Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q2 2012 Earnings Presentation
24 slides from Volvo AB Class A's earnings presentation, Sep 8, 2012
Slide 1: Second quarter 2012
Second quarter 2012 AB Volvo 1
Slide 2: Strengthened focus on core business
VOLVO GROUP Strengthened focus on core business AB Volvo divests Volvo Aero • Enterprise value of SEK 6.9 billion. • Completion expected during the third quarter of 2012. AB Volvo acquires shares in Deutz AG • Largest shareholder in Deutz, 25% ownership (from 6.7%) • Continued cooperation on off-roa
Slide 3: Solid quarter with record sales volumes
VOLVO GROUP Solid quarter with record sales volumes SALES TREND 12-months 323 bn OPERATING INCOME 12 months 26 bn SEK bn SEK bn 84 7.6 7.3 79 69 4.8 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2010 2011 2012 AB Volvo Second quarter 2012 3
Slide 4: Good geographical balance
VOLVO GROUP Good geographical balance Growth in North America compensates for decline in Western Europe and South America MARKET DEVELOPMENT* VOLVO GROUP* SALES Q2 SEK bn % South America 6% growth, 1% excl currency North America 44% 5% 19% 82 77 8 9% -24% Asia 25 - 7% 23 7 30 7 Eastern Europe Wester
Slide 5: Investments in future products and markets
VOLVO GROUP Investments in future products and markets OPERATING INVESTMENTS* CASH FLOW* SEK bn SEK bn 12 months 10.5 bn 4.5 2.5 8.5 1.9 5.2 2.5 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 Leasing Tangibles Intangibles * Industrial operations AB Volvo Second q
Slide 6: High capital efficiency
VOLVO GROUP High capital efficiency CASH ROC* CONVERSION CYCLE* % Days 27% 27% 35 22 23 2% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Inventories CCC-days Target 10 10 10 11 11 11 11 12 12 * Industrial operations AB Volvo Second quarter 2012 6
Slide 7: Group overview – solid quarter in most businesses
VOLVO GROUP Group overview – solid quarter in most businesses OPERATING NET SALES MARGIN INCOME VOLVO GROUP 84 bn 7,335 M 8.7% TRUCKS 51 bn 4,120 M 8.0% VOLVO CE 20 bn 2,629 M 13.3% BUSES 5.2 bn 176 M 3.4% VOLVO PENTA 2.2 bn 268 M 12.1% VOLVO AERO 1.9 bn 305 M 15.7% FINANCIAL SERVICES 12.7 bn New fi
Slide 8: North America drives sales growth
TRUCKS North America drives sales growth SALES TREND SALES BRIDGE SEK bn SEK bn 12 months 204 bn 3% growth, 0% excluding currency 44% 11% 19% 51 50 50 51 - 27% - 8% 42 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 AB Volvo Second quarter 2012 8
Slide 9: Effects from changed market mix
TRUCKS Effects from changed market mix Operating leverage -83%* OPERATING INCOME OPERATING MARGIN SEK bn % Currency + 88 M 12 months 16.5 bn 5.1 10.3% 4.1 8.0% 6.0% 2.5 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2010 2011 2012 * Adjusted for non-recurring items Q2 2012 & 20
Slide 10: Slowing order intake in N America and S Europe
TRUCKS Slowing order intake in N America and S Europe Book-to-bill ratios trigger moderate adjustments in production rates Europe: production to be slightly ORDERS Q2-12 YoY QoQ BtB increased in Russia in Q3 and Europe 21,538 -13% -8% 95% Sweden in Q4. - Volvo 11,813 +3% +2% 100% - Renault 9,725 -25
Slide 11: Continuous adjustments of production to balance orders
TRUCKS Continuous adjustments of production to balance orders ORDERS AND DELIVERIES Book to bill: 90% 59 53 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 2012 Orders Deliveries AB Volvo Second quarter 2012 11
Slide 12: Lowered outlook for HD trucks in Brazil
