Volvo AB Class A · OMXSTO:VOLV_A
Volvo AB Class A — AB Volvo — Q3 2006 Earnings Presentation
31 slides from Volvo AB Class A's earnings presentation, Oct 24, 2006
Slide 1: Third Quarter 2006 Press Conference
Third Quarter 2006 Press Conference, October 24, 2006
Slide 2: Highlights
Press Conference Q3 2006 1 Highlights Third Quarter In Focus Going Forward z Business environment z Manage product- and production - European market stronger than expected change-over - Prebuy effect in North America z Capitalize on new products z Sales increased by 9% z Manage downturn in US truck
Slide 3: Net sales, Operating income, Earnings per share
Press Conference Q3 2006 2 Net sales (SEK bn) Europe North 50% (48) America Asia 31% (32) 8% (9) South Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 America Rest of 52,5 65,3 60,2 65,5 57,4 222,9 231,2 239,1 243,5 248,4 6% (6) the world 5% (5) Quarter 12 months rolling Operating income Earnings per share (SEK M) (S
Slide 4: Trucks
Press Conference Q3 2006 3 Trucks Third Quarter Net sales Operating income (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06* 34,9 43,4 40,5 43,5 38,7 2496 2742 3539 4029 3303 151,5 155,4 159,9 162,3 166,0 7,1% 6,3% 8,7% 9,3% 8,5% 12287 11717 12179 12806 13613 Quarter 12 m
Slide 5: Heavy Duty Truck Market - Europe
Press Conference Q3 2006 4 Heavy Duty Truck Market Europe (EU members + Switzerland and Norway) Units, Thousands (heavy trucks) Forecast 2006: ~290,000 300 Modification of definition In 1991 (East Germany) and 2007: in line with 2006 in 2000 (new member states) 277 250 256 230 200 188 171 179 150 12
Slide 6: Heavy Duty Truck Market - North America
Press Conference Q3 2006 5 Heavy Duty Truck Market North America Units, Thousands (heavy trucks) Forecast 2006: ~340 000 350 2007: ? 308 308 300 225 250 200 174 150 171 100 122 50 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 North America excl. Exports AB Volvo 2006-10-24
Slide 7: Renault Trucks
Press Conference Q3 2006 6 Renault Trucks New construction range Renault Kerax Renault Premium Lander AB Volvo 2006-10-24
Slide 8: Volvo Buses
Press Conference Q3 2006 7 Volvo Buses Third Quarter Net sales Operating income (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 144 134 131 179 132 3,9 5,3 4,2 4,5 3,7 3,7% 2,5% 3,1% 4,0% 3,6% 15,0 16,6 17,6 17,9 17,6 525 470 569 588 576 Quarter 12 months rolling Quarter
Slide 9: Volvo Buses
Press Conference Q3 2006 8 Volvo Buses The new 9900 - new design, new driver place, new safety, significant fuel reduction, complete offer AB Volvo 2006-10-24
Slide 10: Volvo Construction Equipment
Press Conference Q3 2006 9 Volvo Construction Equipment Tony Helsham President of Volvo Construction Equipment AB Volvo 2006-10-24
Slide 11: Volvo Construction Equipment
Press Conference Q3 2006 10 Volvo Construction Equipment Third Quarter Net sales Operating income (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 7,8 10,3 9,4 11,0 9,5 521 736 829 1239 828 32,4 34,8 37,0 38,4 40,1 6,7% 7,1% 8,9% 11,3% 8,7% 2441 2752 3023 3325 3632 Quarte
Slide 12: Agenda
Press Conference Q3 2006 11 Agenda • Construction equipment industry in China • Today’s position in China • Lingong AB Volvo 2006-10-24
Slide 13: Construction Equipment Industry: China vs. other regions
Press Conference Q3 2006 12 Construction Equipment Industry China vs. other regions 200 Others 180 Motor Graders 160 140 Compact Excavator Machine Volume (000) 120 Excavator 100 Compact W heel Loaders 80 W heel Loader 60 40 20 0 China Eur NA Japan Source: Off Highway Research, May 2006 Note: Product
Slide 14: Asia is a strategic region for future growth
Press Conference Q3 2006 13 Asia is a strategic region for future growth Construction equipment market (units) – Volvo CE product range Europe Local 140,000 China Imports North America 140,000 180,000 Japan Volvo CE Volvo CE 65,000 sales: 90% sales: 10% South America Africa & India M. East 20,000 15
Slide 15: Strong drivers for demand
Press Conference Q3 2006 14 Strong drivers for demand The 11th 5-year plan continues to focus on infrastructure development Intercity Road System, 2001 – 2020 Capex in Railway Construction, 2001 – 2010 (in thousand km) (in Billions RMB) 3000 400 350 275 2300 225 165 1920 1871 90 1810 1765 62 1698 58
Slide 16: Market shares in China
