Volvo Cars 2020 First Half Year Update Carla De Geyseleer, Per - - PowerPoint PPT Presentation

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Volvo Cars 2020 First Half Year Update Carla De Geyseleer, Per - - PowerPoint PPT Presentation

Volvo Cars 2020 First Half Year Update Carla De Geyseleer, Per Ansgar, Therese Jandr 2020-07-21 Disclaimer By accepting this document, the person to whom it is from or in connection with the use of or reliance on this provided (the


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Carla De Geyseleer, Per Ansgar, Therese Jandér 2020-07-21

Volvo Cars 2020 First Half Year Update

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Disclaimer

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

  • ther 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

  • pinions 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 perfor- mance is not necessarily indicative of future results and nothing contained herein shall constitute any represen- tation or warranty as to future performance of Volvo Cars

  • r any security, credit, currency, rate or other market or

economic measure. Nor does this document constitute a recommendation with respect to any securities.

2020-07-21 Volvo Cars 2020 First Half Year Update 2

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2020-07-21 Volvo Cars 2020 First Half Year Update 3

1

First Half Year 2020

3

Outlook

2

Financial Review

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SLIDE 4

Market share gains despite Covid-19 impact

  • Proactive and pragmatic

actions

  • China returning to growth in

April and US in June

  • Sales in Europe show clear

signs of recovery

  • Market share gains in all

regions Accelerated transformation

  • Share of PHEV sales doubled
  • XC40 Recharge production

starts in H2

  • Polestar 2 reaching markets
  • Online sales initiatives
  • Waymo collaboration

Financial performance

  • Revenue and EBIT reduction

from volume decline

  • Continued strong mix
  • Cost efficiencies intensified
  • Liquidity remained strong

2020-07-21 Volvo Cars 2020 First Half Year Update 4

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2020-07-21 Volvo Cars 2020 First Half Year Update 5

1

First Half Year 2020

Half Year 2020 Financial Performance

EBIT Balance Sheet Cash flow Financial Summary

3

Outlook

2

Financial Review

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SLIDE 6

2020 H1 KEY FIGURES

COVID-19 IMPACTED FINANCIAL PERFORMANCE

Revenue

(MSEK)

Retail sales

(K UNITS)

EBIT / margin

(MSEK/%) 341 270 2019 H1 2020 H1

  • 20.8%

130,095 111,759 2020 H1 2019 H1

  • 14.1%

5,519

  • 989

2019 H1 2020 H1

  • 117.9%

Cash flow

from operating and investing activities (MSEK)

  • 2,759
  • 12,803

2019 H1 2020 H1

  • 364.0%

4.2%

  • 0.9%

2020-07-21 Volvo Cars 2020 First Half Year Update 6

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SLIDE 7

GROWTH TRAJECTORY AFFECTED ELECTRIFICATION ACCELERATED

2020 H1 SALES BY MARKET, CARLINE AND POWERTRAIN

70 70 77 95 101 91 70 83 82 98 108 101 82 91 114 131 155 153 282 291 299 318 341 290 2019 LTM 2018 2015 2016 2017 504 535 572 642 705 635 CAGR +4.7%

  • 9.9%

XC V S US Europe China Other

18 19 44 47 57 Sweden Italy UK Germany BeLux*

Model range distribution H1 PHEV sales (k units)

* BeLux: Belgium & Luxembourg

H1 2019 H1 2020 21 38 +79.8% Other US Europe China 69% 14% 17%

2020-07-21 Volvo Cars 2020 First Half Year Update 7

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FINANCIAL PERFORMANCE

2020-07-21 8 Volvo Cars 2020 First Half Year Update

2020 H1 FINANCIAL HIGHLIGHTS

(MSEK)

2020 H1 2019 H1 Change (%) 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
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REVENUE DECLINE LESS THAN VOLUME

2020 H1 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS

1,070 111,759 Revenue 2019 H1 Used cars, P&A* and

  • thers
  • 16,860

Volume, sales mix and pricing Foreign exchange rates

  • 2,546

Revenue 2020 H1 130,095 MSEK -18,336

  • 14.1%

49% 22% 15% 14% Other Europe US China

* P&A: parts & accessories

2020-07-21 Volvo Cars 2020 First Half Year Update 9

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Existing initiatives in fixed and variable cost reduction intensified

