Slide 1: Second Quarter 2002 Press Conference
Volvo Group Second Quarter 2002 Press Conference July 23, 2002 AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 2: Highlights
Volvo Group Highlights 1 Second Quarter In Focus Going Forward l Business Environment Short Term - Low demand in N. America - Downward trend in W. Europe, though l Manage Winnsboro production transfer from a high level - Strong development in Asia and E. Europe l Introduction of new US truck program
Slide 3: Sales by Market Area
Volvo Group Sales by Market Area 2 Second Quarter 2002 Second Quarter First Six Months SEK M Split 2002 2001 Change 2002 2001 Change Western Europe 52% 25,670 23,624 9% 46,767 47,321 -1% Eastern Europe 4% 1,946 1,427 36% 3,264 2,626 24% North America 29% 14,491 15,354 -6% 26,229 28,795 -9% South Ame
Slide 4: Sales by Business Area
Volvo Group Sales by Business Area 3 Second Quarter 2002 Second Quarter First Six Months SEK M Split 2002 2001 Change 2002 2001 Change Trucks 66% 32,554 29,256 11% 59,112 58,377 1% Buses 8% 4,142 4,915 -16% 7,307 8,630 -15% Construction Equipm. 13% 6,188 6,067 2% 10,664 10,755 -1% Volvo Penta 5% 2,2
Slide 5: Operating Income by Business Area
Volvo Group Operating Income by Business Area 4 Second Quarter 2002 Second Quarter First Six Months SEK M 2002 2001 Change 2002 2001 Change Trucks 483 639 1) -24% 9 789 -99% Buses 51 (25) n.a. (43) (108) n.a. Construction Equipm. 464 408 14% 333 489 -32% Volvo Penta 225 222 na 371 389 na Volvo Aero
Slide 6: Trucks
Volvo Group Trucks 5 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Volume (units) 43,781 39,945 10% 77,103 -6% Sales 32,554 29,256 11% 59,112 1% Operating income 483 639 1) -24% 9 -99% Operating margin % 1.5% 2.2% (0.7) 0.0 (1.4) Highlights In Focus l Successful p
Slide 7: Volvo Trucks
Volvo Group 6 Volvo Trucks New Volvo FH AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 8: Truck Deliveries First Six Months
Volvo Group Truck Deliveries 7 First Six Months First Six Months 2002 2001 Change Total Europe 47,748 51,986 -8% Western Europe 43,923 48,507 -9% Eastern Europe 3,825 3,479 10% North America 18,034 19,898 -9% South America 2,529 2,986 -15% Asia 3,974 2,506 59% Rest of the world 4,818 4,708 2% Total
Slide 9: Business Environment
Volvo Group Business Environment 8 North America 30,000 25,000 Net orders 20,000 15,000 Industry build 10,000 5,000 0 J F M A M J J A S O N D J F M A M J 2001 2002 AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 10: Total Market Heavy Trucks
Volvo Group 9 Total Market Heavy Trucks W. Europe Registration Forecast Units Thousands 300 246 Forecast 250 237 236 215 200 208 (10)% 150 100 98 99 '00 '01 '02 '03 AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 11: Total Market Heavy Trucks
Volvo Group 10 Total Market Heavy Trucks NAFTA Retail Sales Forecast Units Thousands 309 300 257 250 255 Forecast 200 170 167 150 (2)% 100 98 99 '00 '01 '02 '03 AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 12: Buses
Volvo Group Volvo Buses 11 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Volume (units) 2,571 2,727 -6% 4,413 -9% Sales 4,142 4,915 -16% 7,307 -15% Operating income 51 (25) n.a. (43) n.a. Operating margin % 1.2% -0.5% 1.7 (0.6) 0.7 Highlights In Focus l Progress i
Slide 13: Construction Equipment
Volvo Group Volvo Construction Equipment 12 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Sales 6,188 6,067 2% 10,664 -1% Operating income 464 408 14% 333 -32% Operating margin % 7.5% 6.7% 0.8 3.1 -1.4 Highlights In Focus l Continued soft market l Manage launch of
Slide 14: Volvo Construction Equipment
Volvo Group 13 Volvo Construction Equipment Heavy Equipment Launched in Q1 B-Series Excavator E-Series Wheel Loader AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 15: Volvo Construction Equipment
Volvo Group 14 Volvo Construction Equipment New B-series Motor Grader AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 16: Penta
Volvo Group Volvo Penta 15 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Sales 2,249 1,976 14% 4,211 13% Operating income 225 222 na 1) 371 na 1) Operating margin % 10.0% 11.2% na 1) 8.8 na 1) Highlights In Focus l Business in order l World market trends l Strong
