VOLVO CAR GROUP RESULTS PRESENTATION SECOND QUARTER 2019 HANS OSCARSSON PER ANSGAR THERESE JANDÉR CHIEF FINACIAL OFFICER VP GROUP REPORTING HEAD OF INVESTOR RELATIONS
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OPERATIONAL HIGHLIGHTS Q2 2019 XC40 in Luqiao • Capacity increase and benefit from local production • High demand has exceeded our expectations • Three car models on a single production line (CMA) Battery deal with Asian suppliers • Battery supply for future cars secured with CATL and LG Chem • Major step towards realizing 2025 electrification ambition Uber car • First production ready car, capable of autonomous drive • Developed together with Uber • Part of Volvo Cars’ ambition to be the partner of choice for ride-hailing companies 3 Volvo Car Group Results Presentation January- June 2019
FINANCIAL HIGHLIGHTS Q2 2019 Strong growth and market share gains Sales volume +5.4% Continued price pressure and additional tariffs Revenue +1.7% Operating income SEK 2.6bn Free cash flow MSEK 1,600 Cost actions taken 4 Volvo Car Group Results Presentation January- June 2019
GLOBAL SALES DEVELOPMENT Q2 2019 GLOBAL +5.4% 179,506 Units EUROPE CHINA US +3.5% +1.9% +15.7% 88,029 Units 37,855 Units 28,062 Units OTHER +2.5% 25,560Units 5 Comparable period: Apr – Jun 2018 Volvo Car Group Results Presentation January- June 2019 Europe is defined as EU28 + EFTA
Q2 2019 SALES DISTRIBUTION Retail sales by market Retail sales by carline +5% +5% +5% +5% 179,506 179,506 170,232 170,232 13% 14% 15% 16% 16% 26% 16% 29% 21% 19% 61% 55% 49% 50% Q2 2018 Q2 2019 Q2 2018 Q2 2019 S V XC Other US China Europe 6 Volvo Car Group Results Presentation January- June 2019
FINANCIALS 7 Volvo Car Group Results Presentation January- June 2019
KEY FINANCIAL DEVELOPMENTS Q2 AND H1 2019 Retail sales (units) Capex (MSEK) Net revenue (MSEK) +7% +6% -1% 340,800 122,900 130,100 11,200 11,100 317,600 +5% +2% -4% 170,200 179,500 66,000 67,200 5,700 5,500 Q218 Q219 H118 H119 Q218 Q219 H118 H119 Q218 Q219 H118 H119 EBIT (MSEK) Free cash flow (MSEK) Net income (MSEK) -29% 3,600 7,800 -39% 1,600 -38% 850 5,500 5,600 -53% 4,200 3,400 3,000 2,600 4.2% 6.4% 1,400 6.4% 3.9% -2,800 Q218 Q219 H118 H119 Q218 Q219 H118 H119 Q218 Q219 H118 H119 8 Volvo Car Group Results Presentation January- June 2019
NET REVENUE AND EBIT WALK Q2 2019 Net revenue (MSEK) 67,200 1,500 66,000 1,700 Revenue increase mainly driven • 600 by China, UK and Germany -2,600 Positive volume mainly driven • Q2 2018 Volume, sales Sales of Foreign Other Q2 2019 by XC40 mix and pricing licenses exchange rates Increasing pricing pressure • EBIT (MSEK) 4,200 Lower government grants • 500 2,600 100 -1,100 -500 Net exchange rate effects • -600 6.4% 3.9% Q2 2018 Volume, Sale of Government Foreign Other Q2 2019 sales mix licenses grants exchange and pricing rates 9 Volvo Car Group Results Presentation January- June 2019
NET REVENUE AND EBIT WALK H1 2019 Net revenue (MSEK) 130,100 2,000 4,000 900 300 122,900 Revenue increase mainly driven • by China, UK and Germany Positive volume and sales mix • mainly driven by XC40 H1 2018 Volume, sales Sales of Foreign Other H1 2019 mix and pricing licences exchange rates Increasing pricing pressure • EBIT (MSEK) Increase in license sales YoY • 7,800 500 -500 Lower government grants • 5,500 -1,400 -500 -400 Net exchange rate effects 6.4% • 4.2% H1 2018 Volume, Sale of Government Foreign Other H1 2019 sales mix licenses grants exchange and pricing rates 10 Volvo Car Group Results Presentation January- June 2019