Notice of 1,300 employees in Sweden

3.2 Structural Efficiencies

COST EFFICIENCY MEASURES AND STRUCTURAL TRANSFORMATION 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 reduction H1 2020 vs H1 2019 (BNSEK)

MITIGATING MEASURES AND DISCIPLINED COST EFFICIENCIES

2020-07-21 Volvo Cars 2020 First Half Year Update 10

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IMPROVED HEAD COUNT EFFICIENCY

2020-07-21 Volvo Cars 2020 First Half Year Update 11

2020 H1 FTE* END OF PERIOD DISTRIBUTION BY REGION

Jun-19 Jun-20 Dec-18

  • 455
  • 736

Dec-19 45,233

  • 726

46,414 45,959 44,497

  • 1,917

21% 72% Europe China 4% US 3% Other

*FTE: number of full time equivalents, includes both employees and agency personnel No impact of technical unemployment included

44,497

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2020-07-21 Volvo Cars 2020 First Half Year Update 12

1

First Half Year 2020

Half Year 2020 Financial Performance

EBIT

Balance Sheet Cash flow Financial Summary

3

Outlook

2

Financial Review

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EBIT MAINLY AFFECTED BY VOLUME DECREASE

2020 H1 EBIT (MSEK)

  • 989
  • 1,320
  • 1,679

5,519 Volume, sales mix and pricing* EBIT 2019 H1

  • 6,020

Foreign exchange rates Efficiencies and other EBIT 2020 H1 Governmental support 1,074 1,437 Non-recurring** MSEK -6,508

  • 117.9%

*New car sales ** Including recall and restructuring

2020-07-21 Volvo Cars 2020 First Half Year Update 13

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2020-07-21 Volvo Cars 2020 First Half Year Update 14

1

First Half Year 2020

Half Year 2020 Financial Performance EBIT

Balance Sheet

Cash flow Financial Summary

3

Outlook

2

Financial Review

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BALANCE SHEET REMAINS STRONG

2020-07-21 Volvo Cars 2020 First Half Year Update 15

ASSETS

(MSEK)

JUNE 2020 DECEMBER 2019 Intangible assets 33,960 32,790 PPE 67,700 69,740 Operating leases 3,720 3,240 Investments in JVs and associates 6,500 7,410 Deferred taxes and other non-current assets 12,780 10,870 Total non-current assets 124,660 124,050 Inventories 42,130 38,910 Accounts receivable 14,300 13,240 Current tax assets and other current assets 10,700 9,830 Marketable securities, Cash and cash equivalents 43,810 55,530 Total current assets 110,940 117,510 TOTAL ASSETS 235,600 241,560 EQUITY AND LIABILITIES

(MSEK)

JUNE 2020 DECEMBER 2019 Total equity 62,880 63,650 Provisions for post-employment benefits 13,820 12,580 Bonds and Liabilities to credit institutions 23,920 26,130 Other interest bearing liabilities 4,960 5,080 Other non-current liabilities and provisions 18,830 18,390 Total non-current liabilities 61,530 62,180 Accounts payable 37,970 44,880 Bonds and liabilities to credit institutions 8,040 4,110 Other interest bearing liabilities 1,160 1,070 Other current liabilities and provisions 64,020 65,670 Total current liabilities 111,190 115,730 TOTAL EQUITY & LIABILITIES 235,600 241,560

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2020-07-21 Volvo Cars 2020 First Half Year Update 16

1

First Half Year 2020

Half Year 2020 Financial Performance EBIT Balance Sheet

Cash flow

Financial Summary

3

Outlook

2

Financial Review

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COVID-19 AMPLIFIED CASH FLOW SEASONALITY

2020-07-21 Volvo Cars 2020 First Half Year Update 17 * Change in inventories, accounts receivable and accounts payable

(MSEK)

2020 H1 2019 H1 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
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BUILDING THE FUTURE THROUGH FOCUSED AND CONTROLLED INVESTMENTS

ANNUAL CAPITAL EXPENDITURE (BNSEK) ANNUAL RESEARCH AND DEVELOPMENT EXPENSES (BNSEK)

