultants
VOLVO GROUP Reduction of white-collar employees and consultants 1,106 white-collar employees and consultants left in Q4 3,242 net white-collar reduction, including consultants, achieved Group wide until Q4 2014 Volvo Group Headquarters * Excluding Volvo Rents Fourth quarter 2014 ** Acquisition o
Slide 23: Structural cost reductions visible in the result despite negative currency effect
VOLVO GROUP Structural cost reductions visible in the result despite negative currency effect Volvo Group Headquarters Fourth quarter 2014 23
Slide 24: Structural cost to be reduced by 10 bn – implemented
VOLVO GROUP Structural cost to be reduced by 10 bn – implemented by end 2015 with full-year effect in 2016 SEK bn Targeted reduction 2016 vs 2012 2013 Q3 2014* 2014 2012 Structural cost reduction in Gross Income - -0.7 -1.0 Cash R&D 16.9 15.9 15.4 15.2 Selling expenses 27.9 28.5 27.8 27.4 Administra
Slide 25: Fourth quarter summary
VOLVO GROUP Fourth quarter summary POSITIVE FACTORS Trucks - Improved underlying profitability on lower volumes Restructuring on plan – traction in cost savings Good cash flow and strengthened balance sheet NEGATIVE FACTORS - Lower volumes, -30% - Low capacity utilization - Provisions for ex
Slide 26: Volvo Group Fourth quarter 2014
Volvo Group Fourth quarter 2014 Volvo Group Headquarters