Volvo Ab Class A · OMXSTO:VOLV_A

Volvo Ab Class A — Q2 2016 Earnings Presentation

31 slides from Volvo Ab Class A's earnings presentation, Jul 19, 2016

1. Slide 1: Volvo Group Second Quarter 2016

   Volvo Group SECOND QUARTER 2016 MARTIN LUNDSTEDT PRESIDENT AND CEO Volvo Group Headquarters Second quarter 2016 1

2. Slide 2: Second quarter highlights

   NET SALES VOLVO GROUP SEK bn 12 months 304 bn Second quarter highlights 84.8 78.9 Q2 Q3 Q4 Q1 Q2 OPERATING MARGIN* % 12 months 6.7% 7.8% 7.1%  Improved profitability on lower volumes  Operating margin* 7.8% (7.1) Q2 Q3 Q4 Q1 Q2  Trucks’ operating margin on 10.0% excluding EU provision *2015: Excl

3. Slide 3: Volume development in second quarter

   VOLVO GROUP Volume development in second quarter VOLUME -5% TRUCK DELIVERIES MACHINE DELIVERIES VOLUME -16% Units Units -2,943 Total Change Total Change 60,000 50,000 Volvo 28,255 -2,742 9,221 -81 Volvo 40,000 -2,241 20,000 UD 5,177 -43 2,543 -2,160 30,000 SDLG 15,000 Renault 13,560 +1,414 20,000 10

4. Slide 4: Service sales development

   VOLVO GROUP Service sales development SERVICE SALES 12 months 65.6 bn SEK bn -1% +3% ex FX Trucks Volvo CE 18 16.6 16.7 16 14.9 Buses 14 12 Volvo Penta 10 8 6 4 2 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Volvo Group Headquarters Second quarter 2016 4

5. Slide 5: Trucks

   TRUCKS Volvo Group Headquarters

6. Slide 6: Enhanced powertrain improves performance

   VOLVO TRUCKS Enhanced powertrain improves performance Volvo Group Headquarters Second quarter 2016 6

7. Slide 7: 32 certified Uptime Centers across North America

   MACK TRUCKS 32 certified Uptime Centers across North America Volvo Group Headquarters Second quarter 2016 7

8. Slide 8: Trucks market environment

   TRUCKS Market environment EUROPE NORTH AMERICA HD 400 HD 400 300 300 200 2015: 270’ 200 100 Forecast 2016: 290’ 2015: 302’ 0 100 Forecast 2016: 240’ 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1400 ASIA HD+MD 1200 China BRAZIL 1000 India HD

9. Slide 9: Trucks market shares

   TRUCKS Market shares 2015 2016 % EUROPE NORTH AMERICA EU30 YTD May YTD June 17,1 16,8 12,6 9,6 7,2 7,8 7,5 7,6 JAPAN Volvo Renault YTD June Volvo Mack 18,8 16,4 BRAZIL UD (HD) YTD June 20,1 19,2 SOUTH AFRICA AUSTRALIA YTD May YTD May Volvo 14,5 16,1 15,1 15,9 8,8 9,1 8,3 8,5 1,8 1,4 Volvo UD Volvo M

10. Slide 10: Trucks orders and deliveries

    TRUCKS Orders and deliveries Orders -2% EUROPE Deliveries +20% NORTH AMERICA Orders -29% Deliveries -33% Orders Deliveries Orders Deliveries Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Orders -5% SOUTH AMERICA Orders -14% ASIA Deliveries -9% Deliveries -8% Orders +8% AFRICA & Deliveries -1

11. Slide 11: Construction Equipment

    CONSTRUCTION EQUIPMENT Volvo Group Headquarters

12. Slide 12: Volvo Co-Pilot

    CONSTRUCTION EQUIPMENT Volvo Co-Pilot – investing in operator effectiveness Volvo Group Headquarters Second quarter 2016 12

13. Slide 13: Construction Equipment market environment

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

14. Slide 14: Construction Equipment orders and deliveries

    CONSTRUCTION EQUIPMENT Orders and deliveries Orders +23% EUROPE Deliveries +22% NORTH AMERICA Orders -6% Deliveries -11% Orders Deliveries Orders Deliveries Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Orders -38% SOUTH AMERICA Orders -40% ASIA Deliveries -37% Deliveries -52% Orders +6% AFR

15. Slide 15: Buses

    BUSES  Order intake improved by 33%  Deliveries up 28% in quarter, driven by North America and Europe  Success for hybrid buses in London Volvo Group Headquarters

16. Slide 16: Volvo Penta

    VOLVO PENTA  Orders -2%, deliveries -1% - good growth in off-road engines - slow in marine leisure in North America  Launch of new easy boating products for marine leisure market  New 8 liter engine with IPS drive Volvo Group Headquarters

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

    Volvo Group SECOND QUARTER 2016 JAN GURANDER DEPUTY CEO AND CFO Volvo Group Headquarters Second quarter 2016 17