Slide 17: Volvo Penta
Volvo Group 16 Volvo Penta New 7-Litre Engine for Marine Leisure TAMD75 AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 18: Aero
Volvo Group Volvo Aero 17 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Sales 2,338 3,060 -24% 4,823 -15% Operating income 40 286 -86% 118 -74% Operating margin % 1.7% 9.3% (7.6) 2.4 (5.5) Highlights In Focus l Slow recovery in air traffic, but lower yield l Adapt
Slide 19: Volvo Financial Services
Volvo Group 18 Volvo Financial Services Vision To be valued as a world class provider of financial and related services for the Group’s external and internal customers AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 20: Targeted Customer Offerings by Brand
Volvo Group 19 Targeted Customer Offerings by Brand Financial Services • Volvo Trucks • Renault Trucks • Mack Trucks • Volvo Buses • Volvo Construction Equipment • Volvo Aero • Volvo Penta AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 21: Customers
Volvo Group 20 Customers Extended integrated premium financial service products End Dealers VFS Customers Business Areas AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 22: A Global Services Organization
Volvo Group 21 A Global Services Organization Customer Finance: Insurance • Operational Leasing • Liability • Financial Leasing • Physical damage • Instalment Credits • GAP Dealer Finance: • Floor Plan • Dealer Loans Related Services • Financial Consultancy • Fuel & Tax Reporting • Credit Card AB Vo
Slide 23: A Global Services Organization
Volvo Group A Global Services Organization 22 Treasury • Foreign Exchange • Loans and Deposits • Cash Pooling • Strategic Funding • Liquidity Reserves Real Estate • Ownership • Maintenance • Lease Agreements • New Construction AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 24: A Global Services Organization
Volvo Group 23 A Global Services Organization FC FC TC FC FC FCFC FC FC FC FC HQ FC FC FC FC FC TC FC FC TC FC FC TC Volvo Financial Services consist of FC 21 Finance companies (FC) 4 Treasury Centers (TC) 1 Real Estate Group (Danafjord) AB Volvo Press conf. Q2-2002, July 23, 2002
Slide 25: Risk Management
Volvo Group Risk Management 24 Key Principles within Volvo • Separate Financial Services Business Area reporting • Clear division of responsibilities between VFS & other Business Areas • Currency, interest and liquidity matching of credit portfolio • Standardized credit process within Group - arms l
Slide 26: Development US Truck portfolio
Volvo Group 25 Development US Truck portfolio US Truck overdue trends 12 10 8 Percent (%) 6 Over 30 days Over 90 days 4 2 0 Se 0 Se 1 ja 0 ja 1 0 1 2 N 0 N 1 m 0 M 1 M 2 m 0 m 1 m 2 l-0 l-0 -0 -0 -0 -0 -0 0 0 -0 -0 -0 0 0 0 p- p- n- n- n- ov ov ay ay ay Ju Ju ar ar ar ja Overdue trends began declini
Slide 27: Financial Services
Volvo Group Volvo Financial Services 26 Second Quarter Second Quarter First Six Months SEK M 2002 2001 Change 2002 Change Operating income 120 63 90.5% 235 34% ROE % 1) 3.7% (2.0) Assets, MSEK 68,683 70,057 -2.0% 68,683 -2.0% Equity ratio 10.7% 0.0 Highlights In Focus l Increase in retail finance vo
Slide 28: Finance Volume and Penetration
Volvo Group Finance Volume and Penetration 27 2001 Volume YTD 2002 Volume YTD Volvo Trucks Volvo CE Volvo Buses Renault Trucks Mack Trucks Aero, Penta & Other Finance penetration 35% 30% YTD 2001 25% YTD 2002 20% 15% 10% 5% 0% Volvo Trucks Volvo CE Volvo Buses Renault Trucks Mack Trucks AB Volvo Pre
Slide 29: Key objectives
Volvo Group 28 Key objectives 1 Stability in earnings over a business cycle 2 Profitability in all business segments 3 Controlled and profitable asset growth 4 Sound portfolio structure / asset diversification 5 Support Business Areas & maximize customer satisfaction AB Volvo Press conf. Q2-2002, Ju
Slide 30: Summary
Volvo Group 29 Volvo Group Summary l Business Environment - Low demand in N. America - Downward trend in W. Europe - Strong development in Asia and E. Europe l Successful product introduction l Improved results in Trucks and Construction Equipment, progress in Buses l Significantly improved cash flo