VOLVO CAR GROUP RESULTS PRESENTATION SECOND QUARTER 2019 HANS - - PowerPoint PPT Presentation

VOLVO CAR GROUP RESULTS PRESENTATION SECOND QUARTER 2019

HANS OSCARSSON CHIEF FINACIAL OFFICER PER ANSGAR VP GROUP REPORTING THERESE JANDÉR HEAD OF INVESTOR RELATIONS

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DISCLAIMER

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

OPERATIONAL 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

FINANCIAL HIGHLIGHTS Q2 2019

CHINA +15.7%

37,855 Units

EUROPE +3.5%

88,029 Units

US +1.9%

28,062 Units

GLOBAL +5.4%

179,506 Units

GLOBAL SALES DEVELOPMENT Q2 2019

OTHER +2.5%

25,560Units

Retail sales by carline

Q2 2018 Q2 2019 170,232 179,506 +5% +5% S V XC

Retail sales by market

Q2 2018

170,232

Q2 2019 179,506 +5% +5% US Other China Europe

Q2 2019 SALES DISTRIBUTION

FINANCIALS

Net revenue (MSEK) Retail sales (units) EBIT (MSEK)

Q219 Q218 H118 H119 340,800 170,200 179,500 317,600

+5% +7%

Q219 Q218 H119 H118 66,000 67,200 122,900 130,100

+2% +6%

4,200 Q218 Q219 H119 H118 7,800 2,600 5,500

• 38%
• 29%

Net income (MSEK)

Q218 Q219 H118 H119 3,000 1,400 5,600 3,400

• 53%
• 39%

Capex (MSEK) Free cash flow (MSEK)

850 Q218 Q219

• 2,800

1,600 H118 H119 3,600 5,500 Q218 H119 5,700 Q219 H118 11,200 11,100

• 4%
• 1%

KEY FINANCIAL DEVELOPMENTS Q2 AND H1 2019

Net revenue (MSEK)

• 2,600

NET REVENUE AND EBIT WALK Q2 2019

• 500
• 1,100

• 600

EBIT (MSEK)

• Revenue increase mainly driven

by China, UK and Germany

• Positive volume mainly driven

by XC40

• Increasing pricing pressure
• Lower government grants
• Net exchange rate effects

Net revenue (MSEK)

NET REVENUE AND EBIT WALK H1 2019

• 500

• 500

• 1,400

• 400

EBIT (MSEK)

• Revenue increase mainly driven

by China, UK and Germany

• Positive volume and sales mix

mainly driven by XC40

• Increasing pricing pressure
• Increase in license sales YoY
• Lower government grants
• Net exchange rate effects

35,100 13,500 2019 Q1 Liquidity 2,700 6,500 EBITDA 3,600 Other**

• 2,900

Working capital* 3,500

• 5,500

Investments Financing*** 13,700 4,200 40,300 2019 Q2 Liquidity 51,300 58,200 Cash Undrawn credit facilities Marketable securities

MSEK Free cash flow MSEK 1,600

CASH FLOW MOVEMENTS Q2 2019

• Seasonal working capital

changes, including:

• Higher inventory due to

sales growth and expanding business

• Higher receivables on the

back of sold licenses

• Investments mainly relates to

capacity increase, new car models and technology

• Financing net of new bonds

and repayment of maturing debt

EBITDA 13,300 13,300 1,600 40,200 Financing*** 2018 Q4 Liquidity

• 7,500

Working capital* Other** Investments 2,900 13,700 4,200 40,300 2019 Q2 Liquidity 55,100 58,200 2,500

• 11,100

Undrawn credit facilities Marketable securities Cash

MSEK Free cash flow MSEK -2,800

CASH FLOW MOVEMENTS H1 2019

• Seasonal working capital

changes, including:

• Higher inventory due to

sales growth, expanding business and change in logistics flow

• Higher receivables on the

back of sold licenses

• Investments mainly related to

capacity increase, new car models and technology

• Financing net of new bonds,

repayment and dividend during Q1

R&D Expenses (SEKbn)

2018 5.2% 2014 5.9% 2017 2015 2016 5.7% 4.9% LTM H1 2019 4.8% 5.2% 10.2 7.2 9.5 10.2 12.1 13.5 % of Revenue R&D expenses

Capex (SEKbn)

10.1%

8.5%

10.8%

2016 8.5% 12.8%

2017 22.1 LTM H1 2019 2015 8.7%

26.7

2014 2018

13.9 13.8 19.5 22.1 % of Revenue Intangible investments Tangible investments

CAPEX AND R&D

29,400 2,600 Liquidity 4,200 40,300 13,700 Debt 58,200 32,000 12,500 26,200

Undrawn Credit Facilities Long-term Debt Marketable Securities Short-term Debt Cash & Cash Equivalents

MSEK Net cash position of SEK 12.5bn (Q1 2019 SEK 11.9bn)

LIQUIDITY & DEBT

5,700 2020 2021

3,000 2022 400 2,000 2023 1,100 6,400 2,400 2025

5,300 2026 58,200 1,200 4,000 7,800 3,400

2019 June 30 5,300 2,500 2019 2024

MSEK

68% 32%

Bonds Loans

Funding by type

AMORTIZATION SCHEDULE

Liquidity Bonds Loans

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

2019 H2 - OUTLOOK

Continued growth in sales Continued pressure on margins Additional cost reductions of 1 + 1 billion SEK Strengthened profit vs H2 2018

Q&A

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

Capturing new mass market consumer group (30%) A market leading AD/ADAS software developer (50%) Spearheading electrification Solutions and services for smarted mobility My car sometimes Strong brand with the premium segment Robotaxi

(50%) Subscription services My car always

Care by VOLVO

A NEW STRUCTURE FOR THE FUTURE

Strategic affiliates The Volvo Car Group