Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q3 2007 Earnings Presentation
31 slides from Volvo AB Class A's earnings presentation, Oct 24, 2007
Slide 1: Third Quarter 2007 Press Conference
Third Quarter 2007 Press Conference, October 24, 2007
Slide 2: Group Highlights
Page 1 Group Highlights Third Quarter z Business environment - Europe and International strong - North America and Japan soft/pre-buy z Asia – now the second largest market for the Group - More than 40% of sales outside W Europe and North America z Industrial system in focus - Investing in increased
Slide 3: Net sales
Page 2 Net sales Net sales SEK bn z Net sales up 13% - Growth in Asia and Europe z Adjusted for FX and acquired and divested units, net sales down 1% z Strong organic growth - Volvo CE +22% Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 - Volvo Penta +12% Quarter 60,5 67,6 61,0 71,4 68,4 - Volvo Aero +7% 12 Mth. rol
Slide 4: Operating income
Page 3 Operating income Operating income SEK M + Product and market mix - Strong Europe and International + Price realization + Aftermarket and retail business + Nissan Diesel (seasonally strong Q3) + Renault Trucks - US trucks Q3 06* Q4 06 Q1 07 Q2 07 Q3 07 Quarter 4 972 5 170 5 328 6 119 5 010 - V
Slide 5: Trucks
Page 4 Trucks Net sales – SEK bn Operating income – SEK M Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Quarter 3 470 * 3 575 3 711 3 831 3 507 Quarter 39,7 45,0 39,2 46,3 45,4 12 Mth. rol. 13 995 14 828 14 882 14 587 14 624 12 Mth. rol. 169,7 171,3 168,9 170,3 176,0 Margin 8,7% 7,9% 9
Slide 6: Heavy-Duty Truck Market - Europe
Page 5 Heavy-Duty Truck Market - Europe (EU members + Switzerland and Norway) Forecast -08 +5-10% Units, Thousands (heavy trucks) Forecast -07 400 ~340,000 Modification of definition In 1991 (East Germany) and in 2000 (new member states) 350 In 2006 (new member states) 300 300 256 250 200 178 229 15
Slide 7: Heavy-Duty Truck Market – North America
Page 6 Heavy-Duty Truck Market – North America Units, Thousands (heavy trucks) 400 349 350 308 300 250 Forecast -08: ? 225 200 Forecast -07: 194 200-220,000 150 171 100 122 50 0 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 AB Volvo 2007-10-24 Third Quarter 2007
Slide 8: Volvo Trucks
Page 7 Volvo Trucks z Strong order intake in Europe up 83% - Of which Eastern Europe +161% z Deliveries - Europe +19% - Asia +29% - North America -63% z Price realization z Supply chain challenges z Good reception of US’07 trucks z Field testing of US’10-engines z Continued expansion of European dea
Slide 9: Mack Trucks
Page 8 Mack Trucks z Deliveries down 47% z Positive customer reception of US’07 engine family z Order intake flat - Soft US construction market - Still Industry inventories of US’04 products z UAW-negotiations started AB Volvo 2007-10-24 Third Quarter 2007
Slide 10: Nissan Diesel
Page 9 Nissan Diesel z New emission regulation as of September 1 - Market shares normalized - Nissan Diesel – market leader in fuel efficiency z Deliveries in the third quarter was 14,747, down 24% - Lower deliveries to Nissan Motors - Lower Japanese market post pre-buy, partly compensated by export
Slide 11: Renault Trucks
Page 10 Renault Trucks z Strong order intake – up 64% in total - Of which Eastern Europe +235% z Agreement in place with Karsan for production of Renault trucks in Turkey - Capacity of about 5,000 units in 2009 z Good industrial productivity z Good financial performance AB Volvo 2007-10-24 Third Qua
Slide 12: Stefano Chmielewski
Stefano Chmielewski October 24, 2007
Slide 13: Content
Content Renault Trucks’ new Product Portfolio Light Duty strategy In Focus for 2008 Page 12
Slide 14: New product portfolio
New product portfolio Whole product offer renewal in 2006 and 2007 Best in class quality & performances as the main focus Excellent reception of the new products from our clients : volumes and price level acceptance Page 13
Slide 15: Press comments
Press comments Renault Maxity "If you need the productivity and sheer value for money of a cab over 3,5-tonner this is the best of the bunch". Commercial Motor (UK) 01 02 2007 Renault Lander and Renault Kerax "Lander is a truck that the French manufacturer should be shouting from the rooftops ab
Slide 16: Light Duty vehicles: a very valuable business
Light Duty vehicles : a very valuable business A huge market: (GVW 2,7 t – 7t) 3 Millions vehicles / year worldwide 1 Million vehicles / year in Europe A growing market: +2 to +4 % per year depending on the continent A stable market: Less sensitive to the cycles A LOT OF BUSINESS OPPORTUNITIES
