VOLVO CAR GROUP results presentation second quarter 2018 Hans Oscarsson, Senior vice president finance & CFO Patrik Tolf, Deputy CFO & head of Group Finance Nils Mösko, vice president & Head of investor relations
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Financial Summary Q2 2018 BNSEK 66.0 170 k (+27%) (+15%) Revenue 6.4% units Ebit margin mSEK 3,700 BNSEK 4.2 Operating & investing cash flow (+29%) ebit VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 3
retail Sales Q2 2018 Global growth +15% 170,232 units Suv share 55% EUROPE +6% US +34% 85,036 units China +15% 27,539 units 32,712 units Comparable period: April – June 2017 Europe is defined as EU + EFTA VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 4
highlights US plant inaugurated – global structure completed New S60 launched – SPA completed XC40 capacity increase 5 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 5
Financials VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 6
key financial developments Retail sales (units) Net revenue (MSEK) Investments (MSEK) 14% 24% -17% 317,700 122,900 16,800 -23% 15% 27% 277,700 13,900 99,400 9,650 170,200 66,000 148,500 7,430 52,000 Q217 Q218 YTD17 YTD18 Q217 Q218 YTD17 YTD18 Q217 Q218 YTD17 YTD18 EBIT (MSEK) Free cash flow (MSEK) Net income (MSEK) 15% 3,700 18% 7,840 6,800 29% 5,600 900 40% 4,750 4,250 6.8% 6.4% 3,290 3,000 EBIT EBIT 2,140 -800 margin margin 6.4% 6.3% EBIT EBIT margin margin -3,200 Q217 Q218 YTD17 YTD18 Q217 Q218 YTD17 YTD18 Q217 Q218 YTD17 YTD18 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 7
Net revenue Q2 2018 MSEK +27% 66,000 3,600 2,600 7,800 52,000 Q2 2017 Volume Sales Mix and Pricing Other Q2 2018 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 8
Retail sales by carline and region q2 2018 Retail sales by carline Q2 2017 Retail sales by carline Q2 2018 S S 16% 16% XC 47% XC 55% 37% 29% V V Retail sales by region Q2 2017 Retail sales by region Q2 2018 Other Other 15% 13% US 14% US 16% 50% Europe 54% Europe 19% China 19% China VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 9
ebit improvement q2 2018 +29% MSEK 4,250 3,290 Cost & Other Volume increase 6.4% 6.3% Sales mix positive EBIT EBIT margin margin 2016 2017 VOLVO CAR GROUP RESULTS PRESENTATION JANUARY-DECEMBER 2016 10
Cash Flow movements Q2 2018 Net cash position of SEK 14.4bn (Q1 2018 SEK10.4bn) MSEK Free cash flow MSEK 3,700 52,900 47,800 13,600 6,100 15,900 400 -3,700 -200 7,600 2,800 38,900 29,100 2018 Q1 Liquidity EBITDA Working capital* Investments** Financing*** 2018 Q2 Liquidity Undrawn credit facilities Marketable securities Cash * Change in inventories, accounts receivables and accounts payables, **Adjusted for interests and other items, *** Adjusted for exchange on cash VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 11
Investments and R&D R&D Expenses (SEKbn) Investments (SEKbn) 15.7% 12.8% 12 32.7 14.3% 13.6% 29.8 10.2 10.2 9.5 10 9.7 25.6 8.8 11.5% 9.8 8 7.2 6.4 18.9 18.6 5.7% 5.4% 5.2% 6 4.9% 4.7 5.2 17.0 4.1% 13.1 14.7 4 8.7 8.6 2 6.1 6.0 5.5 5.3 4.8 0 2014 2015 2016 2017 LTM Q2 2014 2015 2016 2017 LTM Q2 2018 2018 % of Revenue R&D expenses % of Revenue Tangible investments Intangible investments Non capitalised R&D VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 12
Liquidity & debt – improved net cash position 52,900 MSEK Net cash position of SEK 14.4bn (Q1 2018 SEK10.4bn) 13,600 400 28,000 14,400 24,900 2,200 38,900 Undrawn Credit Facilities Marketable Securities 22,700 Cash & Cash Equivalents Short-term Debt Long-term Debt Liquidity Debt VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 13
Balanced Amortisation schedule MSEK Funding by type 52,900 Loans 43% 7,600 57% Bonds 2,370 5,650 420 3,540 3,420 420 5,230 5,230 1,560 750 3,000 420 420 210 2018 2018 2019 2020 2021 2022 2023 2024 2025 2026 June 30 Liquidity Loans Bonds VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 14
Looking ahead VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 15
2018 - outlook Continued strong growth and maintained strong profits Upside from renewed product portfolio Strong foundation for our longer term ambitions VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 16
Questions VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 17
Volvo Cars’ Transformation NEW ERA AS AN INDEPENDENT, STANDALONE COMPANY UNDER GEELY OWNERSHIP 2010 – 2015 2016-2020E PHASE I “STRATEGIC TRANSFORMATION” PHASE II “PROFITABLE GROWTH” 2010 2014 2017 2016 Volvo Cars unveils the all-new XC90 , First OEM to commit to fully Zhejiang Geely Holding Group Volvo Cars another record year of sales acquires Volvo Cars the first product on the SPA platform electrified fleet 534k and earnings SEK 11bn Launch new XC60 and XC40 (new segment entry) 2011 Enters into the debt capital markets 2015 30% stake in Lynk & Co Initiation of strategic repositioning Volvo Cars achieves new record unit sales of 503k and improved profitability New ways to consumers: 27.9 Commencement of the largest Care By Volvo subscription 26.2 investment programme in the based ownership Company’s history Launch Polestar – pure 21.5 progressive performance 2013 Further footprint optimisation , Introduces new 16.0 new plant in US generation powertrains 12.5% 12.0% 12.0% 9.5 9.0 8.1 9.8% EBITDA margin, % 7.4% 6.9% 6.5% EBITDA, MSEK 2012 2013 2014 2015 2016 2017 LTM Q2 2018 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 18
Another year of strong growth Retail sales (Thousand) Net revenue (SEKbn) 13.9% 232 250 7.1% 211 800 179 612 200 572 164 534 600 503 138 466 150 400 100 Retail sales Net Revenue 200 50 CAGR CAGR 0 0 2014 2015 2016 2017 LTM Q2 2014 2015 2016 2017 LTM Q2 2018 EBIT (SEKbn) 2018 Investments (SEKbn) 40 20 32.7 +44% 29.8 15.1 14.1 30 15 25.6 9.7 11.0 9.8 18.9 18.6 6.4 Intangible investments 20 10 % margin 6.6 6.7% 4.7 6.5% 6.2% 5.2 17.0 Tangible investments 13.1 14.7 4.0% EBIT 5 10 8.7 8.6 2.1 Non capitalised R&D CAGR 6.1 6.0 4.8 5.5 5.3 1.5% 0 0 2014 2015 2016 2017 LTM Q2 2014 2015 2016 2017 LTM Q2 VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 2018 2018 19
VOLVO CAR GROUP RESULTS PRESENTATION APRIL-JUNE 2018 20
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