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Fixe xed d In Incom ome e In Inves estor or Pr Pres esen - - PowerPoint PPT Presentation
Fixe xed d In Incom ome e In Inves estor or Pr Pres esen entat atio ion 2019 DISCLAIMER . By accepting this document, the person to whom it is provided (the Recipient) agrees to be bound by the following obligations and
.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
loss whatsoever arising from or in connection with the use of or reliance on this document and any such liability is expressly
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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Strengthened brand Completely new vehicle range Truly global presence Standalone governance Personal and direct relationship with consumers Sustainable products and business Safe mobility with leading AD technology Purpose driven organization 2018
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GAME CHANGING BUSINESS TRANSFORMATION COMPANY TRANSFORMATION
2.4 S60 SPA V60 / V60CC
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Petrol 3-4 cvl Diesel 4 cvl PHEV T8 twin engine DRIVE VE-E
Scalable Product Architecture (SPA)
Compact Modular Architecture (CMA)
2015 Portf tfoli lio age e (yea ears) XC90 SPA 2016 3.0 V90 / V90CC S90 S90L SPA 2017 2.5 XC60 XC40 CMA SPA 2018
Modular Architecture Modular Powertrain
2019-20 2021 New Launc unches es Non-complex x and Fully Invest sted d Base Modular ar Architecture Driving g Cost Efficiencies s and Rapid Produ duct Renewal als
an electric motor) while reducing number of cylinders
maintenance as well as increasing efficiencies in production
within the wider Geely Group XC90 BEV XC40 BEV
9 16 22 26 29 6.9% 9.8% 11.9% 12.5% 11.3% 0% 4% 8% 12% 16% 10 20 30 40 2014 2015 2016 2017 2018
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Strong Revenue Development…
XC40 XC90 XC60 European car of the year 2018
…With Solid Earnings Growth…
EBITDA margin, % EBITDA SEKbn %
…And Strong Cash Flow Generation… …Driven By Successful Product Launches
Note: 1) Operating cash flow: EBITDA + net cash interests + tax paid + movements in working capital
2016 2015 2014 2017 2018 9 23 27 25 28 Operating cash flow1 (SEKbn) 138 164 181 209 253 2014 2015 2016 2017 2018 SEKbn
466 503 534 572 642 2014 2015 2016 2017 2018
governance, under ownership of Zheijang Geely Holding Group since 2010
and the Americas
Diversified by model and increasing in SUVs
Overview FY18 Financial Highlights Number of Cars Sold
642k units
56% 29% 15%
SUV Sedan Estate
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Revenue increase
Operating & Investing CF
Revenue
Retail Sales 642.3K Units
Operating Income (EBIT)
Net Cash position
Sales by Model - 2018
Note: 1) Average 2018 employees
CAGR: 8%
Premium Products
Units ‘000 SEK, % PRICE NEW PREMIUM High Low Low High
Previous Price and Premium Positioning XC90 Classic XC60 Classic V70 New Price and New Premium Positioning XC40 XC90 V90 XC60
The Volvo Car Group and Affiliates
Care by Volvo
The Volvo
Stra rateg tegic ic Affilia iate tes Care by Volvo Strong brand within the premium segment Robotaxi Subscription services My car always Solutions & services for smarter mobility
My car sometimes
(Volvo Cars 50% ownership) (Volvo Cars 30% ownership) (Volvo Cars 50% ownership)
Spearheading electrification Capturing new mass market consumer group A market leading AD / ADAS software developer
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HUMAN- CENTRI RIC SYNER ERGIE IES EMBRAC RACIN ING DISRU RUPTI TION ON TRUL ULY GLOBAL PIONEER ERING ING PARTNE TNERS RSHIPS HIPS Non-consolidated entities
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09 May 2016 Moody's assigns first-time Ba3 rating with posit itiv ive outl tloo
major produ duct renewal progra ramme 30 Jun 2017 Moody’s comment: Volvo Car’s declared SEK 2.2bn dividend is credit negative but has no impact on Ba2 rating 06 May 2016 S&P assign gns BB ratin ing g with posit itiv ive outlo look
Positive outlook based on possibility of raising rating by one notch to BB+ if Volvo Cars continues s to be successfu ful in launching new car mode dels, while maintaining stronger profitability and low levels of adjusted debt 21 Dec 2016 Moody’s comment: SEK 5bn Preference Shares Issue ue Is Credit it Posit itiv ive 12 Oct 2016 Moody's upgr grade des ratin ing g to Ba2 with stabl ble outl tloo
Upgrade reflects strong operating performance based
several expected new product launches 17 Oct 2017 Moody’s affirms Ba2 rating with stable outlook. Stable outlook based on expectation that renewa wal progra ramme and subseque uent sales and earnings growth will lead to a f further r impro rovem emen ent in credit metrics 10 May 2017 S&P raises rating g to BB+ with stable le outl tloo
progress in strengthen ening compe petitive position and business profile by demonstrating successf sful mode del launches es and d impro rovi ving profi fitabi bility; Stable outlook reflects expectation that Volvo Cars will continue successful rollout
2 May 2018 Moody’s upgrades rating to Ba1 with stable le outlo look
continued improv
ts in operati ting g perfor
ce and credi dit t metric ics, with expectations that the trend will continue founded by further successfu ful new mode del launches s 20 November 2018 S&P affirms BB+ rating and revis ises outl tloo
itiv ive; the
itio ion to improv
dit t metrics ics over 2019-2021, including meaningful impr prov
t in free operati ting g cash flow to debt.
