Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q4 2008 Earnings Presentation
40 slides from Volvo AB Class A's earnings presentation, Feb 6, 2009
Slide 1: Fourth Quarter 2008
Fourth Quarter 2008 Press Conference, February 6, 2009
Slide 2: Group Highlights
Group Highlights Fourth quarter – Sales down 9%, -15% adjusted for currency – Operating loss SEK 999 M – Rapid adjustment of production capacity – SEK 5.1 bn reduction in working capital Full year – Net sales SEK 304 bn (285) – Operating Income SEK 15.9 bn (22.2) – ROE 12.1% (18.1) – EPS SEK 4.90 (7
Slide 3: Volvo Group
Volvo Group Net sales Fourth quarter (SEK bn) Sales, down 9%, -15% adjusted for currency - Europe -23%, -27% adjusted for currency - North America -2%, -11% adjusted for currency - Asia +16%, +5% adjusted for currency - South America +12%, +10% adjusted for currency Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Qua
Slide 4: Volvo Group – Sales growth year over year
Volvo Group Sales growth year over year (%) Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Sales growth -3% 5% 13% 25% 26% 13% 2% -9% AB Volvo Fourth Quarter 2008 4
Slide 5: Workforce related cost
Workforce related cost Annualized quarterly development 60 Lay-offs: • 16,255 employees/consultants 55 noticed in 2008 and 2009, of which 5,800 left during 2008. • 7,670 in Sweden 50 2,223 in France 2,328 in the US 4,034 in other countries 45 16,255 in total • Corresponding to 56% of 40 Annualized t
Slide 6: Group – Products and Services
Volvo Group – Products and Services Sales, % • Labour intensive • Population driven: • Down-sizing - 2,600,000 trucks - 220,000 machines • Competitive - 130,000 buses products • Increased market • 10 million service shares hours in 2008 • High margin • Utilization drives revenues 74% 26% New Product
Slide 7: Working Capital
Working Capital Inventories, SEK bn • Industrial operating cash flow; 57 positive 1.8 bn in the quarter 56 55 • Focus on working capital 54 - Receivables - 1.6 bn 53 6.2 bn - Inventories - 6.2 bn 52 51 - Payables + 3.6 bn 50 - Other - 0.9 bn 49 48 Total change - 5.1 bn 47 46 Q308 Q408 Currency 4,3 I
Slide 8: Volvo Group – Net Financial Debt
Volvo Group – Net Financial Debt Industrial Operations Net debt by currency Net debt, SEK bn MXN; 2% Oth; 4% PLN; 2% BRL; 3% 35,0 39.7% of CNY; 4% Equity 30,0 32.4% of JPY; 43% 25,0 Equity 31.0% 20,0 USD; 26% 15,0 10,0 5,0 SEK; 16% 0,0 Q308 Q408 Q3-08 Q4-08 Change Currency 6,5 SEK/JPY 0,065 0,086 +3
Slide 9: Group Industrial Operations
Volvo Group Industrial Operations 08Q4 Cash Reserves Maturity Structure 2009 Funding Activities 2009 / Committed Facilities 30 000 • European Investment Bank 25 000 • Development Bank of Japan 20 000 • Bank market in Japan 15 000 • Bond issuance in various markets 10 000 5 000 • Other Agency funding
Slide 10: Group Customer Finance
Volvo Group Customer Finance Maturity Structure – 2009 • Customer financing portfolio amortizes in accordance with debt maturities S-t funding L-t funding 25000 • New funding need depends on demand for new financing in Financial Services 20000 15000 Funding Activities 2009 10000 • Commercial Papers
Slide 11: Trucks
Trucks Net sales Operating income SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 57,0 50,8 52,6 46,1 53,7 Quarter 4 144 4 432 4 825 2 653 257 12 Mth. rol. 188 200 206 207 203 12 Mth. rol. 15 193 15 914 16 908 16 054 12 167 Margin 7,3% 8,7% 9,2% 5,8% 0,5% Highlights
Slide 12: Trucks – Net order intake
