Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q1 2007 Earnings Presentation
33 slides from Volvo AB Class A's earnings presentation, May 11, 2007
Slide 1: First Quarter 2007 Press Conference
First Quarter 2007 Press Conference, May 11, 2007
Slide 2: Group Highlights
Page 1 Group Highlights First Quarter z Business environment - Europe and International strengthening - North America softer/prebuy z Strategic acquisitions - Lingong - Nissan Diesel - Ingersoll Rand road development z Investing for organic growth - Truck production capacity in Europe - Volvo CE com
Slide 3: Industrial Operations
Page 2 Industrial Operations AB Volvo 2007-05-11 First Quarter 2007
Slide 4: Net sales
Page 3 Net sales Net sales SEK bn z Net sales down 3% z Trucks North America down 46% z Strong development outside NA - Europe up 10% - South America up 14% - Asia up 28% - ROW up 24% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 z Positive development in Volvo CE and Quarter 60.4 65.7 57.6 65.3 58.9 Volvo Penta 12
Slide 5: Operating income
Page 4 Operating income Operating income SEK M + Product and market mix - Strong Europe and International + Price realization + Aftermarket and retail business - US truck operations - R&D Q1 06 Q2 06 Q3 06* Q4 06 Q1 07 - Lower capitalization Quarter 5,026 6,055 4,546 4,798 4,933 - Higher amortizatio
Slide 6: Trucks
Page 5 Trucks Net sales – SEK bn Operating income – SEK M Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 * Quarter 3,657 4,126 3,470 3,575 3,711 Quarter 41.5 45.0 39.7 45.0 39.2 12 Mth. rol. 12,297 13,021 13,995 14,828 14,882 12 Mth. rol. 161.0 164.9 169.7 171.3 168.9 Margin 8.8% 9.2% 8
Slide 7: Renault Trucks
Page 6 Renault Trucks z Deliveries down 11% z Deliveries excl. Renault Mascott up 5% z New Renault Maxity well received, 900 trucks delivered in March z Investment in cab manufacturing in Blainville SEK 530M z Improved productivity towards the end of the quarter AB Volvo 2007-05-11 First Quarter 200
Slide 8: Mack Trucks
Page 7 Mack Trucks z Deliveries down 47% z Capacity adjustments implemented early z Slow ramp-up of US 07 products z Introduction of TerraPro Cabover and TerraPro Low Entry. AB Volvo 2007-05-11 First Quarter 2007
Slide 9: Mack Trucks
Page 8 Mack Trucks MACK TerraPro Cabover Concrete Pumper MACK TerraPro Low Entry AB Volvo 2007-05-11 First Quarter 2007
Slide 10: Heavy-Duty Truck Market - Europe
Page 9 Heavy-Duty Truck Market - Europe (EU members + Switzerland and Norway) Units, Thousands (heavy trucks) Forecast 2007 ~330,000 350 Modification of definition In 1991 (East Germany) and in 2000 (new member states) 300 In 2006 (new member states) 256 300 250 200 178 229 150 100 116 50 * 2006 is
Slide 11: Heavy-Duty Truck Market – North America
Page 10 Heavy-Duty Truck Market – North America Units, Thousands (heavy trucks) Forecast 2007: ? 400 349 350 308 300 250 225 200 194 150 171 100 122 50 0 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 AB Volvo 2007-05-11 First Quarter 2007
Slide 12: Staffan Jufors, President of Volvo Trucks
Page 11 Staffan Jufors President of Volvo Trucks AB Volvo 2007-05-11 First Quarter 2007
Slide 13: Agenda
Page 12 Agenda Volvo Trucks’ Strategy -Product offerings -Retail -Market Profitable Growth -Russian expansion In Focus 2007 AB Volvo 2007-05-11 First Quarter 2007
Slide 14: Page
Page 13 AB Volvo 2007-05-11 First Quarter 2007
Slide 15: New products well received
Page 14 New products well received AB Volvo 2007-05-11 First Quarter 2007
Slide 16: The Retail Strategy
Page 15 The Retail Strategy Europe 2006/7 2005/6 • Direct customer relations Financing Service hours sales • Widening customer offering Parts sales Service contracts • Improved retail competence • Better partner to private dealers Truck Shop Europe Sales Used trucks AB Volvo 2007-05-11 First Quarter
Slide 17: Market
Page 16 Market Europe • Full capacity utilization except in North America - Bottle neck management for Europe and International • Manage changeover to US07 ROW - Cost structure prepared - Disturbances in Q1 - Gradual ramp-up in Q2/Q3 - Intend to achieve price levels for US07 Technology North America
