Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — Investor Day (February 2013)
75 slides from Volvo Ab Class A's investor day presentation, Feb 28, 2013
Slide 1: Investor Day
THE VOLVO GROUP Investor Day New York, February 28 2013 Volvo Group Headquarters
Slide 2: Volvo Group Headquarters
Volvo Group Headquarters
Slide 3: Intense work during 2012 to transform the Group
Intense work during 2012 to transform the Group from to Business Areas & Business Units One Group Quarterly pace Weekly pace Brand by brand Brand portfolio Local processes Global processes Shared accountability within matrix Clear accountability and metrics Volvo Group Headquarters Investor Day Febr
Slide 4: One year of preparations to have the base in place for execution 2013-2015
One year of preparations to have the base in place for execution 2013-2015 Revised corporate vision New financial targets New incentive program – aligned with financial targets New management team New organization – 450 managers appointed New process oriented workflow New corporate gov
Slide 5: Next step – new strategy developed to utilize the full potential
Next step – new strategy developed to utilize the full potential Drive organic revenue growth Improve profitability Volvo Group Headquarters Investor Day February 2013 5
Slide 6: Delivering our full potential
Group Trucks’ strategic objectives 2013-2015 34 Delivering our full potential Drive revenue growth Volvo Group Headquarters Investor Day February 2013 6
Slide 7: Delivering our full potential
Group Trucks’ strategic objectives 2013-2015 34 Delivering our full potential 5. Build high performing Driveglobal profitability teams Volvo Group Headquarters Investor Day February 2013 7
Slide 8: Targets on Trucks to secure profitability improvement
Targets on Trucks to secure profitability improvement Base – Group Trucks’ sales of SEK ~200 billion GROUP TRUCKS’ Expected impact Strategic objectives on Trucks’ Roadmap examples operating margin Increase vehicle gross profit margin ~2% points • Coordinated brand and product positioning per region
Slide 9: Targets to secure 3 percentage points on operating margin improvement for the Group
Targets to secure 3 percentage points on operating margin improvement for the Group Base – Group sales of SEK ~300 billion GROUP Expected impact Roadmap examples Strategic objectives on Group operating margin Trucks’ impact on Group ~4.0% points Business Areas: ~0.5% points Examples: Consolidation o
Slide 10: Execution with accountability and stringent follow-up – present status
34 Execution with accountability and stringent follow-up – present status Key focus Strategic Targets & Activity areas objectives Roadmaps Plans #5 #20 >35 >400 Monthly follow-up in management teams to ensure speed and execution Volvo Group Headquarters Investor Day February 2013 10
Slide 11: Leveraging our unique brand portfolio
Strategic direction 2013-2015 Leveraging our unique brand portfolio Volvo Group Headquarters Investor Day February 2013 11
Slide 12: Delivering our full potential
Group Trucks’ strategic objectives 2013-2015 34 Delivering our full potential Brand positioning Volvo Group Headquarters Investor Day February 2013 12
Slide 13: Leveraging our asset portfolio – unique in truck industry
Leveraging our asset portfolio – unique in truck industry Volvo Group Headquarters Investor Day February 2013 13
Slide 14: Underserved market segment – a great potential
Underserved market segment – a great potential A PREMIUM Price SEGMENT level (> 95%) B HIGH-END SEGMENT (95-85%) Technology level C VALUE SEGMENT (85-65%) D (65-40%) E BASIC SEGMENT (<40%) Volvo Group Headquarters Investor Day February 2013 INCREASING SOLUTION REQUIREMENT 14
Slide 15: Full market coverage with future positioning
Full market coverage with future positioning A PREMIUM Price level SEGMENT Vocational (> 95%) B HIGH-END SEGMENT (95-85%) Japan Technology level C VALUE SEGMENT (85-65%) D (65-40%) E BASIC SEGMENT (<40%) Essential solutions Total solutions Volvo Group Headquarters Investor Day February 2013 INCREASI
