Fixe xed d In Incom ome e In Inves estor or Pr Pres esen - PowerPoint PPT Presentation

Fixe xed d In Incom ome e In Inves estor or Pr Pres esen entat atio ion 2019

DISCLAIMER . By accepting this document, the person to whom it is provided (the “Recipient”) agrees to be bound by the following obligations and limitations. This document has been prepared and issued by Volvo Car AB (together with its subsidiaries, “Volvo Cars”). The information contained in this document is derived from sources that have not been independently verified. Except in the case of fraudulent misrepresentation, no responsibility or liability is accepted by Volvo Cars or by any of its respective officers, employees, affiliates or agents in relation to the accuracy, completeness or sufficiency of any information contained herein or any other written or oral information made available by Volvo Cars in connection therewith or any data which any such information generates, or for any loss whatsoever arising from or in connection with the use of or reliance on this document and any such liability is expressly disclaimed. Analyses and opinions contained herein may be based on assumptions that, if altered, can change the analyses or opinions expressed. This document speaks as of the date hereof and in providing this document, Volvo Cars gives no undertaking and is under no obligation to provide the Recipient with access to any additional information or to update this document or to correct any inaccuracies in it which may become apparent. Volvo Cars’ past performance is not necessarily indicative of futur e results and nothing contained herein shall constitute any representation or warranty as to future performance of Volvo Cars or any security, credit, currency, rate or other market or economic measure. Nor does this document constitute a recommendation with respect to any securities. | VOLVO CARS – DEBT INVESTOR PRESENTATION | 2

AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix

OUR STRATEGIC JOURNEY Personal and direct relationship with consumers Sustainable products and business Strengthened brand Safe mobility with leading AD technology Completely new vehicle range Purpose driven organization Truly global presence 2018 Standalone governance GAME CHANGING BUSINESS TRANSFORMATION COMPANY TRANSFORMATION | VOLVO CARS – DEBT INVESTOR PRESENTATION | 4

SUCCESSFUL BUSINESS TRANSFORMATION... 2019-20 2021 New Launc unches es 2015 2016 2017 2018 XC90 S90 S60 XC60 SPA V90 / V90CC SPA XC40 BEV XC90 BEV XC40 V60 / V60CC S90L SPA CMA SPA Portf tfoli lio age e 3.0 2.5 2.4 (yea ears) Modular Powertrain Modular Architecture • Consolidation of separate engine architectures into DRIVE VE-E Scalable Product Architecture (SPA) one • Outputs from 122 to >400bhp (in combination with ● Models: 60 / 90 Series an electric motor) while reducing number of cylinders ● Scale: Volvo 550’ units • Modular design allows high component commonality - Reducing complexity in development and Compact Modular Architecture (CMA) maintenance as well as increasing efficiencies in production ● Models: 40 Series • Collaboration with Geely also facilities engine sales PHEV T8 Petrol 3-4 cvl Diesel 4 cvl ● Scale: Volvo 250’ units within the wider Geely Group twin engine Non-complex x and Fully Invest sted d Base Modular ar Architecture Driving g Cost Efficiencies s and Rapid Produ duct Renewal als | VOLVO CARS – DEBT INVESTOR PRESENTATION | 5

…YIELDING STRONG PERFORMANCE Strong Revenue Development… …With Solid Earnings Growth… SEKbn SEKbn % EBITDA EBITDA margin, % 40 16% 12.5% 11.9% 11.3% 30 12% 9.8% 253 29 209 6.9% 26 20 8% 181 164 22 138 16 10 4% 9 0 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 …And Strong Cash Flow Generation… …Driven By Successful Product Launches Operating cash flow 1 (SEKbn) XC90 XC60 XC40 28 27 25 23 European car of the year 9 2018 2014 2015 2016 2017 2018 Note: 1) Operating cash flow: EBITDA + net cash interests + tax paid + movements in working capital | VOLVO CARS – DEBT INVESTOR PRESENTATION | 6

VOLVO CARS AT A GLANCE Overview FY18 Financial Highlights Premium Products SEK, % PRICE Fastest growing premium OEM • New Price and New Premium Positioning 253 53bn bn 14.2bn bn High Standalone business with an own corporate • Previous Price and governance, under ownership of Zheijang Geely Holding Revenue Operating Income (EBIT) Premium Positioning Group since 2010 XC60 XC90 Global footprint with activities in EMEA, Asia-Pacific • +21 21.1 .1% +12. 2.4% 4% XC90 Classic and the Americas XC40 V90 Revenue increase Retail Sales ~43,000 employees 1 • 642.3K Units XC60 Classic ~2,300 dealers selling in ~100 countries • 4.7bn bn 18bn V70 Headquartered in Gothenburg, Sweden • NEW PREMIUM Operating & Investing Net Cash position Low CF Low High Number of Cars Sold Sales by Model - 2018 The Volvo Car Group and Affiliates Diversified by model and increasing in SUVs Units ‘000 CAGR: 8% 642k Care by Volvo 15% 642 units 572 SUV 534 503 466 Estate 56% 29% Sedan 2014 2015 2016 2017 2018 Note: 1) Average 2018 employees | VOLVO CARS – DEBT INVESTOR PRESENTATION | 7