progress in strengthen ening compe petitive position and successful model launches establishing itself as a premium car manufacturer
Oct-16 Jan-16 Jul-16 Apr-17 Jul-17 Jan-18 Jul-18 Jan-19 Apr-16 Jan-17 Apr-18 Oct-17
19 March 2019 Volvo Car’s parent company Zhejiang Geely Holding Group rated Investm tment t Grade de BBB BBB- with stable outlook by S&P
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STRATEGIC AFFILIATES DRIVING SYNERGIES AND EARNINGS
WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY
TRANSFORMATION FULLY SELF FINANCED
TRACK RECORD OF INDUSTRY OUTPERFORMANCE
OPEN APPROACH TO TECHNOLOGY AND MARKET CHANGE
WITH UNIQUE CHINA POSITIONING
Purpose, Culture and Customer Promise
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Sustainability Visions WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY
Full transparency of our 3TG and cobalt supply chain by 2020 50% of sales to be fully electric by 2025 Climate neutral operations by 2025
Brand nd Valu lue in Line With Societal al Develo lopment nt
No one should be seriously injured or killed in a new Volvo car by 2020 25% of plastic in our cars made from recycled material by 2025
We Understand You We Protect What Is Important to You We Make People Feel Special
1.3% 5.6% 8.4% Non-premium Cars Premium Cars Volvo Cars
Strong Track Record of Outgrowing Market1
Note: 1) Based on the LMC Automotive Q1-2019 edition of its Global Automotive Sales Forecast 2) Premium Cars based on LMC Automotive’s Premium and Super-Premium segmentation. 3) Non-premium Cars based on LMC Automotive’s segmentation excluding the Premium and Super-Premium segments.
Unit Sales CAGR 2014-18A
2 3
Impact and growth from strategic affiliates All cars to be fully electric or plug-in hybrids Full range now being rolled out including strong SUVs Well-known brand with momentum Global market share opportunities In particular US & China New business segments
Key Growth Levers
TRACK RECORD OF INDUSTRY OUTPERFORMANCE
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Global Presence Why Volvo Car Group Is Uniquely Positioned in China
– Enabled VCG to move fast (3 plants in 4 years) – Unique JV setup
Well Diversified Manufacturing Footprint
– Charleston 75k – Gothenburg 300k – Ghent 225k
HIGHLY FLEXIBLE MANUFACTURING NETWORK WITH UNIQUE CHINA POSITION
– Chengdu 150k – Daqing 75k – Luqiao 45k 50% 20% 15% 15% 642k units Other China Europe US 75% 19% 4% 2%
Global Employee Base
43k FTEs Europe1 China US Other
Note: 1) Whereof Sweden represents 57% of total FTEs
Production R&D
Units Sold By Region
platform compatible: FY 2018 FY 2018
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Power ertrain train Arch chit itec ectur ture Product ctio ion R&D / Procur curem emen ent Distrib tributio ution / Servi vice ce Profit fitab abil ilit ity
STRATEGIC AFFILIATES DRIVING SYNERGIES AND EARNINGS
Joint Venture with Veoneer
utilization of commercial system
scale
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OPEN APPROACH TO TECHNOLOGY AND MARKET CHANGE
Electric Cars Well-positioned on EU CO2 target having flexibility to launch BEV at right time Sharing costs with broader Volvo-Geely ecosystem Phasing out diesel from all new models; no diesel residual value exposure Target all new models to be electrified; effectively transitioning to 100% electrification Connected Premium Cars All new cars produced are internet connectivity enabled Focus on consumer experience to drive price premium and consumer loyalty Transition to direct consumer relationships Long term ambition of >5m direct customer relationships Autonomous Cars Aim to be first to commercialise L4 AD on wide scale Safety branding recognition among consumers and legislators Provider of total solutions to Robotaxi operators Long term ambition of L4 AD cars representing 30% of car volume Direct Consumer Business/ Subscription Traditional and new consumer go to market model in place in parallel Offers range of mobility solutions including subscription (Care by Volvo), Mobility per mile (Volvo Car Mobility) and Robotaxi Long term ambition of 50% cars under subscirption1
