2019 Results Presentation Carla De Geyseleer Volvo Car Group Results - - PowerPoint PPT Presentation

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2019 Results Presentation Carla De Geyseleer Volvo Car Group Results - - PowerPoint PPT Presentation

Volvo Cars 2019 Results Presentation Carla De Geyseleer Volvo Car Group Results Presentation January December 2019 DISCLAIMER By accepting this document, the person to whom it is provided (the Recipient) agrees to be bound by the


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Volvo Cars 2019 Results Presentation

Carla De Geyseleer

Volvo Car Group Results Presentation January – December 2019

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DISCLAIMER

Volvo Car Group Results Presentation January – December 2019

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 future 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.

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SLIDE 3

Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

3.

Sustainable actions

3

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SLIDE 4

Volvo Car Group Results Presentation January – December 2019

A YEAR OF STRONG PERFORMANCE AND TRANSFORMATION

Strong growth and market share gains

  • 700,000 cars sold, 6th

consecutive all time high

  • Market share gains in US,

EU and China

  • Production start of XC40

and S60 in China Financial targets achieved

  • Continued growth in sales

and revenue

  • Improvements from cost

efficiency measures

  • Improved profit and EBIT

margins in 2nd half

  • Strong cash flow

Milestone in electrification and connectivity

  • Two BEV´s launched
  • Battery capacity secured
  • World´s first integrated

Android infotainment system

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SLIDE 5

Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

5

3.

Sustainable actions

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SLIDE 6

Volvo Car Group Results Presentation January – December 2019

STRONG REVENUE GROWTH AND IMPROVED FINANCIAL PERFORMANCE

Revenue

(MSEK)

Retail sales

(k units)

EBIT / margin

(MSEK/%)

642 705 2018 2019

9.8%

2018 2019 252,700 274,100

8.5%

14,200 2019 2018 14,300

+0.8%

Cash flow

from operating and investing activities (MSEK)

2018 2019 11,573 4,705

146.0%

5.6% 5.2%

2019 HIGHLIGHTS

6

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SLIDE 7

Volvo Car Group Results Presentation January – December 2019

14% 63% 23% 7% 62% 31% 74 70 70 77 95 101 56 70 83 82 98 108 82 82 91 114 131 155 254 282 291 299 318 341 2019 2014 2015 504 2017 2016 572 2018 642 466 535 705 CAGR +8.6% +9.8% PHEV +23% Diesel -5% Petrol +18% XC +24% V -13% S +2% Europe China Other US

22 24 53 56 64 Sweden BeLux* Italy UK Germany

% change YoY % change YoY

GROWTH AMBITIONS DELIVERED

2019 SALES GROWTH BY MARKET, CARLINE AND POWERTRAIN

Model range distribution Powertrain distribution

* BeLux: Belgium & Luxembourg

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SLIDE 8

(MSEK)

2019 2018 Change (%)

Revenue 274,100 252,700 8.5 Cost of goods sold

  • 222,000
  • 203,300

9.2 Gross income 52,070 49,331 5.6 Gross margin 19.0% 19.5% Operating income (EBIT) 14,303 14,185 0.8 EBIT margin 5.2% 5.6% Net income 9,600 9,800

  • 2.0

Volvo Car Group Results Presentation January – December 2019

FINANCIAL PERFORMANCE IN LINE WITH GUIDANCE

2019 FINANCIAL HIGHLIGHTS

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SLIDE 9

Volvo Car Group Results Presentation January – December 2019

Other Revenue 2018 10,670 Volume, sales mix and pricing 252,653

  • 894

Sales of licenses 8,533 Foreign exchange rates 3,155 Revenue 2019 274,117 MSEK 21,464 +8.5% 15% 48% 22% 16%

SOLIDLY OUTGROWING THE OVERALL MARKET ACROSS ALL REGIONS

2019 REVENUE GROWTH COMPOSITION (MSEK)

US Europe China Other

GLOBALLY BALANCED REVENUE DISTRIBUTION

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Key objectives

  • Increase profitability by focusing on margins,

variable and fixed costs

  • Ongoing review of resource allocation

2019 activities Cost efficiency measures are targeting to lower fixed cost run rate in H1 2020 by SEK 2bn through

  • Reduction white collar employees and consultants
  • Reduction bought services

Volvo Car Group Results Presentation January – December 2019

Achieved by December 31 2019 1.8 Other Employees

ONGOING COST EFFICIENCY MEASURES

TARGETING A LOWER FIXED COST BASE RUN RATE COST REDUCTION (BNSEK)

