Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — AB Volvo — Investor Day (June 2009)
36 slides from Volvo Ab Class A's investor day presentation, Jun 16, 2009
Slide 1: Leif Johansson, President and CEO, Volvo Group
Leif Johansson President and CEO Volvo Group AB Volvo Capital Market Day 2009 - Leif Johansson 1 2009-06-16
Slide 2: Agenda
Agenda DOWNTURN MANAGEMENT STRUCTURE & CULTURE STRATEGIC DIRECTION - PROFITABLE GROWTH - PRODUCT PORTFOLIO - OPERATIONAL EXCELLENCE PRIORITIES AB Volvo Capital Market Day 2009 - Leif Johansson 2 2009-06-16
Slide 3: Regional market outlook
f Europe – prepare for possible protracted downturn f North America and Japan – increase readiness for upturn f International markets - South America stable - Middle East still weak - India and China improving AB Volvo Capital Market Day 2009 - Leif Johansson 3 2009-06-16
Slide 4: Unprecedented drop - both speed and depth
Unprecedented drop - both speed and depth – Combined market in Europe & North America Units, Thousands (heavy trucks) 700 600 500 - 26% 400 - 60% 300 ? 200 100 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 AB Volvo Capital Market Day 2009 - Leif Johansson 4 2
Slide 5: Unprecedented drop – now stabilizing on low level
Unprecedented drop – now stabilizing on low level – Volvo Group truck deliveries globally Units, Thousands 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 07- 07- 07- 07- 08- 08- 08- 08- 08- 08- 08- 08- 08- 08- 08- 08- 09- 09- 09- 09- 09- sep okt nov dec jan feb mar apr maj jun jul aug sep okt nov
Slide 6: Good market positions and maintained market shares
Good market positions and maintained market shares – Heavy duty trucks EUROPE 29 24.3% 25.6% Renault Trucks 9,7% 10,8% JAPAN NORTH AMERICA Volvo Trucks 14,6% 14,8% 16.6% 16.2% 21.6% 22.6% Mack Trucks 7,3% 7,3% 2007 2008 Nissan Diesel Volvo Trucks 9,3% 8,9% 2007 2008 2007 2008 BRAZIL 14.6% 14.8% Volv
Slide 7: Stimulus plans worldwide
Stimulus plans worldwide Considerable amounts into infrastructure Central banks at very low interest rates EUROPE • EU 260 • France 40 NORTH AMERICA • Germany 108 ASIA • USA 787 • Italy 103 MIDDLE EAST • China 710 • Canada 50 plus • UK 55 • Egypt 5 • Hong Kong 51 • Mexico 54 • Russia 200 • Kuwait 5
Slide 8: Downturn management
Downturn management Cutting production to adapt to demand and to maintain price levels on new products • Cutting production rapidly and drastically in Q4 2008 through Q3 2009 • Significantly reduce workforce • Reducing operating costs • Strict control of capital expenditures • Prioritize R&D project
Slide 9: Different national tools to handle over capacity
Different national tools to handle over capacity Swe Fra NA Jpn Bra Bel • Flex time banks Ongoing Ongoing N/A Ongoing Ongoing Ongoing • Release temps Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing • Release hired services Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing • Release consultants Ongoing
Slide 10: Agenda
Agenda DOWNTURN MANAGEMENT STRUCTURE & CULTURE STRATEGIC DIRECTION - PROFITABLE GROWTH - PRODUCT PORTFOLIO - OPERATIONAL EXCELLENCE PRIORITIES AB Volvo Capital Market Day 2009 - Leif Johansson 10 2009-06-16
Slide 11: Volvo Group
Volvo Group Structure at high level stable, however structural changes within Business Areas and Business Units to improve organizational efficiency Business Areas Volvo Trucks Renault Trucks Mack Trucks Nissan Diesel Volvo Buses Construction Volvo Penta Volvo Aero Financial Equipment Services Busin
Slide 12: Culture
Building a competitive global culture Good cultural integration, now increasing focus on profitability Strategy Culture Organization AB Volvo Capital Market Day 2009 - Leif Johansson 12 2009-06-16
Slide 13: Agenda
Agenda DOWNTURN MANAGEMENT STRUCTURE & CULTURE STRATEGIC DIRECTION - PROFITABLE GROWTH - PRODUCT PORTFOLIO - OPERATIONAL EXCELLENCE PRIORITIES AB Volvo Capital Market Day 2009 - Leif Johansson 13 2009-06-16
Slide 14: Changing focus
Changing focus Product Cycle Profitable Growth Operational Excellence Management Required scale in all Capitalize on scale Reduce operating cost to business areas achieved to optimize R&D based on improve profitability shared technology and common architecture AB Volvo Capital Market Day 2009 - Leif
Slide 15: Changing focus
Changing focus Product Cycle Profitable Growth Operational Excellence Management Required scale in all Capitalize on scale Reduce operating cost to business areas achieved to optimize R&D based on improve profitability shared technology and common architecture AB Volvo Capital Market Day 2009 - Leif
Slide 16: Required scale achieved
Required scale achieved - No need for structural growth • Heavy duty trucks: 180,000 units (#2) • Organic growth in line with market development, • Construction equipment: 64,000 units (#3) except soft products to • Heavy duty engines: 200,000 units (#2) grow faster • Good brand portfolio • Address
Slide 17: Focus on soft product sales
Focus on soft product sales - to build customer satisfaction and loyalty Soft Products Hard Aftermarket Extended Services Products Products Product Offering Offering Products Services Aftermarket Product Areas Service Offering Areas SPARE PARTS SOFTWARE ACCESSORIES SERVICE EXTENDED UPTIME CUSTOMER S
Slide 18: Strong focus to grow soft product sales
Strong focus to grow soft product sales Soft product sales in 2008, excl. VFS ~82 BSEK (28% of the Volvo Group) Opportunity Soft products for growth, at high margins Soft product sales Q1 2009, excl VFS -3% growth, 39% of the Volvo Group AB Volvo Capital Market Day 2009 - Leif Johansson 18 2009-06-1
