VOLVO CAR GROUP RESULTS PRESENTATION THIRD QUARTER 2019 PER ANSGAR THERESE JANDÉR VP GROUP REPORTING HEAD OF INVESTOR RELATIONS 1
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OPERATIONAL AND FINANCIAL HIGHLIGHTS Q3 2019 Strong growth and market share gains Cost efficiency activities implemented begin to take effect Sales volume 166,878 cars, +7.7% • Staff reduction of 900 since actions Revenue SEK 64.8bn, +14.2% initiated Operating income SEK 3.5bn, +90% • Fixed cost close to flat yoy Free cash flow SEK 2bn vs SEK -6.6bn Q3 2018 • Intensifying product cost reduction by e.g. utilising synergies Volvo Car Group Results Presentation January- September 2019 3
GLOBAL SALES DEVELOPMENT Q3 2019 GLOBAL +7.7% 166,878 Units EUROPE US CHINA +5.7% +3.8% +20.3% 73,303 Units 27,312Units 41,771 Units OTHER -0.3% 24,492Units Comparable period: Apr – Jun 2018 Volvo Car Group Results Presentation January- September 2019 4 Europe is defined as EU28 + EFTA
Q3 2019 SALES DISTRIBUTION Retail sales by market Retail sales by carline 7.7% 7.7% 166,873 166,878 154,914 154,914 14.7% 15.8% 14.2% 15.9% 16.4% 20.7% 17.0% 25.3% 25.0% 22.4% 63.6% 60.5% 43.9% 44.7% Q3 2018 Q3 2019 Q3 2018 Q3 2019 S V XC Other US China Europe Volvo Car Group Results Presentation January- September 2019 5
FINANCIALS Volvo Car Group Results Presentation January- September 2019 6
KEY FINANCIAL DEVELOPMENTS Q3 AND 9M 2019 Retail sales (units) Net revenue (MSEK) Capex (MSEK) 7.4% 8.5% -5.9% 472,553 507,704 179,600 194,900 15,300 14,400 14.2% -29.2% 7.7% 166,878 56,800 64,800 154,914 4,800 3,400 Q318 Q319 9M18 9M19 Q318 Q319 9M18 9M19 Q318 Q319 9M18 9M19 EBIT (MSEK) Free cash flow (MSEK) Net income (MSEK) 2,000 -13.7% -6.9% 9,700 6,700 9,000 5,800 90.0% 108.8% -800 4.6% 5.4% 3,500 2,400 6.4% 1,850 1,150 -5,800 5.4% -6,600 3.2% Q318 Q319 9M18 9M19 Q318 Q319 9M18 9M19 Q318 Q319 9M18 9M19 Volvo Car Group Results Presentation January- September 2019 7
NET REVENUE AND EBIT WALK Q3 2019 (MSEK) 550 64,850 1,850 450 Revenue increase mainly driven by China, UK • and Germany 56,800 5,200 Positive volume mainly driven by XC40 • Positive mix effect from XC car lines • Net Revenue Volume, sales Sales of Foreign Other Net Revenue Q3 2018 mix and pricing licenses exchange rates Q3 2019 Continuous price pressure related to market • conditions 550 3,500 50 Positive effects of tariff mitigating actions • 500 -300 1,850 850 5.4% Cost efficiency activities start to come through • 3.2% Positive exchange rate effects • EBIT Q3 Volume, Sale of Government Foreign Other EBIT Q3 2018 sales mix licenses grants exchange 2019 and pricing rates Volvo Car Group Results Presentation January- September 2019 8
NET REVENUE AND EBIT WALK 9M 2019 (MSEK) 2,500 194,900 5,850 1,300 5,650 Revenue increase mainly driven by China, • 179,600 UK and Germany Positive volume and sales mix mainly driven • by XC40 Net Revenue Volume, sales Sales of Foreign Other Net Revenue Positive mix effect from XC car lines • 9M 2018 mix and pricing licences exchange rates 9M 2019 600 Continuous price pressure related to market • 9,700 9,000 conditions 400 0 0 -1,700 6.4% Increase in license sales YoY • 4.2% Lower government grants effects • EBIT 9M Volume, Sale of Government Foreign Other EBIT 9M 2018 sales mix licenses grants exchange 2019 and pricing rates Volvo Car Group Results Presentation January- September 2019 9