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SLIDE 11

Volvo Car Group Results Presentation January – December 2019

21,212 24,869 25,202 20,364 46,414 45,233

  • 1,181

4% US Europe 75% 19% China 2% Other

IMPROVED HEAD COUNT EFFICIENCY

2019 FTE* END OF PERIOD FULL TIME EMPLOYEES DISTRIBUTION BY REGION

Rest of Europe Sweden 26,800 5,109 1,973 33,882 Belgium

Blue collar White collar

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*FTE includes both employees and agency personnel

45,233

December 2018 December 2019 Average FTE* for the year 45,871 +0.2% 45,965 Produced cars 669k +5.5% 707k

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Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

12

3.

Sustainable actions

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SLIDE 13

Volvo Car Group Results Presentation January – December 2019

865 14,303 1,308 EBIT 2018

  • 125

Volume, sales mix and pricing

  • 425

Sale of licenses Foreign exchange rates Other EBIT 2019 Government grants

  • 1,505

14,185

MSEK 118 0.8%

5.6% 5.2%

ROBUST EBIT DRIVEN BY VOLUME AND PRODUCT MIX

2019 EBIT GROWTH (MSEK)

5.2%

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SLIDE 14

Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

14

3.

Sustainable actions

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SLIDE 15

Volvo Car Group Results Presentation January – December 2019

ASSETS

(MSEK)

DECEMBER 2019 DECEMBER 2018

Intangible assets 32,790 29,630 PPE 69,740 61,210 Operating leases 3,240 2,520 Investments 7,410 7,000 Deferred taxes and other non-current assets 10,870 9,810

Total non-current assets

124,050 110,170 Inventories 38,910 35,160 Accounts receivable 13,240 13,700 Current tax assets and other current assets 9,830 10,450 Marketable securities and Cash and cash equivalents 55,530 41,750

Total current assets

117,510 101,060

TOTAL ASSETS

241,560 211,230

EQUITY AND LIABILITIES

(MSEK)

DECEMBER 2019 DECEMBER 2018 Total equity

63,650 61,250 Provisions for post-employment benefits 12,580 8,430 Bonds and Liabilities to credit institutions 26,130 21,470 Other interest bearing liabilities 5,080

  • Other non-current liabilities and provisions

18,390 16,670

Total non-current liabilities

62,180 46,570 Accounts payable 44,880 43,630 Liabilities to credit institutions 4,110 2,180 Other interest bearing liabilities 1,070

  • Other current liabilities and provisions

65,670 57,600

Total current liabilities

115,730 103,410

TOTAL EQUITY & LIABILITIES

241,560 211,230

STRONG CONSOLIDATED BALANCE SHEET

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Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

16

3.

Sustainable actions

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SLIDE 17

Volvo Car Group Results Presentation January – December 2019

IMPROVED EBITDA AND WORKING CAPITAL DRIVE STRONG CASH FLOW GENERATION IN 2019

2019 CONDENSED CASH FLOW

* Change in inventories, accounts receivable and accounts payable

17

(MSEK)

2019 2018

EBITDA 29,851 27,398 Cash flow from other operating activities

  • 4,978
  • 4,745

Adjustments

  • 2,415

68 Net working capital *

  • 403
  • 1,961

Other working capital 10,319 6,005 Cash flow from operating activities 32,374 26,765 Investments in tangible assets

  • 11,807
  • 13,574

Investments in intangible assets

  • 9,176
  • 7,283

Cash flow from other investing activities 182

  • 1,203

Total operating and investing cash flow 11,573 4,705 Net cash flow from interest bearing liabilities and bonds 4,673

  • 4,267

Investments in marketable securities

  • 1,985

2,558 Dividends

  • 2,897
  • 67

Other

  • 622

1,033 Cash flow from financing activities

  • 831
  • 743

Total cash flow for the period 10,742 3,962

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SLIDE 18
  • 403
  • 4
  • 2

2 4 6 8 10 12 14

  • 5,000
  • 4,000
  • 3,000
  • 2,000
  • 1,000

1,000 2,000 3,000 4,000 2018

2.1% 2.3%

2015 3,608 2016

  • 0.8%

2017

  • 2.1%
  • 0.2%

2019

  • 4,385

3,740

  • 1,961

254 69,108 13,330 1,580 13,593 40,170 51,997 2019 December Liquidity 2018 December Liquidity Financing Other** Investments EBITDA 55,080