18. Slide 18: Net sales per market

    VOLVO GROUP Net sales per market NET SALES SEK bn Currency -2.8 bn +3.1 -5.8 84.8 -0.8 -1.5 -0.9 78.9 Q2 2015 Europe North South Asia Africa & Q2 2016 America America Oceania Volvo Group Headquarters Second quarter 2016 18

19. Slide 19: Operating income per business area

    VOLVO GROUP Operating income OPERATING INCOME per business area Currency -317 M SEK M +817 -543 +202 +36 +2 -363 5,979* 6,130* Q2 2015 Trucks Volvo CE Buses Volvo Financial Group Q2 2016 Penta Services Functions & Other *Q2 2015: Excluding restructuring charges in efficiency program (-799) and capit

20. Slide 20: Operating income contributors

    VOLVO GROUP Operating income OPERATING INCOME Currency - 317 M contributors SEK M 5,979* -901 +228 +47 6,130* +511 +277 -11 + Lower selling and admin expenses + Lower material cost + Higher R&D capitalization - Lower volumes - Currency Q2 2015 Gross Cash R&D Selling Admin. Other Q2 2016 income R&D c

21. Slide 21: Industrial operations 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 7.9 bn 12 months SEK 5.7 bn SEK bn 3.5 2.6 8.6 1.6 1.4 6.9 1.3 -0.3 -1.0 0.2 4.0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Oth

22. Slide 22: Trucks net sales

    TRUCKS Net sales NET SALES 12 months 205.6 bn SEK bn -8% 57.1 52.3 48.2  Delivered trucks -5%: - North America -33% - Europe +20% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2  Net sales currency-adjusted -5%: 2014 2015 2016 - vehicles -8% - service +3% Volvo Group Headquarters Second quarter 2016 22

23. Slide 23: Trucks operating income

    TRUCKS OPERATING INCOME* Operating income SEK bn 12 months 17.0 bn 5.2 4.4 2.2 OPERATING INCOME SEK M 5,222* Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 4,405* + Lower S&A expenses + Lower material cost OPERATING MARGIN* + Higher R&D capitalization 12 months 8.3% % + Positive market mix 10.0% 7.7% - L

24. Slide 24: Construction Equipment net sales

    CONSTRUCTION EQUIPMENT Net sales NET SALES 12 months 48.9 bn SEK bn -12% 14.6 15.4 13.6  Delivered machines -16%: - Volvo -1% - SDLG -46%  Net sales currency-adjusted -7%: Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 - machines -9% 2014 2015 2016 - service 0% Volvo Group Headquarters Second quarter 2016 24

25. Slide 25: Construction Equipment operating income

    OPERATING INCOME* CONSTRUCTION EQUIPMENT SEK M 12 months 1,537 M Operating income Currency -27 M 1,353 751 810 OPERATING INCOME SEK M 1,353* Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 810 2014 2015 2016 OPERATING MARGIN* % 12 months 3.1% - Lower volumes 8.8% 5.1% 5.9% Q2 2015 Q2 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014

26. Slide 26: Buses net sales and operating income

    NET SALES 12 months 24.8 bn BUSES SEK bn Net sales and 6.7 6.1 operating income 4.8 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 OPERATING INCOME* 12 months 1,040 M SEK M Currency 24 M  Net sales currency-adjusted +17% 313 - vehicles +20% - service +2% 111  Operating income: 70 + higher volumes + mai

27. Slide 27: Volvo Penta net sales and operating income

    NET SALES 12 months 9.6 bn VOLVO PENTA SEK bn Net sales and 2.6 2.7 operating income 2.0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 OPERATING INCOME* SEK M 12 months 1,211 M  Net sales currency-adjusted +6% Currency 7 M - engines +3% 389 - service +15% 353  Operating income: 235 + higher sales + ma

28. Slide 28: Financial Services new financing and profitability

    FINANCIAL SERVICES New financing and profitability NEW FINANCING OPERATING INCOME* ROE* SEK bn SEK M 12 months, % 12 months 2,027 M 12 months 53.9 bn 497 499 15.0 13.3% 13.5% 13.9 13.5 397 10.9% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2014 2015

29. Slide 29: Second quarter highlights

    NET SALES VOLVO GROUP SEK bn 12 months 304 bn Second quarter highlights 84.8 78.9 Q2 Q3 Q4 Q1 Q2 OPERATING MARGIN* % 12 months 6.7% 7.8% 7.1%  Improved profitability on lower volumes  On our way… Q2 Q3 Q4 Q1 Q2 *2015: Excluding restructuring charges in efficiency program (-799 in Q2 2015) and capi

30. Slide 30: On our way

    VOLVO GROUP On our way  Brand-based truck organisation  Profit and loss focus  Enthusiasm and drive Volvo Group Headquarters Second quarter 2016 30

31. Slide 31: Volvo Group Second Quarter 2016

    Volvo Group SECOND QUARTER 2016 Volvo Group Headquarters Second quarter 2016 31

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