Volvo Cars 2020 First Half Year Update Carla De Geyseleer, Per Ansgar, Therese Jandér 2020-07-21
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1 2 3 First Half Year 2020 Financial Review Outlook 2020-07-21 Volvo Cars 2020 First Half Year Update 3
Market share gains despite Financial performance Accelerated transformation Covid-19 impact Proactive and pragmatic • Revenue and EBIT reduction Share of PHEV sales doubled • • actions from volume decline XC40 Recharge production • China returning to growth in • Continued strong mix starts in H2 • April and US in June • Cost efficiencies intensified Polestar 2 reaching markets • Sales in Europe show clear • • Liquidity remained strong Online sales initiatives • signs of recovery Waymo collaboration • Market share gains in all • regions 2020-07-21 Volvo Cars 2020 First Half Year Update 4
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 5
COVID-19 IMPACTED FINANCIAL PERFORMANCE 2020 H1 KEY FIGURES Retail sales Revenue EBIT / margin Cash flow (K UNITS) (MSEK) (MSEK/%) from operating and investing activities (MSEK) -20.8% -14.1% -117.9% -364.0% 341 130,095 5,519 111,759 270 -2,759 4.2% -0.9% -989 -12,803 2019 2020 2019 2020 2019 2020 2019 2020 H1 H1 H1 H1 H1 H1 H1 H1 2020-07-21 Volvo Cars 2020 First Half Year Update 6
GROWTH TRAJECTORY AFFECTED ELECTRIFICATION ACCELERATED 2020 H1 SALES BY MARKET, CARLINE AND POWERTRAIN Model range distribution H1 14% CAGR XC +4.7% -9.9% V 17% S 705 69% 642 635 57 Sweden 572 535 504 341 PHEV sales (k units) 47 UK 290 318 +79.8% 299 Germany 291 44 282 BeLux* 19 38 155 Italy 153 18 131 Europe 114 91 82 108 China 98 101 21 82 83 70 US 101 95 91 77 70 70 Other 2015 2016 2017 2018 2019 LTM Europe China US Other H1 2019 H1 2020 * BeLux: Belgium & Luxembourg 2020-07-21 Volvo Cars 2020 First Half Year Update 7
FINANCIAL PERFORMANCE 2020 H1 FINANCIAL HIGHLIGHTS 2020 H1 2019 H1 Change (%) (MSEK) Revenue 111,759 130,095 -14 Cost of sales -94,480 -105,450 -10 Gross income 17,279 24,645 -31 Gross margin 15.5% 18.9% Operating income (EBIT) -989 5,519 -118 EBIT margin -0.9% 4.2% Net income -1,171 3,398 -134 2020-07-21 Volvo Cars 2020 First Half Year Update 8
REVENUE DECLINE LESS THAN VOLUME 2020 H1 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS MSEK -18,336 -14.1% 130,095 14% 1,070 111,759 -16,860 49% -2,546 22% 15% Revenue Volume, sales Foreign Used cars, Revenue 2019 H1 mix and pricing exchange rates P&A* and 2020 H1 Europe US China Other others * P&A: parts & accessories 2020-07-21 Volvo Cars 2020 First Half Year Update 9
MITIGATING MEASURES AND DISCIPLINED COST EFFICIENCIES 3.2 COVID-19 MITIGATION MEASURES Governmental support for “technical unemployment” in Q2 ➢ Plants balanced their manning costs to meet 20% reduced ➢ production in Q2 Strengthened liquidity with SEK 14.7bn credit facilities ➢ (of which SEK 13.2 bn incremental) COST EFFICIENCY MEASURES AND STRUCTURAL TRANSFORMATION Existing initiatives in fixed and variable cost reduction intensified ➢ Notice of 1,300 employees in Sweden ➢ Cost reduction H1 2020 vs H1 2019 (BNSEK) Structural Efficiencies 2020-07-21 Volvo Cars 2020 First Half Year Update 10
IMPROVED HEAD COUNT EFFICIENCY DISTRIBUTION BY REGION 2020 H1 FTE* END OF PERIOD -1,917 46,414 Other 45,959 -455 3% China -726 45,233 21% -736 44,497 44,497 4% US 72% Europe Dec-18 Jun-19 Dec-19 Jun-20 *FTE: number of full time equivalents, includes both employees and agency personnel No impact of technical unemployment included 2020-07-21 Volvo Cars 2020 First Half Year Update 11