Slide 17: A wider product offer through OEM strategy
A wider product offer through OEM strategy A double partnership with Renault SA and Nissan Motor Several complementary products Renault Renault Mascott Midlum 7.5t Renault Renault Master Maxity Page 16
Slide 18: Renault Trucks’ Light Duty ambition
Renault Trucks’ Light Duty ambition Ambition 60 000 60000 50000 Ambition With 6 35 000 products 40000 26 500 23 600 30000 With 4 14 500 products 20000 10000 0 1999 2005 2006 2009 2011 Light Duty : a strategic priority Î Good profitability Î Excellent return on capital Î More and more business on aft
Slide 19: In Focus for 2008: prepare the future
In Focus for 2008 : prepare the future Acceleration of strategic projects to become even more efficient Projects Service Quality Quality & Commercial Logistic Customer satisfaction (outbound logistics and truck inventory decrease) Soft offer development Direct order and direct invoicing with
Slide 20: Volvo Construction Equipment
Page Volvo Construction Equipment 19 Net sales Operating income SEK bn SEK M Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Quarter 872 1 047 946 1 398 839 Quarter 9,8 11,2 11,0 14,1 13,0 12 Mth. rol. 3 761 4 072 4 141 4 263 4 230 12 Mth. rol. 41,3 42,1 43,4 46,1 49,3 Margin 8,9% 9,4% 8
Slide 21: Volvo Construction Equipment – Pipe layers
Page Volvo Construction Equipment 20 Volvo Pipe layers – modern machines for the modern oil and gas pipeline industry – Innovative, patented, 360 degree swing design – Cost-effective versatility - increased utilization. – Pipe layer – Excavator – Crane – Advanced technology. – Proven Volvo reliabili
Slide 22: Volvo Buses
Page Volvo Buses 21 Net sales Operating income SEK bn SEK M Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Quarter 162 211 90 122 -73 Quarter 3,8 4,6 3,7 4,1 3,6 12 Mth. rol. 668 745 664 585 349 12 Mth. rol. 17,9 17,3 16,7 16,2 16,0 Margin 4,3% 4,6% 2,4% 3,0% -2,0% Highlights In Focus z
Slide 23: Volvo Buses – 9700 Coach of the Year 2008
Page Volvo Buses 22 Volvo 9700 Coach of the Year 2008 Appreciated by the jury: - Passenger comfort - Driveline - Drivers environment - Safety features - Design - Total quality Low fuel consumption in tests AB Volvo 2007-10-24 Third Quarter 2007
Slide 24: Volvo Penta
Page Volvo Penta 23 Net sales Operating income SEK bn SEK M Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Quarter 257 226 293 444 258 Quarter 2,4 2,6 2,9 3,2 2,7 12 Mth. rol. 1 084 1 105 1 151 1 220 1 222 12 Mth. rol. 10,6 10,8 10,9 11,2 11,5 Margin 10,5% 8,7% 10,0% 13,8% 9,6% Highligh
Slide 25: Volvo Penta Product News
Page 24 Volvo Penta Product News D4-300 D6-370 AB Volvo 2007-10-24 Third Quarter 2007
Slide 26: Volvo Aero
Page Volvo Aero 25 Net sales Operating income SEK bn SEK M Q3 06 Q4 06 *Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Quarter 143 111 92 93 148 Quarter 2,0 2,1 2,0 1,8 1,8 12 Mth. rol. 725 617 499 439 445 12 Mth. rol. 8,2 8,2 8,0 7,9 7,8 Margin 7,3% 5,2% 4,7% 5,0% 8,0% Highlights In Focus • Improv
Slide 27: Volvo Aero – light weight technology breakthrough
Page Volvo Aero 26 Breakthrough for light weight technology - Volvo Aero’s new component for GP7000 will reduce A380 fuel consumption Low Pressure Turbine Exhaust Case Turbine Case AB Volvo 2007-10-24 Third Quarter 2007
Slide 28: Volvo Financial Services
Page Volvo Financial Services 27 New retail financing Operating income and return on equity SEK bn SEK M Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Operating 426 372 395 421 455 Quarter 7,8 10,1 8,7 10,7 9,8 Income 12 Mth. rol. 34,5 35,3 36,2 37,3 39,3 ROE 13,5% 13,2% 13,1% 12,9% 14
Slide 29: Volvo Financial Services
Page Volvo Financial Services 28 Total managed assets Penetration on new financing Managed assets in: (SEK bn) (Third Quarter isolated) Volvo Aero & Volvo Penta (SEK M) North Volvo Volvo Volvo Renault W Europe International Mack America CE Trucks Buses Trucks Volvo Aero Volvo Penta Q306 39 32 14 Q30
Slide 30: Group Summary
Page 29 Group Summary Earning per share SEK z Good financial performance - Operating income SEK 5.0 bn - Earnings per share SEK 1.54 - Return on equity 17.3% - Operating cash flow SEK neg 0.4 bn Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 z Integrating acquisitions Quarter 1,94 1,83 1,85 1,98 1,54 12 Mth. roll. 7
Slide 31: Page
Page 30 AB Volvo 2007-10-24 Third Quarter 2007