  • 403

3,518 Net working capital*

  • 20,801

29,851 2,926 Undrawn credit facilities Marketable securities Cash

Volvo Car Group Results Presentation January – December 2019

* Change in inventories, accounts receivable and accounts payable ** Interest, tax and changes in other items

% of Revenue Net working capital

FREE CASH FLOW AMOUNTING TO 11.6 BN SEK

2019 LIQUIDITY (MSEK) CHANGE IN NET WORKING CAPITAL (MSEK)

MSEK 11,573

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SLIDE 19

10.0% 8.3%

2017 2014 2015

8.7%

2016

10.8% 12.3%

11.8 17.0 2018

7.7%

2019 13.8 4.7 13.9 19.3 25.7 20.9 21.0 13.1 8.6 5.2 9.2 6.2 8.7 13.6 7.3 9.2 Intangible investments % of Revenue Tangible investments

Volvo Car Group Results Presentation January – December 2019

2 4 6 8 10 12 14 1 2 3 4 5 6 7 8 9 10 11 12

3.6%

2014 2019

5.3%

2017

5.9%

2015

5.7%

2016

4.3%

2018

4.2%

7.2 9.5 10.2 10.2 10.9 11.4 % of Revenue R&D expenses

BUILDING THE FUTURE THROUGH FOCUSED AND CONTROLLED INVESTMENTS

2019 ANNUAL CAPITAL EXPENDITURE (BN SEK) 2019 RESEARCH AND DEVELOPMENT EXPENSES (BN SEK)

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4,100

5,200 3,000 2,000 6,200 5,200

200 3,500

2,400

2023 52,000 13,600 6,650 3,450 Liquidity December 31 2019

450

2020 2021

450

2022 5,850 2,450

450

2024

650

2025 2026 69,100 7,600

Volvo Car Group Results Presentation January – December 2019

Undrawn credit facilities Bonds Cash & cash equivalents Marketable securities Loans 30,300

STRONG NET CASH POSITION OF SEK 25.2BN SUFFICIENTLY COVERING UPCOMING MATURITIES

2019 MATURITY PROFILE AND SPLIT (MSEK)

28% 72% Loans Bonds Net cash 25,200

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Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

21

3.

Sustainable actions

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SLIDE 22

(MSEK)

Q4 2019 Q4 2018 Change (%) Revenue 79,200 73,000 8.4 Cost of sales

  • 64,100
  • 59,000

8.5 Gross income 15,100 14,000 8.1 Gross margin 19.1 19.2 Operating income (EBIT) 5,300 4,500 17.5 EBIT margin 6.7 6.2 Net income 3,800 3,100 24.0

Volvo Car Group Results Presentation January – December 2019

STRONG REVENUE GROWTH AND EBIT RECOVERY RESULTING FROM BETTER MIX AND IMPROVED EFFICIENCIES IN QUARTER 4 2019

QUARTER 4 2019 FINANCIAL HIGHLIGHTS

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Volvo Car Group Results Presentation January – December 2019

3,545 2,690 2,125 Volume, sales mix and pricing Revenue Q4 2019 Revenue Q4 2018

  • 2,190

Sales of licenses Foreign exchange rates Other 73,025 79,195 MSEK 6,170 8.4% 15% 15% 49% 21% Europe US Other China

STRONG REVENUE GROWTH DRIVEN BY VOLUME AND MIX IN QUARTER 4 2019

QUARTER 4 REVENUE GROWTH COMPOSITION (MSEK)

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GLOBALLY BALANCED REVENUE DISTRIBUTION

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Volvo Car Group Results Presentation January – December 2019

510 150 Other Government grants 1,267 EBIT Q4 2019

  • 145

Sale of licenses

  • 995

Volume, sales mix and pricing Foreign exchange rates 4,505 5,292 EBIT Q4 2018

MSEK 787 17.5%

6.2% 6.7%

EBIT RECOVERY DRIVEN BY VOLUME & PRODUCT MIX ALONG WITH COST & OPERATIONAL EFFICIENCIES

QUARTER 4 2019 EBIT GROWTH (MSEK)

6.7%

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Volvo Car Group Results Presentation January – December 2019

IMPROVED EBITDA AND WORKING CAPITAL DRIVE STRONG CASH FLOW GENERATION IN QUARTER 4 2019

QUARTER 4 2019 CONDENSED CASH FLOW

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* Change in inventories, accounts receivable and accounts payable