A STRUCTURE FOR THE FUTURE HUMAN- EMBRAC RACIN ING PIONEER ERING ING SYNER ERGIE IES TRUL ULY GLOBAL CENTRI RIC DISRU RUPTI TION ON PARTNE TNERS RSHIPS HIPS The Volvo o Car Group Stra rateg tegic ic Affilia iate tes Care by Volvo (Volvo Cars 50% ownership) (Volvo Cars 30% ownership) (Volvo Cars 50% ownership) Strong brand Subscription Solutions & Spearheading Capturing new A market leading within the services services for electrification mass market AD / ADAS premium segment smarter mobility consumer group software developer Robotaxi My car always My car sometimes Non-consolidated entities | VOLVO CARS – DEBT INVESTOR PRESENTATION | 8

POSITIVE RATING TRAJECTORY 20 November 2018 06 May 2016 10 May 2017 S&P affirms BB+ rating and revis ises outl tloo ook to posit itiv ive ; the S&P assign gns BB ratin ing g with posit itiv ive outlo look ok; S&P raises rating g to BB+ with stable le outl tloo ook citing good outlook reflects Volvo Cars’ good od posit itio ion to improv ove its credi dit t Positive outlook based on possibility of raising progress in strengthen ening compe petitive position and rating by one notch to BB+ if Volvo Cars continues metrics ics over 2019-2021, including meaningful impr prov ovement t in s business profile by demonstrating successf sful mode del to be successfu ful in launching new car mode dels, launches es and d impro rovi ving profi fitabi bility; Stable outlook reflects free operati ting g cash flow to debt. t. Positive outlook reflects good while maintaining stronger profitability and low expectation that Volvo Cars will continue successful rollout progress in strengthen ening compe petitive position and successful levels of adjusted debt of new car models while maintaining profitability and zero model launches establishing itself as a premium car manufacturer or low levels of adjusted debt 19 March 2019 Volvo Car’s parent company Zhejiang Geely Holding Group rated Investm tment t Grade de BBB BBB- with stable outlook by S&P Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Jan-19 30 Jun 2017 21 Dec 2016 Moody’s comment: Volvo Car’s Moody’s comment: declared SEK 2.2bn dividend is credit SEK 5bn Preference negative but has no impact on Ba2 2 May 2018 Shares Issue ue Is rating Moody’s upgrades rating to Ba1 with Credit it Posit itiv ive stable le outlo look ok; Upgrade reflects 17 Oct 2017 continued improv ovements ts in operati ting g 09 May 2016 12 Oct 2016 Moody’s affirms Ba2 rating with stable outlook . perfor ormance ce and credi dit t metric ics, with Moody's assigns first-time Ba3 Moody's upgr grade des ratin ing g to Ba2 with stabl ble outl tloo ook; Stable outlook based on expectation that renewa wal expectations that the trend will rating with posit itiv ive outl tloo ook ; Positive Upgrade reflects strong operating performance based progra ramme and subseque uent sales and earnings continue founded by further successfu ful growth will lead to a f further r impro rovem emen ent in credit outlook reflects commencement of on the successful introduction of new XC90 and new mode del launches s major produ duct renewal progra ramme several expected new product launches metrics | VOLVO CARS – DEBT INVESTOR PRESENTATION | 9

LONGER TERM AMBITIONS >5 million direct consumer relationships 50% recurring subscription based revenues 50% pure electric cars 30% autonomous cars Naturally hedged global production Superior growth Premium OEM profitability | VOLVO CARS – DEBT INVESTOR PRESENTATION | 10

AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix

KEY CREDIT HIGHLIGHTS HUMAN-CENTRIC BRAND IDENTITY 1 WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY ROBUST GROWTH TRAJECTORY 2 TRACK RECORD OF INDUSTRY OUTPERFORMANCE TRULY GLOBAL 3 WITH UNIQUE CHINA POSITIONING SYNERGIES 4 STRATEGIC AFFILIATES DRIVING SYNERGIES AND EARNINGS EMBRACING DISRUPTION AND PIONEERING PARTNERSHIPS 5 OPEN APPROACH TO TECHNOLOGY AND MARKET CHANGE SOLID FINANCIAL PERFORMANCE 6 TRANSFORMATION FULLY SELF FINANCED | VOLVO CARS – DEBT INVESTOR PRESENTATION | 12