Press Conference Q3 2006 15 Market shares in China Yucai 2% Others 14% CAT 2% Yituo 2% Komatsu 3% Futian 2% Hitachi 3% Chenggong 4% Doosan 4% Changlin 5% Hyundai 4% Kobelco 1% Shangong 5% Volvo 1% XCMG 7% Liugong 12% Lingong 8% Xiagong 11% Longgong 10% AB Volvo 2006-10-24
Slide 17: Volvo CE in China
Press Conference Q3 2006 16 Volvo CE in China Key Data Sales Sales Employees (units) (MUSD) 186 1,645 275 1,106 111 107 183 918 169 752 161 76 252 25 11 17 30 17 24 33 43 8 3 4 7 1 2 3 3 5 97 98 99 00 01 02 03 04 05 06E 97 98 99 00 01 02 03 04 05 06E 97 98 99 00 01 02 03 04 05 06E AB Volvo 2006-10-2
Slide 18: Market development & Volvo market share in China
Press Conference Q3 2006 17 Market development & Volvo market share in China Excavators Compact Excavators 30 000 5,0% 12 000 4,0% 25 000 4,0% 10 000 3,0% 20 000 8 000 3,0% 15 000 6 000 2,0% 2,0% 10 000 4 000 1,0% 5 000 1,0% 2 000 0 0,0% 0 0,0% 00 01 02 03 04 05 06e 00 01 02 03 04 05 06e AB Volvo 20
Slide 19: Rationale for investment in Lingong
Press Conference Q3 2006 18 Rationale for investment in Lingong • China is the 2nd largest and fastest growing CE market • Chinese Wheel loaders market twice as big as rest of the world combined • Access to a very good dealer network • Very modern manufacturing and R&D hub and an up-and-running supp
Slide 20: Lingong overview
Press Conference Q3 2006 19 Lingong overview Products • Over 16 models of Wheel Loaders • Small backhoe loaders, road rollers, excavators SHANDONG PROVINCE BEIJING Manufacturing - 1 facility (Blue collars; size land/building) • Linyi, China (1,212 BC; 660k sqm / 110k sqm) • Jinan – Advanced R&D cent
Slide 21: Well invested and modern facilities
Press Conference Q3 2006 20 Well invested and modern facilities Administration and R&D offices Assembly line Gear cutting area Stocks of finished frames after painting AB Volvo 2006-10-24
Slide 22: Strong distribution network
Press Conference Q3 2006 21 Strong distribution network Own branches TOP 10 of dealers Other dealers AB Volvo 2006-10-24
Slide 23: Competitive entry-level products
Press Conference Q3 2006 22 Competitive entry-level products Lingong ZL50F – High Volume Lingong LG950 – High End AB Volvo 2006-10-24
Slide 24: Summary
Press Conference Q3 2006 23 Summary • Deal is subject to approval from MOFCOM • We aim to be a significant player in China • We will maintain separate brands • Capitalize on learnings from Samsung acquisition • Number one in the world for wheel loaders AB Volvo 2006-10-24
Slide 25: Volvo Penta
Press Conference Q3 2006 24 Volvo Penta Third Quarter Net sales Operating income (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 2,3 2,4 2,7 2,8 2,4 230 205 222 347 233 9,5 9,8 10,1 10,3 10,4 9,9% 8,4% 8,2% 12,2% 9,8% 976 943 959 1004 1007 Quarter 12 months rolling Quart
Slide 26: Volvo Penta
Press Conference Q3 2006 25 Volvo Penta Multiple IPS installations AB Volvo 2006-10-24
Slide 27: Volvo Aero
Press Conference Q3 2006 26 Volvo Aero Third Quarter Net sales Operating income (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 2,0 2,1 2,2 1,9 1,9 239 219 206 150 139 7,2 7,5 8,1 8,2 8,1 12,0% 10,4% 9,5% 7,9% 7,3% 630 836 832 814 714 Quarter 12 months rolling Quarter Ma
Slide 28: Volvo Aero
Press Conference Q3 2006 27 Volvo Aero Important agreement with Pratt & Whitney, to demonstrate new technology for the aircraft engine of the future AB Volvo 2006-10-24
Slide 29: Volvo Financial Services
Press Conference Q3 2006 28 Volvo Financial Services Third Quarter New retail financing Operating income and return on equity (SEK bn) (SEK M) Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 7,9 9,3 7,8 9,6 7,8 484 479 571 626 580 31,4 33,0 33,8 34,6 34,5 15,4% 15,3% 14,1% 15,6% 15,5% Qu
Slide 30: Volvo Financial Services
Press Conference Q3 2006 29 Volvo Financial Services Third Quarter - isolated New financing Penetration on new financing 3% 9% 24% 48% Volvo Renault Volvo Volvo CE Mack Trucks Trucks Buses 16% 30% 22% 17% 10% 10% AB Volvo 2006-10-24
Slide 31: Volvo Group Summary
Press Conference Q3 2006 30 Volvo Group Summary z Manage prebuy effect in the US truck market z Finalize product renewal for Renault Trucks in Europe and for Volvo Trucks and Mack in North America z Strengthened positions in Asia - Increased ownership in Nissan Diesel - Awaiting approval for acquiri