CASH FLOW MOVEMENTS Q3 2019 EBITDA increase with improved EBIT • (MSEK) and higher level of depreciations and 60,750 amortizations 58,150 Free cash flow MSEK 2,000 Working capital changes include: • 13,900 13,700 7,200 Higher receivables and inventory • 500 2,800 1,800 due to sales growth, change in -2,200 4,200 -3,500 logistics flow and seasonality Investments mainly relates to capacity • increase, new car models and technology 45,050 40,250 Financing net divestments of • marketable securities and repayment of maturing debt 2019 Q2 EBITDA Working Other** Investments Financing 2019 Q3 Liquidity capital* Liquidity Undrawn credit facilities Marketable securities Cash * Change in inventories, accounts receivable and accounts payable ** Interest, tax and changes in other items Volvo Car Group Results Presentation January- September 2019 10
CASH FLOW MOVEMENTS 9M 2019 (MSEK) EBITDA increase from higher level of • MSEK Free cash flow MSEK -800 depreciations and amortizations 20,500 60,750 Working capital changes include: • 55,050 2,700 13,900 Higher receivables and • -9,700 inventory due to sales growth 13,300 5,700 1,800 and change in logistics flow 1,600 Investments mainly related to car -14,300 • launches and production ramp up, upcoming car models and new technology 45,050 40,150 Financing net of new bonds, • repayment and dividend during Q1 2018 Q4 EBITDA Working Other** Investments Financing 2019 Q3 Liquidity capital* Liquidity Undrawn credit facilities Marketable securities Cash * Change in inventories, accounts receivable and accounts payable ** Interest, tax and changes in other items Volvo Car Group Results Presentation January- September 2019 11
CAPEX AND R&D R&D Expenses (SEKbn) Capex (SEKbn) 14 12.3 25.7 12 12 12.3% 10.9 10.2 10.2 20.9 9.5 10 8.7 10 19.9 19.3 10.0% 10.8% 8.7% 7.3 8 8 7.2 6.2 8.1 13.9 13.8 5.9% 5.7% 7.9% 5.3% 6 6 4.9% 4.7 5.2 8.3% 4.3% 3.6% 4 17.0 4 13.6 13.1 11.8 9.2 8.6 2 2 0 0 2014 2015 2016 2017 2018 LTM Q3 2014 2015 2016 2017 2018 LTM Q3 2019 2019 % of Revenue R&D expenses % of Revenue Tangible investments Intangible investments Volvo Car Group Results Presentation January- September 2019 12
LIQUIDITY & DEBT (MSEK) 60,750 Net cash position of SEK 14.5bn (Q2 2019 SEK 12.5bn) 13,900 28,350 1,800 14,450 32,400 4,100 45,050 Undrawn Credit Facilities 28,300 Marketable Securities Cash & Cash Equivalents Short-term Debt Long-term Debt Liquidity Debt Volvo Car Group Results Presentation January- September 2019 13
AMORTIZATION SCHEDULE (MSEK) Funding by type 60,750 Loans 32% 7,900 7,550 1,150 2,550 5,800 68% 450 Bonds 4,200 3,450 6,400 450 2,450 5,350 5,350 450 930 3,000 2,000 200 2019 2019 2020 2021 2022 2023 2024 2025 2026 September 30 Liquidity Loans Bonds Volvo Car Group Results Presentation January- September 2019 14
VOLVO CARS MOMENT – SUSTAINABILITY 2025 2040 Ambition Ambition Reduce the lifecycle climate footprint per car by 40% vs. 2018 Climate neutral Emissions reduction New Recharge ambitions for 2025: car line: 2020 sales: CO 2 reduction per -25% 20% Plug-in hybrid car in supply chain CO 2 reduction per car overall 2025 sales: -25% operations emissions 50% battery electric Incentives to encourage reduction in tailpipe -50% emissions per car electrified driving Volvo Car Group Results Presentation January- September 2019 15
2019 H2 - OUTLOOK Continued growth in sales and revenue Market conditions continue to put price pressure on margins Continued implementation of SEK 2bn cost efficiency activities Slightly lower level of capex Strengthened profit vs H2 2018 Volvo Car Group Results Presentation January- September 2019 16
Q&A Volvo Car Group Results Presentation January- September 2019 17
18 Volvo Car Group Results Presentation January- September 2019
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