TRUCKS Lowered outlook for HD trucks in Brazil Units, thousands 400 Total market 2011 Act 2012 F Europe 29 242,000 230,000 350 North America 216,000 250,000 Brazil 112,000 90,000 Japan 25,000 30,000 2012 Forecast 300 North America 250’ (unchanged’) 250 Europe 230’ (unchanged) 200 150 100 Brazil 90’
Slide 13: Strong growth in North America and maintained volumes in Asia
VOLVO CE Strong growth in North America and maintained volumes in Asia SALES TREND SALES BRIDGE SEK bn SEK bn 12 months 69 bn 15% growth, 7% excluding currency 20 63% 20 17 89% 0% 0% 15 17 2% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 AB Volvo Second quarter 2012 13
Slide 14: Strong performance – price management & cost control
VOLVO CE Strong performance – price management & cost control Operating leverage 9%* OPERATING INCOME OPERATING MARGIN Currency +418M SEK bn % 12 months 7.9 bn 2.6 13.6% 13.3% 11.3% 2.1 1.9 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2010 2011 2012 * Adjusted for non-recurri
Slide 15: European market leveling off
VOLVO CE European market leveling off Units, thousands 450 Market forecasts 2011 Act 2012 F 2012 Forecast 400 Europe + 33% +/- 0 North America + 39% + 15 to 25% South America + 20% + 0 to 10% 350 Asia, excluding China + 27% + 0 to 10% China + 9% - 15 to -25% China -15 to -25% 300 (unchanged) 250 Asi
Slide 16: Reorganization – progressing as planned
VOLVO GROUP Reorganization – progressing as planned Processes and - Definition of the Group’s strategic goals for the next structures three-year period Customer offering Utilizing the full potential Q4 2011 Q1 2012 Q2 2012 Q3 2012 1. Design and prepare 2. Implement 3. Adjust and follow- 4. Finalize
Slide 17: Reorganization – progressing as planned
VOLVO GROUP Reorganization – progressing as planned Processes and structures Customer - Brand segmentation project well under way – finished in Q4 offering - Expansion on key growth markets: - SDLG excavator production Utilizing the full in Brazil potential - Excavator plant in Kaluga Q4 2011 Q1 201
Slide 18: Reorganization – progressing as planned
VOLVO GROUP Reorganization – progressing as planned Processes and structures Customer offering - Detailed mapping of cost Utilizing the full efficiency opportunities potential developing according to plan. - Activity plan finalized in Q3. Q4 2011 Q1 2012 Q2 2012 Q3 2012 1. Design and prepare 2. Impl
Slide 19: Second quarter summary
VOLVO GROUP Second quarter summary Solid second quarter • Record sales SEK 84 bn – best second quarter • Operating income SEK 7.3 bn – second best quarter Softening order intake • Continuous capacity adjustments to meet changes in demand Strengthened focus on core business • Divestment of Volvo Aero
Slide 20: VOLVO
VOLVO
Slide 21: APPENDIX
APPENDIX AB Volvo Second quarter 2012 21
Slide 22: Guidance
Guidance Market forecast Capex PPE 2012 Heavy-duty trucks 2012 - Europe 29 230,000 Ind. Operations ~10 bn - North America 250,000 - Brazil 90,000 Tax rate 2012 ~30% - Japan 30,000 CE 2012 - Europe +/- 0 - North America + 15 to 25% - South America + 0 to 10% - Asia, ex China + 0 to 10% - China - 15 t
Slide 23: Currency effects – On operating income
Currency effects – On operating income SEK M Q2-12 vs Q2-11 Trucks + 88 Volvo CE + 418 Buses - 37 Volvo Penta - 13 Volvo Aero + 61 Other -4 Volvo Group + 513 AB Volvo Second quarter 2012 23
Slide 24: Upcoming events
Upcoming events CAPITAL MARKET DAY Sept 25 Göteborg Q3 REPORT Oct 24 Stockholm Q4 REPORT Feb 6 Stockholm ANNUAL REPORT March AGM April 4 Göteborg www.volvogroup.com/IR AB Volvo Second quarter 2012 24