Volvo AB Class A · OMXSTO:VOLV_A

Volvo AB Class A — Q3 2015 Earnings Presentation

23 slides from Volvo AB Class A's earnings presentation, 2015

  1. Slide 1: Volvo Group Third Quarter 2015

    Volvo Group THIRD QUARTER 2015 JAN GURANDER Volvo Group Headquarters Third quarter 2015 1

  2. Slide 2: Third quarter highlights

    VOLVO GROUP Third quarter highlights NET SALES SEK bn 12 months 310 bn 73  IMPROVED PROFITABILITY ON FLAT VOLUMES 67  UNDERLYING OPERATING MARGIN 6.9%  OPERATING CASH FLOW OF SEK -3.3 BN Q3 Q4 Q1 Q2 Q3 OPERATING MARGIN*  LOI TO SELL EXTERNAL IT BUSINESS AND % 12 months 6.0% OUTSOURCE IT INFRASTR

  3. Slide 3: Trucks Europe: Improving demand

    ORDERS & DELIVERIES TRUCKS EUROPE Book-to-bill Q3: 102% Improving demand 19’ 18’  Total market up 20% through Aug – growth in most markets Orders Deliveries  Total market outlook for 2015 revised Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 upwards from 250,000 to 265,000 units  Net order intake improved by 11% in

  4. Slide 4: Adjusting from peak to high levels in 2016

    ORDERS & DELIVERIES TRUCKS NORTH AMERICA Book-to-bill Q3: 70% Adjusting from peak to high levels in 2016 15’ 11’  Total market increased by 18% through Sep Orders Deliveries  Total market forecast remains Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 at 310,000 trucks for 2015  Net order intake decreased by 40% in

  5. Slide 5: Continued weak economic development in Brazil

    ORDERS & DELIVERIES TRUCKS SOUTH AMERICA Book-to-bill Q3: 71% Continued weak economic development in Brazil 3’ 2’ Orders Deliveries Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3  Total heavy-duty truck market in Brazil declined by 53% in Q3 2015 TOTAL MARKET, BRAZIL (heavy-duty) Forecast:  Total Brazilian market for

  6. Slide 6: Mixed market development

    ORDERS & DELIVERIES TRUCKS ASIA PACIFIC Book-to-bill Q3: 105% Mixed market development 8’ 7’ Orders Deliveries Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3  Japanese demand remains healthy MARKET OUTLOOK medium- & heavy-duty  Recovering demand in India, but weak in South East Asia Forecasts: China  China continues

  7. Slide 7: Continued headwind in BRC

    ORDERS & DELIVERIES VOLVO CONSTRUCTION EQUIPMENT Book-to-bill Volvo Q3: 74% Continued headwind in BRC  Markets YTD August: 10’ - Europe, ex Russia: +3% 8’ Orders Deliveries - North America: +4% - China: -50% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3  Deliveries down by 25% mainly due to low Forecast China demand

  8. Slide 8: Buses and Volvo Penta orders and deliveries

    BUSES VOLVO PENTA  Good order intake, +10%  Deliveries stable, orders up by 21%  Continued good demand in North America,  Significant slowdown in China recovery in Europe and low demand in Brazil  Competitive products in all segments:  Launch of: - New range of gasoline engines - Volvo Dynamic

  9. Slide 9: Financial Review

    Volvo Group THIRD QUARTER 2015 FINANCIAL REVIEW Volvo Group Headquarters Third quarter 2015 9

  10. Slide 10: Good sales growth in North America and Europe partly offset by decline in South America

    VOLVO GROUP Good sales growth in North America and Europe partly offset by decline in South America NET SALES SEK bn FX impact: +5 bn +5.4 -2.1 +0.7 -0.3 73.3 +2.3 67.2 Q3 2014 Europe North South Asia Other Q3 2015 America America markets Volvo Group Headquarters Third quarter 2015 10

  11. Slide 11: Earnings improvement driven by Trucks and Buses

    VOLVO GROUP Earnings improvement driven by Trucks and Buses OPERATING INCOME* SEK M FX impact: +831 M +287 +64 +49 +8 5,087 + Trucks +1,422 -72 + Buses + Volvo Penta + Customer Finance +422 3,330 2,908 - Volvo CE – credit loss provision of SEK 293 M Q3 2014 EPA Q3 2014 Trucks Volvo Buses Volvo Cust.

