Volvo Ab Class A · OMXSTO:VOLV_A

Volvo Ab Class A — Q3 2016 Earnings Presentation

30 slides from Volvo Ab Class A's earnings presentation, Oct 21, 2016

  1. Slide 1: Volvo Group Third Quarter 2016

    Volvo Group THIRD QUARTER 2016 MARTIN LUNDSTEDT PRESIDENT AND CEO Volvo Group Headquarters Third quarter 2016 1

  2. Slide 2: Third quarter highlights

    NET SALES VOLVO GROUP SEK bn 12 months 299 bn Third quarter highlights 73.3 68.8 Q3 Q4 Q1 Q2 Q3 ADJUSTED OPERATING MARGIN* 12 months 6.7% % 6.9% 7.0%  Maintained profitability despite lower volumes  Adjusted operating margin* 7.0% (6.9) Q3 Q4 Q1 Q2 Q3  Trucks’ adjusted operating margin* 8.2% (7.2

  3. Slide 3: Volume development in the third quarter

    VOLVO GROUP Volume development in the third quarter VOLUME -13% TRUCK DELIVERIES MACHINE DELIVERIES VOLUME 0% Units Units -6,183 Total Change Total Change 60,000 50,000 Volvo 22,353 -3,142 6,779 -312 Volvo 40,000 -23 16,000 UD 4,919 +194 2,902 +269 30,000 14,000 SDLG 12,000 10,000 Renault 9,920 -575

  4. Slide 4: Service sales development

    VOLVO GROUP Service sales development SERVICE SALES 12 months 66.0 bn SEK bn +2% +1% ex FX Trucks Volvo CE 18 17.0 16.6 16 15.5 Buses 14 12 Volvo Penta 10 8 6 4 2 Excl FX 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Volvo Group Headquarters Third quarter 2016 4

  5. Slide 5: Trucks

    TRUCKS Volvo Group Headquarters

  6. Slide 6: Automation in Boliden mine

    VOLVO TRUCKS Automation in Boliden mine Volvo Group Headquarters Third quarter 2016 6

  7. Slide 7: Awarded at IAA - Fehrenkötter test winner 2016

    VOLVO TRUCKS Awarded at IAA - Fehrenkötter test winner 2016 #1 Total cost of ownership #1 Fuel consumption #1 Overall winner Volvo Group Headquarters Third quarter 2016 7

  8. Slide 8: Market environment

    TRUCKS Market environment EUROPE NORTH AMERICA HD 400 HD 400 300 300 200 2015: 270’ 100 Forecast 2016: 295’ 200 2015: 302’ Forecast 2017: 280’ Forecast 2016: 240’ 0 100 Forecast 2017: 215’ 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 000102030405060708091011121314151617 1400 ASIA HD+MD 20

  9. Slide 9: Market shares

    TRUCKS Market shares 2015 2016 HD % EUROPE NORTH AMERICA EU28 YTD August YTD September 16,0 16,7 12,0 9,6 8,0 8,0 7,3 7,8 JAPAN Volvo Renault YTD September Volvo Mack 18,0 16,3 BRAZIL UD YTD September 20,0 18,9 SOUTH AFRICA AUSTRALIA YTD August YTD September 14,6 16,2 Volvo 13,4 15,0 9,1 8,6 9,0 8,6

  10. Slide 10: Orders and deliveries

    TRUCKS Orders and deliveries Orders +6% EUROPE Deliveries +11% NORTH AMERICA Orders -37% Deliveries -46% Orders Deliveries Orders Deliveries Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Orders -4% SOUTH AMERICA Orders +36% ASIA Deliveries -3% Deliveries -21% Orders -24% AFRICA & Deliveries

  11. Slide 11: Construction Equipment

    CONSTRUCTION EQUIPMENT Volvo Group Headquarters

  12. Slide 12: Innovations showcased at Xploration Forum

    CONSTRUCTION EQUIPMENT Innovations showcased at Xploration Forum Hybrid wheel-loader Autonomous battery-electric carrier Volvo Group Headquarters Third quarter 2016 12

  13. Slide 13: Market environment

    CONSTRUCTION EQUIPMENT Market environment EUROPE 250 200 150 CHINA 450 100 400 350 50 Forecast 2016: 0% to +10% NORTH AMERICA 250 300 Forecast 2017: -5% to +5% 0 250 200 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 200 150 150 100 100 50 Forecast 2016: -10% to 0% Forecast 2017: 0% to +10% 50 F

  14. Slide 14: Orders and deliveries

    CONSTRUCTION EQUIPMENT Orders and deliveries Orders +1% EUROPE Deliveries +9% Orders +6% NORTH AMERICA Deliveries -24% Orders Deliveries Orders Deliveries Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Orders +24% ASIA Orders +69% SOUTH AMERICA Deliveries +2% Deliveries -6% Orders +53% AFR

  15. Slide 15: Buses

    BUSES  Order intake and deliveries decreased by 7% respectively, mainly driven by Asia and South America  First order for Volvo 7900 Electric  In focus at IAA fair: - Volvo Dynamic Steering - Pedestrian and Cyclist Detection - Energy efficiency focus Volvo Group Headquarters

  16. Slide 16: Volvo Penta

    VOLVO PENTA  Continued sales growth, driven by good product mix  Service sales increased by 13% driven by higher marine leisure volumes  Gaining new customers in off-road engine segment Volvo Group Headquarters