Trucks – Net order intake 1 1 Net order intake 2008 2007 Change Q4-08 Q4-07 Change Europe 46,784 174,987 -73% -1,549 41,403 NA North America 23,648 26,008 -9% 4,037 8,879 -55% South America 14,100 18,209 -23% 1,087 5,775 -81% Asia 47,001 45,236 +4% 7,868 14,525 -46% Other markets 17,547 18,556 -5% 2
Slide 13: Heavy-duty truck market - Europe
Heavy-duty truck market - Europe (EU members + Switzerland and Norway) Units, Thousands (heavy trucks) Modification of definition 350 329 In 1991 (East Germany) and in 2000 (new member states) 319 In 2006 (new member states) 300 256 300 250 200 178 229 2009: 150 180-220 100 116 ? 50 0 90 91 92 93 94
Slide 14: Heavy-duty truck market – North America
Heavy-duty truck market – North America Units, Thousands (heavy trucks) 400 349 350 308 300 250 225 208 200 194 171 185 150 2009: 165-185 122 100 ? 50 0 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 AB Volvo Fourth Quarter 2008 14
Slide 15: Trucks
Trucks Volvo Trucks Renault Trucks z Market shares gained in Europe z Improving market shares in Europe 14.8% (14.6) - Heavy duty 10.8% (9.9) - Medium duty 9.7% (8.7) z Production adjustments in Europe z Adjustment of production rates z Inventories reduced z Inventories reduced z New Volvo FH16 – 70
Slide 16: New Volvo FH16 700hp
New Volvo FH16 700hp The most powerful truck in the world – 700 hp and 3150 Nm AB Volvo Fourth Quarter 2008 16
Slide 17: New Renault Trafic
New Renault Trafic To be distributed through Renault Trucks’ dealers AB Volvo Fourth Quarter 2008 17
Slide 18: Construction Equipment
Construction Equipment Net sales Operating income SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 1 035 1 301 1 629 134 -1 256 Quarter 15,5 15,1 16,7 13,2 11,0 12 Mth. rol. 4 218 4 573 4 804 4 099 1 808 12 Mth. rol. 54 58 60 61 56 Margin 6,7% 8,6% 9,7% 1,0% -11,4 Hig
Slide 19: Construction Equipment
Construction Equipment The new Volvo L50F AB Volvo Fourth Quarter 2008 19
Slide 20: Buses
Buses Net sales Operating income SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 93 -122 46 -72 72 Quarter 5,2 3,7 4,3 3,8 5,5 12 Mth. rol. 231 19 -57 -56 -76 12 Mth. rol. 17 17 17 17 17 Margin 1,8% -3,3% 1,1% -1,9% 1,3% Highlights In Focus z Profitable fourth quarte
Slide 21: Buses
Buses New London Wrights DD Volvo Buses
Slide 22: Slowing bus market development
Slowing bus market development Coach • Coach segment decline • City segment stable • Financing constraints • Asian growth potential City Volvo Buses
Slide 23: Environmental issues high on all agendas
Environmental issues high on all agendas Challenges • Global warming • Peak oil • Mega cities development Solutions • Efficient public transport systems • Alternative drivelines - hybrids • Alternative fuels – biogas Volvo Buses
Slide 24: Bus Sales 2008 Top ten markets 2008
Volvo Bus Sales 2008 Top ten markets 2008 North & South America China Volume: 2,879 UK Volume: 2,879 NetNet sales: 6,926 sales: MSEK 6,915 MSEK US/Canada Mexico Europe Iran Volume: 3,611 India Net sales: 7,321 MSEK Spain Brazil International Israel Volume: 3,447 Volume: 3,447 NetNet Sales: 3,065 Chi
Slide 25: Buses Turnaround program 2008-2010
Volvo Buses Turnaround program 2008-2010 Main targets Main activities • Customer satisfaction Selective business expansion/ Export Mexico, China, India Coach - Retail exellence • Operating margin City - Tender excellence Profitable product portfolio/product cost reduction Global Industrial footprint
Slide 26: Buses Turnaround program