9.2 13.1 17.0 13.6 11.8 10.9 4.7 6.2 8.7 7.3 9.2 9.2

7.9% 10.8% 8.7%

2019 2016 2015

12.3%

2017

8.3%

2018

7.7%

25.7 2020 June LTM 13.9 19.3 20.9 21.0 20.1 % of Revenue Tangible investments Intangible investments 9.5 10.2 10.2 10.9 11.4 11.5 2 4 6 8 10 12 14 2 4 6 8 10 12 2015 2017

5.9% 5.7%

2018 2019 2016

3.6% 4.3% 4.2% 4.5%

2020 June LTM R&D expenses % of Revenue

2020-07-21 Volvo Cars 2020 First Half Year Update 18

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LIQUIDITY REMAINS STRONG AT 68 BNSEK

2020-07-21 Volvo Cars 2020 First Half Year Update 19

2020 H1 LIQUIDITY (MSEK) CHANGE IN NET WORKING CAPITAL (MSEK)

3,740

  • 4,385
  • 1,961
  • 403
  • 4,200

2018

  • 2.1% -0.8%

2.1%

  • 0.2%

2016 2017 2019

  • 1.6%

LTM 2020 June 6,819 867 4,187 524 13,593 2020 June Liquidity 3,518 51,997 2019 December Liquidity Investments 68,094 Financing Other** 24,282 43,288 Net working capital* EBITDA

  • 11,252

69,108

  • 9,330

Cash Undrawn credit facilities Marketable securities % of Revenue Net working capital

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

MSEK

  • 12,896
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STRONG NET CASH POSITION

2020-07-21 Volvo Cars 2020 First Half Year Update 20

2020 MATURITY PROFILE AND SPLIT (MSEK)

1,800

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

200

2,400 4,400 450

43,300 500 24,300

Liquidity June 30 2020 2020 2021

7,400

2022 2023

450

2024

2,450

650

2025 2026

68,100 7,600 6,650 5,850 Bonds Undrawn credit facilities Marketable securities Loans Cash & cash equivalents

32,000 32% 68% Loans Bonds Net cash 11,800

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2020-07-21 Volvo Cars 2020 First Half Year Update 21

1

First Half Year 2020

Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow

Financial Summary

3

Outlook

2

Financial Review

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FINANCIAL SUMMARY

Covid-19 impact

volume, revenue and EBIT decline

Market share gains

in all regions with strong sales mix

PHEV sales increase

with a doubling share of sales reaching CO2-targets

Disciplined cost efficiencies

and structural transformation showing effect

Strong liquidity

maintained on 2019 level with a net cash position of 12bn

2020-07-21 Volvo Cars 2020 First Half Year Update 22

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2020-07-21 Volvo Cars 2020 First Half Year Update 23

1

First Half Year 2020

3

Outlook

2

Financial Review

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OUTLOOK H2 2020

Ambition to return to sales volume, profit and cash flow similar to H2 2019. Committed to continue investments in new technologies and products

2020-07-21 Volvo Cars 2020 First Half Year Update 24

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Thank You.

2020-07-21 Volvo Cars 2020 First Half Year Update 25

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Appendix

2020-07-21 Volvo Cars 2020 First Half Year Update 26

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SLIDE 27

FINANCIAL DEVELOPMENT

2020-07-21 Volvo Cars 2020 First Half Year Update 27

101 98 99 198 185 161 116 170 273 359 445 424 254 LTM 69 642 2017 42 2019 2016 2018 572 95 535 705 635 +4.4%

  • 9.9%

SUV Sedan Estate Other 181 209 253 274 256 2019 2016 2017 2018 LTM +9.1%

  • 6.6%

26.2 27.4 29.9 23.4 5 10 15 10 20 30 12.5% 2018 10.8% 12.1% 2016 2017 10.9% 2019 9.1% LTM 21.5 EBITDA margin, % EBITDA 27 25 27 32 22 2017 2016 2018 2019 LTM

RETAIL SALES REVENUE OPERATING CASH FLOW EBITDA

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BUSINESS RECOVERY

2020-07-21 28

2020 MONTHLY SALES* BY MARKET AND PRODUCTION RESTART (K UNITS) EUROPE CHINA US

23 23 24 9 15 28 Apr Jan Mar Feb Jun May 10 1 10 15 15 15 Jun Jan Mar Feb May Apr 6 8 6 4 10 10 Jun May Feb Jan Apr Mar

* Sales: Volvo Cars retail sales

Volvo Cars 2020 First Half Year Update