  17. Slide 17: Volvo Group Third Quarter 2016 - CFO

    Volvo Group THIRD QUARTER 2016 JAN GURANDER DEPUTY CEO AND CFO Volvo Group Headquarters Third quarter 2016 17

  18. Slide 18: Net sales per market

    VOLVO GROUP Net sales per market NET SALES SEK bn Currency +0.3 bn +2.1 -6.8 73.3 -0.3 0.7 -0.3 68.8 Q3 2015 Europe North South Asia Africa & Q3 2016 America America Oceania Volvo Group Headquarters Third quarter 2016 18

  19. Slide 19: Adjusted operating income per business area

    VOLVO GROUP Adjusted operating ADJUSTED OPERATING INCOME* income per Currency -45 M SEK M business area +141 +25 -105 +42 +27 -371 5,087* 4,846* Q3 2015 Trucks Volvo CE Buses Volvo Financial Group Q3 2016 Penta Services Functions & Other *Adjustments: Q3 2016: EU provision (190) Q3 2015: Restructuri

  20. Slide 20: Adjusted operating income contributors

    VOLVO GROUP Adjusted operating ADJUSTED OPERATING INCOME* Currency - 45 M income SEK M contributors 5,087* -1,082 +460 4,846* +161 +85 +88 +47 + Market mix – high volumes in Europe + Lower S&A expenses + Lower material cost + Service business + Higher R&D capitalization - Lower volumes and capacity

  21. Slide 21: Cash flow

    VOLVO GROUP – INDUSTRIAL OPERATIONS Cash flow OPERATING CASH FLOW INVESTMENTS IN PPE CASH FLOW EFFECT FROM SEK bn SEK bn CHANGES IN WORKING CAPITAL 12 months SEK 13.3 bn 12 months SEK 5.5 bn SEK bn 1.6 1.4 -1.1 -1.6 -1.4 -2.4 1.3 1.1 2.1 0.9 -3.3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

  22. Slide 22: Trucks: Net sales

    TRUCKS Net sales NET SALES 12 months 201.2 bn SEK bn -9% 50.2 45.7 45.1  Delivered trucks -13%: - North America -46% - Europe +11% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3  Net sales currency-adjusted -10%: 2014 2015 2016 - vehicles -13% - service -1% Volvo Group Headquarters Third quarter 2016 22

  23. Slide 23: Trucks: Adjusted operating income

    ADJUSTED OPERATING INCOME* TRUCKS Adjusted SEK bn 12 months 17.1 bn Currency 189 M operating 3.6 3.8 income 2.2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ADJUSTED 2014 2015 2016 OPERATING INCOME SEK M + Positive market mix – high volumes in Europe ADJUSTED OPERATING MARGIN* + Lower S&A expenses 3,756* % 12 months

  24. Slide 24: Construction Equipment: Net sales

    CONSTRUCTION EQUIPMENT Net sales NET SALES 12 months 48.6 bn SEK bn -3% 12.6 11.9 11.5  Delivered machines 0%: - Volvo -4% - SDLG +10%  Net sales currency-adjusted -2%: Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 - machines -2% 2014 2015 2016 - service -1% Volvo Group Headquarters Third quarter 2016 24

  25. Slide 25: Construction Equipment: Adjusted operating income

    ADJUSTED OPERATING INCOME* CONSTRUCTION EQUIPMENT SEK M 12 months 1,561 M Adjusted operating income Currency -104 M 648 576 601 ADJUSTED OPERATING INCOME SEK M Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 601 2014 2015 2016 576* ADJUSTED OPERATING MARGIN* + Lower credit losses China % 12 months 3.2% - Negative produc

  26. Slide 26: Buses: Net sales & adjusted operating income

    NET SALES 12 months 24.7 bn BUSES SEK bn Net sales & adjusted 5.5 5.4 operating income 4.6 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 ADJUSTED OPERATING INCOME*  Net sales currency-adjusted 0% SEK M 12 months 897 M - vehicles -1% Currency -138 M 337 - service +1% 232  Adjusted operating income: + l

  27. Slide 27: Volvo Penta: Net sales & adjusted operating income

    NET SALES 12 months 9.7 bn VOLVO PENTA SEK bn Net sales & adjusted 2.3 2.5 operating income 2.0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 ADJUSTED OPERATING INCOME* SEK M 12 months 1,253 M Currency 16 M  Net sales currency-adjusted +5% 358 - engines +1% 316 - service +14% 253  Adjusted operating i

  28. Slide 28: Financial Services: New financing and profitability

    FINANCIAL SERVICES New financing and profitability NEW FINANCING ADJUSTED OPERATING INCOME* ROE* SEK bn SEK M 12 months, % 12 months 2,053 M 12 months 53.9 bn 528 501 13.4% 13.3% 13.6 13.3 13.4 11.8% 452 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 2014 2015 2016

  29. Slide 29: Third quarter highlights

    NET SALES VOLVO GROUP SEK bn 12 months 299 bn Third quarter highlights 73.3 68.8 Q3 Q4 Q1 Q2 Q3 ADJUSTED OPERATING MARGIN* 12 months 6.7% % 6.9% 7.0%  Maintained profitability despite lower volumes  Adjusted operating margin* 7.0% (6.9) Q3 Q4 Q1 Q2 Q3  Trucks’ adjusted operating margin* 8.2% (7.2

  30. Slide 30: Volvo Group Third Quarter 2016

    Volvo Group THIRD QUARTER 2016 Volvo Group Headquarters Third quarter 2016 30

Volvo Group — Q3 2016 Earnings Presentation on 6ix