Slide 19: Example – increase capture of parts sales
Example – increase capture of parts sales From parts sales to sales of service (with parts) From brake down repairs to preventive maintenance 30 000 “Broaden business offerings” 25 000 20 000 15 000 100% original parts “Secure control over the consumption level installed truck base over 10 000 “Incr
Slide 20: Changing focus
Changing focus Product Cycle Profitable Growth Operational Excellence Management Required scale in all Capitalize on scale Reduce operating cost to business areas achieved to optimize R&D based on improve profitability shared technology and common architecture AB Volvo Capital Market Day 2009 - Leif
Slide 21: Emission regulations and technology convergence
Emission regulations and technology convergence EGR+SCR+DPF for the global engine • To meet upcoming emission regulations US’10 PNLT with competitive solutions Euro 6 Tier 4i • Capitalize on converging technologies across products and markets to drive: ~2014 - R&D efficiency - Competitive product co
Slide 22: Competitive products on their way…
Competitive products on their way… - Good news for both our customers and the environment Well prepared for new emission technology US’10 - Using existing engine platform – adding SCR - Significantly lower complexity in transition compared with US’07 - 33 trucks with customers, 3,7 million test mile
Slide 23: New Euro V engines already introduced
New Euro V engines already introduced Much cleaner – more power, less fuel Fuel Status Savings f Euro V ~3% f US’10 ~ 2-3% f PNLT ~same AB Volvo Capital Market Day 2009 - Leif Johansson 23 2009-06-16
Slide 24: Launching in-house medium duty engine platform
Launching in-house medium duty engine platform for trucks and buses • Volvo Group volume base 2008: ~70,000 engines • New MD engine project part of Nissan Diesel acquisition • New MD engine platform to be launched in 2010 • Economy of scale with HD engine platform in R&D, Purchasing and Production •
Slide 25: Enhance leadership in AMT:s
Enhance leadership in AMT:s Develop global platform for Automated Mechanical Transmissions 70000 • Big customer success 60000 • Global platform 50000 Manual Transmissions • Investments done 40000 • Captive spare parts 30000 • Into more products 20000 Automated Transmissions and markets 10000 • Trend
Slide 26: The hybrid future is arriving
The hybrid future is arriving Moving to commercialize hybrids with Group-wide technology Lyon Göteborg London Real life experiences of fuel savings > 30% AB Volvo Capital Market Day 2009 - Leif Johansson 26 2009-06-16
Slide 27: Sum-up
Sum-up • Volvo Group HD engine platform in all HD trucks • To meet upcoming emission regulations with competitive solutions - Capitalize on converging technologies • Launch in-house medium duty engine range in trucks • Further develop leadership with in-house platform for AMTs • Commercialize group-
Slide 28: Changing focus
Changing focus Product Cycle Profitable Growth Operational Excellence Management Required scale in all Capitalize on scale Reduce operating cost to business areas achieved to optimize R&D based on improve profitability shared technology and common architecture AB Volvo Capital Market Day 2009 - Leif
Slide 29: Efficiency and productivity in every step
Efficiency and productivity in every step • Manufacturing • Purchasing • Research and Development • Sales and Administration AB Volvo Capital Market Day 2009 - Leif Johansson 29 2009-06-16
Slide 30: Create global production capacity
Manufacturing Create global production capacity Move from regional to global engine production Current Future • Manning flexibility within plant – workforce • Product flexibility within line – Lyon, Ageo and Köping • Geographical flexibility between plants – “One global engine” • Total capital effic
Slide 31: Focus on productivity and quality
Manufacturing Focus on productivity and quality Optimize production efficiency and reduce quality cost • Window of opportunity to drive productivity, post integration and demand peak • Drive best practice across Group, Nissan Diesel to lead in new quality standards • Reduce capital expenditures (PPE
Slide 32: Move to high-performing suppliers
Purchasing Move to high-performing suppliers Opportunity to further leverage volumes • Focus on performing suppliers - Quality, Delivery, Financially… • Converging technology and globalizing products improving opportunity for cost rationalization • Leverage entire Volvo Group purchasing volumes • As
Slide 33: Research and Development
Research and Development Sufficient scale to invest in key technologies, but… …opportunity to improve organizational efficiency • Global development processes to drive productivity • Improve productivity and take out overlaps: - Volvo CE - 3P and Volvo Powertrain - Purchasing/R&D interface - Volvo P
Slide 34: A decade of very strong sales growth
Sales and Administration A decade of very strong sales growth Present downturn gives opportunity to kick-start efficiency work in S&A • Re-set cost structure in current downturn, and keep it • Improve profitability in owned distribution • Drive global processes through Business Units AB Volvo Capita
Slide 35: Agenda
Agenda DOWNTURN MANAGEMENT STRUCTURE & CULTURE STRATEGIC DIRECTION - PROFITABLE GROWTH - PRODUCT PORTFOLIO - OPERATIONAL EXCELLENCE PRIORITIES AB Volvo Capital Market Day 2009 - Leif Johansson 35 2009-06-16
Slide 36: Priorities
f Cash flow f Cost structure f Competitive products f Profitability among industry leaders AB Volvo Capital Market Day 2009 - Leif Johansson 36 2009-06-16