  12. Slide 12: Improved earnings in North America and Europe

    VOLVO GROUP Improved earnings in North America and Europe OPERATING INCOME* SEK M FX impact: +831 M +317 +79 -83 -580 + Higher gross income in North America and +2,035 -11 Europe 5,087 + Higher R&D capitalization + Currency +422 3,330 2,908 - Lower gross income in Brazil and China - Credit provision

  13. Slide 13: Trucks: Profitability improvement trend continues

    TRUCKS Profitability improvement trend continues SALES TREND OPERATING INCOME* OPERATING MARGIN* SEK bn SEK bn % 12 months 213 bn 12 months 15.0 bn 12 months 7.1% Currency: +3.7 bn Currency: +381 M 50 3.6 7.2% 43 45 2.2 4.9% 1.9 4.4% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2

  14. Slide 14: Trucks: Improved profitability in North America and Europe

    TRUCKS Improved profitability in North America and Europe OPERATING INCOME* + Improved margins & volumes in North OPERATING INCOME* SEK M SEK M America + Lower OPEX + Higher volumes in Europe + Aftermarket 3,615 + Currency 2,193 - Lower volumes & margins in Brazil Q3 2014 Q3 2015 Volvo Group Headqua

  15. Slide 15: CE: Stable profitability despite continued drop in volumes

    VOLVO CE Stable profitability despite continued drop in volumes – down 25% Volvo Group Headquarters * Excluding restructuring charges Third quarter 2015 15

  16. Slide 16: CE: Improved results in Europe and North America offset by volume drop

    VOLVO CE Improved results in Europe and North America off- set by volume drop and credit loss provision OPERATING INCOME* OPERATING INCOME* SEK M + Favorable product mix SEK M + Reduced operating expenses + Currency 648 - Lower volumes, deliveries down 25% 576 - Lower earnings in China and provision

  17. Slide 17: Buses and Volvo Penta

    BUSES VOLVO PENTA SALES TREND SALES TREND SEK bn 12 months 22 bn SEK bn 12 months 9 bn Currency: +0.3 bn Currency: +0.1 bn 5.5 2.3 4.6 1.8 2.0 3.7 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 OPERATING INCOME* OPERATING INCOME* SEK M 12 months 494 M SEK M 12 months 1,052 M Currency: -26 M C

  18. Slide 18: Customer Finance: Profitable portfolio growth

    CUSTOMER FINANCE Profitable portfolio growth NEW FINANCING OPERATING INCOME* ROE SEK bn SEK M 12 months, % 12 months 56 bn 12 months 1,944 M 501 13.3 452 12.6% 13.4% 13.6 327 11.8% 11.1 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Volvo Group Headquarters * Exclud

  19. Slide 19: Cash flow impacted by seasonal drop in payables

    VOLVO GROUP – INDUSTRIAL OPERATION Cash flow impacted by seasonal drop in payables OPERATING CASH FLOW INVESTMENTS IN PPE CASH-FLOW EFFECT FROM SEK bn, SEK bn, CHANGES IN WORKING CAPITAL 12 months SEK 14.1 bn 12 months SEK 6.1 bn SEK bn 1.4 1.9 -8.7 -2.9 -8.3 2.1 1.4 1.3 0.9 -5.3 -3.3 Total change O

  20. Slide 20: Structural cost reductions continue in local currency

    VOLVO GROUP Structural cost reductions continue in local currency SELLING EXPENSES ADMIN. EXPENSES CASH R&D EXPENSES TOTAL OPEX SEK bn, 12 months 27.8 SEK bn, 12 months 5.8 SEK bn, 12 months 14.7 SEK bn, 12 months 48 11.7 11.0 11.0 6.8 6.5 6.5 3.5 3.3 3.3 1.5 1.1 1.2 Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q3 Q4 Q1 Q2 Q

  21. Slide 21: Structural cost to be reduced by SEK 10 bn

    VOLVO GROUP Structural cost to be reduced by SEK 10 bn – facing currency-headwind SEK bn Targeted reduction 2016 vs 2012 2013 2014 Q3 2015* 2012 Structural cost reduction in Gross Income - - -1.0 -2.1 Cash R&D 16.9 15.9 15.2 14.7 Selling expenses 27.9 28.5 27.4 27.8 Administrative expenses 5.6 5.9 5

  22. Slide 22: Third quarter summary

    VOLVO GROUP Third quarter summary NET SALES SEK bn 12 months 310 bn 73 IMPROVED PROFITABILITY ON FLAT VOLUMES 67 EFFICIENCY ACTIVITIES IN FOCUS FOR 2015:  GROUP TRUCKS SALES Q3 Q4 Q1 Q2 Q3  IT OPERATIONS OPERATING MARGIN*  GROUP TRUCKS OPERATIONS % 12 months 6.0%  VOLVO CE 6.9% 4.3% Q3 Q4 Q1 Q2

  23. Slide 23: Volvo Group Third quarter 2015

    Volvo Group Third quarter 2015 Volvo Group Headquarters Third quarter 2015 23

Volvo Group — Q3 2015 Earnings Presentation on 6ix