Slide 18: Market Information
Page 17 Market Information Deliveries y.t.d. March Market Area 2007 Change ALL MARKETS 23 886 0% Europe 13 743 24% - West Europe 10 125 9% - East Europe 3 618 111% North America 4 993 -43% South America 1 997 33% Asia 2 038 12% Other 1 095 44% AB Volvo 2007-05-11 First Quarter 2007
Slide 19: Market Share Development
Page 18 Market Share Development Main Markets Europe North America 11,3 10,8 15,7 15,5 9,7 14,8 14,5 8,6 14,2 7,5 '01 '02 '03 '04 '05 '06 '07 '01 '02 '03 '04 '05 '06 '07 March March AB Volvo 2007-05-11 First Quarter 2007
Slide 20: Profitable Growth in Russia
Page 19 Profitable Growth in Russia • Population: 130,000 units of foreign heavy-duty trucks 2006 -Volvo leading with 25% • Strong brand image • Strong performance 2003 2004 2005 2006 Market share (%) 21 20 25 25 Deliveries (no of units) 463 673 1,339 2,436 • Expansion plan - Sales/Service 2006 2010
Slide 21: In focus 2007
Page 20 In focus 2007 Future looking activities Increase capacity to meet strong demand Manage changeover to US07 Profitability Management AB Volvo 2007-05-11 First Quarter 2007
Slide 22: Volvo Construction Equipment
Page Volvo Construction Equipment 21 Net sales Operating income SEK bn SEK M Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Quarter 877 1,276 872 1,047 946 Quarter 9.7 11.4 9.8 11.2 11.0 12 Mth. rol. 3,071 3,410 3,761 4,072 4,141 12 Mth. rol. 37.4 39.2 41.3 42.1 43.4 Margin 9.0% 11.2% 8
Slide 23: Volvo Construction Equipment
Page Volvo Construction Equipment 22 New products presented at the worldwide show Bauma AB Volvo 2007-05-11 First Quarter 2007
Slide 24: Volvo Buses
Page Volvo Buses 23 Net sales Operating income SEK bn SEK M Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Quarter 171 201 162 211 90 Quarter 4.3 4.6 3.8 4.6 3.7 12 Mth. rol. 609 650 668 745 664 12 Mth. rol. 17.7 18.1 17.9 17.3 16.7 Margin 4.0% 4.3% 4.3% 4.6% 2.4% Highlights In Focus z
Slide 25: Volvo Buses
Page Volvo Buses • Euro5 emission standard 24 • Reduced fuel consumption Commercial Vehicle Award in Finland • Part of Jokeri BRT system AB Volvo 2007-05-11 First Quarter 2007
Slide 26: Volvo Penta
Page Volvo Penta 25 Net sales Operating income SEK bn SEK M Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Quarter 247 375 257 226 293 Quarter 2.8 2.9 2.4 2.6 2.9 12 Mth. rol. 984 1,057 1,084 1,105 1,151 12 Mth. rol. 10.2 10.5 10.6 10.8 10.9 Margin 8.9% 12.8% 10.5% 8.7% 10.0% Highlights
Slide 27: Volvo Penta
Page Volvo Penta 26 The new 7-liter engine for diesel-powered gensets AB Volvo 2007-05-11 First Quarter 2007
Slide 28: Volvo Aero
Page Volvo Aero 27 Net sales Operating income SEK bn SEK M Q1 06 Q2 06 Q3 06 Q4 06* Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Quarter 210 153 143 111 92 Quarter 2.2 2.0 2.0 2.1 2.0 12 Mth. rol. 836 821 725 617 499 12 Mth. rol. 8.1 8.3 8.2 8.2 8.0 Margin 9.5% 7.8% 7.3% 5.2% 4.7% Highlights In Focus • Opera
Slide 29: Volvo Aero
Page Volvo Aero 28 First flight with the new GEnx engine in February 22, with six components from Volvo Aero AB Volvo 2007-05-11 First Quarter 2007
Slide 30: Financial Services
Page 29 Financial Services AB Volvo 2007-05-11 First Quarter 2007
Slide 31: Volvo Financial Services
Page Volvo Financial Services 30 New retail financing Operating income and return on equity SEK bn SEK M Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Operating 404 484 426 372 395 Quarter 7.8 9.6 7.8 10.1 8.7 Income 12 Mth. rol. 33.8 34.6 34.5 35.3 36.2 ROE 12.0% 14.0% 13.5% 13.2% 13.
Slide 32: Volvo Financial Services
Page 31 Volvo Financial Services New financing Penetration on new financing 3% 6% 21% 52% Volvo Volvo Renault Volvo CE Mack Trucks Buses Trucks 15% 30% 22% 8% 14% 9% Q106 3%* Q107 29% 26% 19% 16% 14% *Volvo Aero and Volvo Penta. AB Volvo 2007-05-11 First Quarter 2007
Slide 33: Group Summary
Page 32 Group Summary Earning per share SEK z Continued good financial performance - Operating income SEK 5.3 bn - Earnings per share SEK 1.85 - Return on equity 18.6% Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 z Truck operating margin at all-time high, 9.5% Quarter 1.96 2.31 1.94 1.83 1.85 12 Mth. roll. 6.8 7.2