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 12
EBIT MAINLY AFFECTED BY VOLUME DECREASE 2020 H1 EBIT (MSEK) MSEK -6,508 -117.9% 5,519 1,074 1,437 -6,020 -989 -1,320 -1,679 EBIT 2019 H1 Volume, sales Foreign Governmental Non-recurring** Efficiencies and other EBIT 2020 H1 mix and pricing* exchange rates support *New car sales ** Including recall and restructuring 2020-07-21 Volvo Cars 2020 First Half Year Update 13
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 14
BALANCE SHEET REMAINS STRONG JUNE DECEMBER EQUITY AND LIABILITIES ASSETS JUNE DECEMBER 2020 2019 (MSEK) 2020 2019 (MSEK) Intangible assets 33,960 32,790 Total equity 62,880 63,650 PPE 67,700 69,740 Provisions for post-employment benefits 13,820 12,580 Operating leases 3,720 3,240 Investments in JVs and associates 6,500 7,410 Bonds and Liabilities to credit institutions 23,920 26,130 Deferred taxes and other non-current assets 12,780 10,870 Other interest bearing liabilities 4,960 5,080 Total non-current assets 124,660 124,050 Other non-current liabilities and provisions 18,830 18,390 Total non-current liabilities 61,530 62,180 Inventories 42,130 38,910 Accounts payable 37,970 44,880 Accounts receivable 14,300 13,240 Bonds and liabilities to credit institutions 8,040 4,110 Current tax assets and other current assets 10,700 9,830 Other interest bearing liabilities 1,160 1,070 Marketable securities, Cash and cash equivalents 43,810 55,530 Other current liabilities and provisions 64,020 65,670 Total current assets 110,940 117,510 Total current liabilities 111,190 115,730 TOTAL EQUITY & LIABILITIES 235,600 241,560 TOTAL ASSETS 235,600 241,560 2020-07-21 Volvo Cars 2020 First Half Year Update 15
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 16
COVID-19 AMPLIFIED CASH FLOW SEASONALITY 2020 H1 2019 H1 (MSEK) EBITDA 6,819 13,300 Cash flow from other operating activities -2,420 -3,133 Adjustments 3,243 -1,608 Net working capital * -11,252 -7,455 Other working capital 137 6,259 Cash flow from operating activities -3,473 7,363 Investments in tangible assets -5,108 -5,998 Investments in intangible assets -4,218 -4,239 Cash flow from other investing activities -4 115 Total operating and investing cash flow -12,803 -2,759 Net cash flow from interest bearing liabilities and bonds 971 6,909 Investments in marketable securities 3,065 -2,705 Dividends - -2894 Other 151 255 Cash flow from financing activities 4,187 1,565 Total cash flow for the period -8,616 -1,194 * Change in inventories, accounts receivable and accounts payable 2020-07-21 Volvo Cars 2020 First Half Year Update 17
BUILDING THE FUTURE THROUGH FOCUSED AND CONTROLLED INVESTMENTS ANNUAL RESEARCH AND DEVELOPMENT ANNUAL CAPITAL EXPENDITURE (BNSEK) EXPENSES (BNSEK) 12 11.5 14 11.4 10.9 25.7 10.2 10.2 12 9.5 10 12.3% 21.0 20.9 20.1 10 8.7 19.3 8 10.8% 7.3 8 13.9 9.2 6.2 9.2 6 8.7% 8.3% 5.9% 5.7% 6 7.9% 7.7% 4.7 4.5% 4.3% 4.2% 4 3.6% 4 17.0 13.6 13.1 11.8 10.9 2 9.2 2 0 0 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 June June LTM LTM % of Revenue Intangible investments Tangible investments % of Revenue R&D expenses 2020-07-21 Volvo Cars 2020 First Half Year Update 18
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