(MSEK)

Q4 2019 Q4 2018

EBITDA 9,338 7,860 Cash flow from other operating activities

  • 1,149
  • 1,123

Adjustments

  • 1,514

2,386 Net working capital * 9,275 4,189 Other working capital 2,125 2,764 Cash flow from operating activities 18,075 16,076 Investments in tangible assets

  • 3,410
  • 3,440

Investments in intangible assets

  • 2,473
  • 2,118

Cash flow from other investing activities 164

  • 32

Total operating and investing cash flow 12,356 10,486 Net cash flow from interest bearing liabilities and bonds

  • 1,810
  • 708

Investments in marketable securities

  • 1,797
  • 1,077

Dividends

  • Other
  • 890
  • 144

Cash flow from financing activities

  • 4,497
  • 1,929

Total cash flow for the period 7,859 8,557

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SLIDE 26

3,518 2019 Q4 Liquidity 13,905

  • 5,419

51,997 Financing Other**

  • 538

9,275 45,060 2019 Q3 Liquidity 63,165 69,108 EBITDA Working capital*

  • 5,719

Investments 4,200 9,338 13,593 Undrawn credit facilities Marketable securities Cash

Volvo Car Group Results Presentation January – December 2019

* Change in inventories, accounts receivable and accounts payable ** Interest, tax and changes in other items

FREE CASH FLOW REACHING HISTORICAL LEVEL IN QUARTER 4

QUARTER 4 2019 LIQUIDITY (MSEK)

MSEK 12,356

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SLIDE 27

Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

Full year 2019 global sales & financial performance EBIT Balance sheet Cash flow Quarter 4 2019 Financial summary

27

3.

Sustainable actions

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SLIDE 28

Volvo Car Group Results Presentation January – December 2019

FINANCIAL SUMMARY

Revenue growth

  • f 8.5% reaching SEK 274bn,

driven by volume growth and mix

Record EBIT

  • f 14.3bn, driven by volume and

product mix, combined with cost and operational efficiencies

Cost optimisation measures

successfully implemented achieving 1.8bn lower cost run rate

Increased profit and margin improvement

in the 2nd half of the year,

  • utperforming last year

Historically strong cash flow

  • f SEK 11.6bn resulting in a net

cash position of 25.2bn

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SLIDE 29

Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

29

3.

Sustainable actions

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YYYY.MM.DD Presentation title, Full name, Security Class: Proprietary 30 30

Supply chain Operations Car 40 % reduction of carbon footprint Every model has plug-in version – 20% of sales Recharge– chargeable electric cars XC40-first all electric car We plan to meet new EU CO2 emission target

SUSTAINABLE ACTIONS

2020 2025

  • 25%
  • 25%
  • 50%
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Volvo Car Group Results Presentation January – December 2019

2.

Financial review

4.

Outlook

1.

2019 Highlights

31

3.

Sustainable actions

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SLIDE 32

Volvo Car Group Results Presentation January – December 2019

OUTLOOK 2020

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Sales and revenue growth Increased profit Similar level

  • f investments

Continued strong cash flow

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Volvo Car Group Results Presentation January – December 2019

A YEAR OF STRONG PERFORMANCE AND TRANSFORMATION

Strong growth and market share gains Financial targets achieved Milestone in electrification and connectivity

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Volvo Car Group Results Presentation January – December 2019

APPENDIX

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Volvo Car Group Results Presentation January – December 2019

SEK DEPRECIATION DURING 2019 VS 2018

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GBP 6,3% EUR USD CNY 2,0% PLN JPY NOK CHF KRW RUB 9,5% 2,7% 3,9% 4,1% 8,1% 0,4% 2,1% 5,3% Change %

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FINANCIAL DEVELOPMENT

Volvo Car Group Results Presentation January – December 2019

68 101 98 99 64 69 198 185 161 168 170 273 359 445 203 254 2019 642 42 2015 2016 705 2017 2018 503 535 572 +8.8% +9.8% Other SUV Estate Sedan

RETAIL SALES

164 181 209 253 274 2018 2017 2015 2016 2019 +13.7% +8.3%

REVENUE

2 4 6 8 10 12 14 5 10 15 20 25 30 2019 27.4 2015 26.2 2016 2017 16.0 2018 21.5 29.8 EBITDA EBITDA margin, %

EBITDA

23 27 25 27 32 2016 2015 2017 2018 2019

OPERATING CASH FLOW

37