Care by Volvo vo
Note: 1) Percentage of car volume produced and delivered through subscription services
(4.8) 7.2 6.5 (3.8) 4.7 2014 2015 2016 2017 2018
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Longer r Term Objective to Have a Capital al Structure re that Enables s an Invest stment Grade de Rating
Cash Flow From Operating and Investing Activities Net Cash (Net Debt) Position Development TRANSFORMATION FULLY SELF FINANCED SEK K 9.9bn bn
Free cash flow 2014-2018
SEK K 18bn
Net cash position 2018
(0.9) 7.7 18.9 12.5 18.1 (0.1x) 0.5x 0.9x 0.5x 0.6x 2014 2015 2016 2017 2018 Net Cash Net Cash/ EBITDA SEKbn SEKbn
155 203 254 273 359 173 168 170 198 185 68 64 69 101 98 71 68 42
2014 2015 2016 2017 2018
296 326 338 365 393
1 2 3 4 5
2016 2014 2015 2017 2018
Retail Revenue Average Revenue per Unit
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Units ‘000 +12% +8% 138 164 181 209 253
2014 2015 2017 2016 2018
+21% Volvo Cars consistently delivered on volume targets Established track-record of successful execution of product launches High exposure to fast growing SUV segment 2016 2014 2015 2017 2018
SUV Estate Sedan Other
SEK ‘000 SEKbn
9.5 16.0 21.5 26.2 28.6 2.1 6.6 11.0 14.1 14.2 1,5% 2014 4,0% 2017 2016 6,7% 6,1% 2015 5,6% 2018 % margin EBIT
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6,9% 2015 2016 2014 9,8% 11,9% 12,5% 2018 2017 11,3% % margin EBITDA Benefiting from increased pricing and stronger sales mix Expects considerable benefits from operational leverage in the future
EBIT EBITDA
SEKbn SEKbn
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7.2 9.5 10.2 10.1 12.1 5.2% 5.9% 5.7% 4.9% 4.8% R&D expenses % of Revenue 2014 2017 2016 2015 2018
R&D Expenses
Intangible investments Tangible investments 2016 2015 2014 2017 2018 8.6 9.2 13.1 17.0 13.6 5.2 4.7 6.4 9.7 8.5 10.1% 8.5% 10.8% 12.8% 8.7% Intangible and tangible investments % of Revenue
Note: 1) Net working capital = inventory + accounts receivable – accounts payable 2) Operating cash flow: EBITDA + net cash interests + tax paid + movements in working capital
2014 2017 2016 2015 2018
Net Working Capital1 Operating Cash Flow2
2016 2015 2014 2017 2018 6.8 2.8 (0.6) 3.0 5.2 9 23 27 25 28
Capex
SEKbn SEKbn SEKbn SEKbn
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SEKm
AS PER FY 2018 Liquidity and Debt Position Net Cash Position
SEK 18bn
Net cash position 2018
(0.9) 7.7 18.9 12.5 18.1 (0.1x) 0.5x 0.9x 0.5x 0.6x 2014 2015 2016 2017 2018 Net Cash Net Cash/ EBITDA SEKbn 40,200 21,500 2,200
Liquidity
13,300 23,700
Debt
1,600 55,100 18,100 31,400 Undrawn Credit Facilities Short-term Debt Long-term Debt Marketable Securities Cash & Cash Equivalents
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AS PER FY 2018
Prior to issuances during 2019
Loan and Bond Amortization Schedule of SEK 23.7bn Funding by Type
%
56% 44%
Bonds Bank loans 420 530 210
420 420 5,130
2025 2024 2019
2,360
2020 3,420 2021 5,550
3,000
2022 2023
5,130
2026 2,240 7,490 3,850
Bonds Loans
MSEK
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STRATEGIC AFFILIATES DRIVING SYNERGIES AND EARNINGS
WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY
TRANSFORMATION FULLY SELF FINANCED
TRACK RECORD OF INDUSTRY OUTPERFORMANCE
OPEN APPROACH TO TECHNOLOGY AND MARKET CHANGE
WITH UNIQUE CHINA POSITIONING
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Zhejiang Geely Holding Group Co., Ltd. Volvo Car Corporation Geely Sweden Holdings AB Volvo Car AB Volvo Cars consolidated subsidiaries Volvo Car Group Other Investors 100 % 100 % 1 % 99 % Guarantor of the Notes Non-consolidated entities with Volvo Cars ownership Volvo Cars (China) Investment
Issuer