Slide 1: Third Quarter 2000 Telephone conference
Volvo Group Third Quarter 2000 Telephone conference October 25, 2000 AB Volvo Telekonf-Q3/001025/
Slide 2: Highlights
Volvo Group Highlights 21 Third Quarter In Focus going forward l Market situation l Turnaround program in Trucks - Cyclical decline North America - Gradual price realisation in Europe - Improvements outside North America l Adapting to market changes l Sales are up in 4 out of 5 business areas l Geog
Slide 3: Sales by Market Area
Volvo Group Sales by Market Area 2 2000 Percent of Third quarter, bln Change First nine months Change MSEK Volvo´s sales 2000 1999 % 2000 % Western Europe 50 15,052 13,795 9 48,781 4 Eastern Europe 3 803 659 22 2,525 26 North America 32 9,795 11,487 (15) 30,609 (3) South America 5 1,512 746 103 3,86
Slide 4: Sales by Business Area
Volvo Group Sales by Business Area 3 2000 Total Third quarter Change First nine months Change SEK M % 2000 1999 % 2000 % Trucks 45 13,635 14,222 (4) 44,545 (1) Buses 13 3,883 3,360 16 12,277 19 Construction Equipm. 16 4,804 4,107 17 14,891 6 Marine & Ind. Power sys. 5 1,610 1,400 15 4,920 18 Aero 9
Slide 5: Operating Income by Business Area
Volvo Group Operating Income by Business Area 4 2000 Total Third quarter Change First nine months Change SEK M % 2000 1999 % 2000 % Trucks 7 53 442 (88) 729 (66) Buses 9 65 13 400 278 309 Construction Equipm. 37 282 389 (28) 1,333 (2) Marine & Ind. Power sys. 16 121 92 32 421 59 Aero 9 72 80 (10) 46
Slide 6: First nine months 2000 Consolidated Results
Volvo Group First nine months 2000 Consolidated Results 5 First nine months Adjustments Normalized Change SEK M 2000 1999 2000 1999 2000 1999 % Sales 94,138 89,806 94,138 89,806 5 Operating income 4,465 31,296 (1,278)1 (26,875) 2 3,187 4,421 (28) Inc. ass. comp. & oth. inv. 533³ 676 533³ 676 Interes
Slide 7: Volvo Trucks Third Quarter 2000
Volvo Group Volvo Trucks 6 Third Quarter 2000 Third quarter First nine months SEK M 2000 1999 Change 2000 Change Volume (units) 16,941 19,353 (12%) 58,691 (4%) Sales 13,635 14,222 (4%) 44,545 (1%) Operating income 53 442 (88%) 729 (66%) Operating margin 0.4 3.1 (2.7) 1.6 (3.1) ROC, 12M 13.8% 29.1% (
Slide 8: Deliveries
Volvo Group 7 Deliveries Units January-September Change 1999 2000 % Total Europe 29 871 32 291 8 of which: Western Europe 27 962 29 648 6 Eastern Europe 1 909 2 643 38 North America 25 640 17 672 (31) South America 2 674 3 450 29 Asia 1 651 3 937 138 Rest of the world 1 270 1 341 6 Total 61 106 58 6
Slide 9: The gap between monthly orders vs. build is starting to narrow
Volvo Group The gap between monthly orders vs. build is 8 starting to narrow 40000 Industry Build Net Order Intake 35000 • N. America worse than forecast 30000 • Monitoring market development 25000 • Volvo engines order intake 29% 20000 • Stable stock situation on low level 15000 • VHD launch succes
Slide 10: Trucks Turn Around Programme
Volvo Group Volvo Trucks 9 Turn Around Programme ON TRACK + - Revenue increases Cost reductions • Price increase in Europe Purchased material • Market mix management Production efficiency • Product mix management Selling expenses • Customer mix management Warranty recovery • After market sales R&D e
Slide 11: New Volvo VHD range in North America
Volvo Group 10 New Volvo VHD range in North America Positive response from customers and dealers 80% Volvo engines Positive outlook AB Volvo Telekonf-Q3/001025/
Slide 12: Volvo Construction Equipment Third Quarter 2000
Volvo Group Volvo Construction Equipment 11 Third Quarter 2000 Third quarter First nine months SEK M 2000 1999 Change 2000 Change Sales 4,804 4,107 17% 14,891 6% Operating income 282 389 (28%) 1,333 (2%) Operating margin 5.9% 9.5% (3.6) 9.0% (0.6) ROC, 12M 17.6 17.8 (0.2) 17.6% (0.2) Major Factors T
Slide 13: Construction Equipment: Articulated Hauler, A35D
Volvo Group Volvo Construction Equipment 12 Articulated Hauler, A35D AB Volvo Telekonf-Q3/001025/
Slide 14: Construction Equipment: Excavator EC150
Volvo Group Volvo Construction Equipment 13 Excavator EC150 AB Volvo Telekonf-Q3/001025/
Slide 15: Volvo Buses Third Quarter 2000
Volvo Group Volvo Buses 14 Third Quarter 2000 Third quarter First nine months SEK M 2000 1999 Change 2000 Change Volume (units) 2,636 2,271 16% 8,040 22% Sales 3,883 3,360 16% 12,277 19% Operating income 65 13 400% 278 309% Operating margin 1.7% 0.4% 1.3 2.3% 1.6 ROC, 12M 6.5% 1.9% 4.6 6.5% 4.6 Majo
Slide 16: Buses: TX Platform - a new technical level
Volvo Group Volvo Buses 15 TX Platform - a new technical level Modular Concept Space Frame in Stainless Steel Weight Reduction World Class Fuel Efficiency and Environmental Characteristics Low Operating Cost and Good Serviceability AB Volvo Telekonf-Q3/001025/
Slide 17: Volvo Penta Third Quarter 2000
Volvo Group Volvo Penta 16 Third Quarter 2000 Third quarter First nine months SEK M 2000 1999 Change 2000 Change Sales 1,610 1,400 15% 4,920 18% Operating income 121 92 32% 421 59% Operating margin 7.5% 6.6% 0.9 8.6% 2.2 ROC, 12M 42% 16% 26 42% Major Factors Third quarter constraints In focus • Sale
Slide 18: Penta: D25-D65
Volvo Group Volvo Penta 17 D25-D65 AB Volvo Telekonf-Q3/001025/
Slide 19: Volvo Aero Third Quarter 2000
Volvo Group Volvo Aero 18 Third Quarter 2000 Third quarter First nine months SEK M 2000 1999 Change 2000 Change Sales 2,814 2,412 17% 7,831 10% Operating income 72 80 (10%) 460 17% Operating margin 2.6 3.3 (0.7) 5.9 0.4 ROC, 12M, excl. AGES 28.3 17.8 10.5 28.3 Major Factors Third quarter constraints
Slide 20: Volvo Finance Third Quarter 2000
Volvo Group Volvo Finance 19 Third Quarter 2000 Third months Nine months quarter SEK M 2000 1999 Change 2000 Change Operating income 173 285 (39%) 1,269* 98% Op. Income excl non-rec. 173 230** (25%) 621 (3%) ROE before tax (excl.non-rec.) 11.3% 13.4% (2.1%) Assets, MSEK 63,144 56,477 12% Equity rati
Slide 21: Summary
Volvo Group Summary 20 l Cyclical decline in North America l Improvements outside North America l Product introductions l Volvo Trucks turn around program - price realisation Europe l Renault V.I. and Mack - ready for implementation after approval AB Volvo Telekonf-Q3/001025/