CASH FLOW MOVEMENTS Q2 2019 Seasonal working capital • MSEK changes, including: 58,200 Higher inventory due to • Free cash flow MSEK 1,600 51,300 sales growth and 13,700 expanding business 13,500 3,500 6,500 3,600 4,200 Higher receivables on the • 2,700 -2,900 back of sold licenses -5,500 Investments mainly relates to • 40,300 capacity increase, new car 35,100 models and technology Financing net of new bonds • 2019 Q1 EBITDA Working Other** Investments Financing*** 2019 Q2 and repayment of maturing Liquidity capital* Liquidity debt Undrawn credit facilities Marketable securities Cash * Change in inventories, accounts receivable and accounts payable, ** Interest, tax and changes in other items, *** Adjusted for exchange on cash 11 Volvo Car Group Results Presentation January- June 2019
CASH FLOW MOVEMENTS H1 2019 Seasonal working capital • changes, including: Free cash flow MSEK -2,800 MSEK Higher inventory due to • 58,200 sales growth, expanding 55,100 13,300 business and change in 13,700 2,500 13,300 logistics flow -7,500 2,900 4,200 1,600 Higher receivables on the • -11,100 back of sold licenses Investments mainly related to • 40,300 40,200 capacity increase, new car models and technology Financing net of new bonds, • 2018 Q4 EBITDA Working Other** Investments Financing*** 2019 Q2 Liquidity capital* Liquidity repayment and dividend during Q1 Undrawn credit facilities Marketable securities Cash * Change in inventories, accounts receivable and accounts payable, ** Interest, tax and changes in other items, *** Adjusted for exchange on cash 12 Volvo Car Group Results Presentation January- June 2019
CAPEX AND R&D R&D Expenses (SEKbn) Capex (SEKbn) 12.8% 13.5 12.1 8.5% 26.7 10.8% 8.7% 10.1% 10.2 10.2 22.1 22.1 9.5 9.7 8.5% 19.5 8.5 7.2 9.4 6.4 13.8 13.9 5.9% 5.7% 5.2% 5.2% 4.9% 4.8% 4.7 5.2 17.0 13.6 13.1 12.7 9.2 8.6 2014 2015 2016 2017 2018 LTM H1 2014 2015 2016 2017 2018 LTM H1 2019 2019 % of Revenue R&D expenses % of Revenue Tangible investments Intangible investments 13 Volvo Car Group Results Presentation January- June 2019
LIQUIDITY & DEBT MSEK 58,200 Net cash position of SEK 12.5bn (Q1 2019 SEK 11.9bn) 13,700 26,200 4,200 12,500 32,000 2,600 Undrawn Credit Facilities 40,300 Marketable Securities Cash & Cash Equivalents 29,400 Short-term Debt Long-term Debt Liquidity Debt 14 Volvo Car Group Results Presentation January- June 2019
AMORTIZATION SCHEDULE MSEK Funding by type 58,200 Loans 32% 7,800 7,500 1,100 2,500 5,700 68% 400 4,000 Bonds 3,400 6,400 2,400 400 5,300 5,300 400 1,200 3,000 2,000 200 2019 2019 2020 2021 2022 2023 2024 2025 2026 June 30 Liquidity Loans Bonds 15 Volvo Car Group Results Presentation January- June 2019
COST REDUCTIONS Staff reduced by 750 people Cost reduction in bought services Planned actions to lower cost run rate by SEK 2bn Further actions will reduce costs into 2020 H1 2019 H2 2019 H1 2020 SEK 1bn SEK 1bn 16 Volvo Car Group Results Presentation January- June 2019
2019 H2 - OUTLOOK Continued growth in sales Continued pressure on margins Additional cost reductions of 1 + 1 billion SEK Strengthened profit vs H2 2018 17 Volvo Car Group Results Presentation January- June 2019
Q&A 18 Volvo Car Group Results Presentation January- June 2019
Longer Term Ambitions Direct consumer relationships >5 million Subscription with recurring revenue 50% Pure electric cars 50% Autonomous cars 30% Naturally hedged global production Superior growth Premium OEM profitability 19 Volvo Car Group Results Presentation January- June 2019
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