Volvo Buses Turnaround program North America coach business expansion • Volvo 9700 US/Canada introduction • Expanding the service network Prevost / Volvo • Volvo driveline in Prevost coaches • Strategic inroads into Greyhound Volvo Buses
Slide 27: Buses Turnaround program
Volvo Buses Turnaround program North America transit bus business expansion • Nova LFS Hybrid introduced • Nova LFS Articulated introduced • New Nova BAA compliant factory in USA Volvo Buses
Slide 28: Buses Turnaround program
Volvo Buses Turnaround program European consolidation and improved performance • Tender excellence process • Industry restructuring finalized Säffle xx Borås • Volvo Bus service center rollout Wroclaw • Profitable product portfolio • Hybrid launch Volvo Buses
Slide 29: Buses Turnaround program
Volvo Buses Turnaround program India business expansion • New complete bus plant in India opened • Extended coach range • Export from India in process • Study with Eicher ongoing Volvo Buses
Slide 30: Towards sound profitability
Towards sound profitability Product and industrial efficiency • New modularized production process • Lean factory process, hub concept • Global sourcing of components • Export of complete buses Volvo Buses
Slide 31: Towards sound profitability
Towards sound profitability Towards a leading environmental position Euro V & Biodiesel CNG & Biogas Volvo I-sam Hybrid Volvo Buses
Slide 32: Penta
Volvo Penta Net sales Operating income SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 178 318 458 198 -46 Quarter 2,9 3,2 3,4 2,7 2,3 12 Mth. rol. 1 173 1 198 1 212 1 152 928 12 Mth. rol. 12 12 12 12 11 Margin 6,2% 10,0% 13,7% 7,4% -2,0% Highlights In Focus z Lower
Slide 33: Penta product news
Volvo Penta product news The new Volvo Penta IPS900 Lazzara 92 Volvo Penta IPS900 AB Volvo Fourth Quarter 2008 33
Slide 34: Aero
Volvo Aero Net sales Operating income SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 196 136 4 78 141 Quarter 2,0 1,9 1,7 1,6 2,2 12 Mth. rol. 529 573 484 414 359 12 Mth. rol. 7,6 7,6 7,4 7,2 7,4 Margin 9,8% 7,2% 0,2% 4,8% 6,3% Highlights In Focus • Declining air tr
Slide 35: Aero
Volvo Aero Important contract on Clean Sky for lower emissions – could reduce fuel consumption by up to 20% ”Open Rotor” AB Volvo Fourth Quarter 2008 35
Slide 36: Financial Services
Financial Services New retail financing Operating income and return on equity SEK bn SEK M Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 12,2 9,9 11,8 10,9 11,9 Quarter 378 381 387 391 238 12 Mth. rol. 41,4 42,6 43,7 44,8 44,5 ROE 15,9% 16,2% 15,4% 13,9% 12,6% Highlights In Foc
Slide 37: Financial Services
Financial Services Total managed assets Penetration on new financing Managed assets in: (SEK bn) Volvo Aero & Volvo Penta (SEK M) North Volvo Volvo Renault Mack W Europe International Buses America CE Trucks Trucks Trucks Volvo Aero Volvo Penta Q407 45 29 22 Q407 32% 30% 8% 15% 16% Q407 919 148 Q408
Slide 38: Group Summary
Group Summary Earnings per share Fourth quarter SEK • Sales down 9%, -15% adjusted for FX • Significant production cut backs • Operating loss • Substantial reduction in working capital • Positive cash flow Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Quarter 2,00 2,07 2,53 0,98 -0,67 In focus 12 Mth. roll. 7,37 7,
Slide 39: Dividend over time
Dividend over time Ordinary Dividend per share Direct return, % SEK 6 6 5.50 5 5 4 4 3 3 2.00 2 2 1 1 0.31 0 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08* * Proposed by the Board of Directors Dividend Direct return AB Volvo Fourth Quarter 2008 39
Slide 40: Fourth Quarter 2008
VOLVO Fourth Quarter 2008