Slide 16: Three heavy-duty truck platforms to capture full market potential
Three heavy-duty truck platforms to capture full market potential PREMIUM-END Premium platform HIGH-END VALUE Value platform VALUE BASIC BASIC Basic platform Volvo Group Headquarters Investor Day February 2013 16
Slide 17: New Volvo FH-range – largest product introduction in 20 years
PREMIUM-END New Volvo FH-range – largest product introduction in 20 years • New cab • New dynamic steering • Narrow-band engine • I-Torque • Dual clutch Fuel savings • Turbo-compound • I-See up to 10% Volvo Group Headquarters Investor Day February 2013 17
Slide 18: Introduction of a completely new range of Renault trucks in 2013
HIGH-END Introduction of a completely new range of Renault trucks in 2013 • Full range of HD products to be launched in June 2013 • New features to be revealed at launch • Production ramp-up, H2 2013 – Delivery volumes in 2014 Volvo Group Headquarters Investor Day February 2013 18
Slide 19: Significant growth potential with new, global HD truck platform
VALUE Significant growth potential with new, global HD truck platform Game changing offering • Balance features and product cost • Broaden product range, e.g. - Haulage - Construction - Mining • Developed and sourced in Asia • Market across APAC (and beyond) • South Asia • South East Asia Volvo Grou
Slide 20: Competitive cost through localized production
VALUE Competitive cost through localized production Bangkok, Thailand Asia manufacturing plan Thailand • Bangkok, Group plant • For ASEAN and export markets Bangalore, India India • Bangalore, Group plant • For the Indian market China Hangzhou, China • Hangzhou, DND JV (discussions to be finalized)
Slide 21: Grow Eicher HD volumes by introducing new product range
BASIC Grow Eicher HD volumes by introducing new product range in the end of 2013 Leveraging strong brand and dealer network – LMD market share 31% Combining the best of two worlds • Volvo - technology and processes • Eicher - frugal engineering and expertise in basic products/services Product featur
Slide 22: Next step – implement the new brand strategy into product plans
Next step – implement the new brand strategy into product plans Globally maximise brand New and fully aligned positions Revised product plans product strategies • Optimize the brand • Define brand distinction: Unique • Create cost efficiency portfolio from a Group vs.Similar vs. Common through Commo
Slide 23: Volvo Group acquires 45% of Dongfeng Commercial Vehicles
Volvo Group acquires 45% of Dongfeng Commercial Vehicles Volvo Group Headquarters Investor Day February 2013
Slide 24: Group Trucks' strategic objectives 2013-2015
34 Group Trucks’ strategic objectives 2013-2015 3.1 By optimizing the brand assets become number 1 or 2 in combined Group Trucks HD market share This agreement supports the 3.2 Establish required commercial strategic objective for the Volvo Group’s presence to support revenue growth by 50% in APAC a
Slide 25: Acquisition of 45% in DFCV
VOLVO GROUP Acquisition of 45% in DFCV – Further strengthening of China as one of our home markets • Major shareholding in China’s leading manufacturer of commercial vehicles – DFCV • Strong foothold in and share of the world’s largest truck market: DFCV delivered 142,000 HD trucks and had a 16% mar
Slide 26: Volvo Group acquires 45% of DFCV for RMB 5.6 bn
Volvo Group acquires 45% of DFCV for RMB 5.6 bn Purchase price RMB 5.6 bn Volvo for 45% ownership Dongfeng Group (DFG) 45% 55% DFCV DFCV 100% DND Volvo Group Headquarters Investor Day February 2013 26
Slide 27: DFCV: a large commercial vehicle company with a strong position in China
DFCV: a large commercial vehicle company with a strong position in China VOLUMES FINANCIALS (RMB) * 1 RMB = 1.05 SEK 2011 2012 FY2011 Q312 YTD HD trucks 142,000 102,000 Net sales 39 bn 22 bn MD trucks 49,000 46,000 Op Inc. 1.2 bn 0.3 bn Total 191,000 148,000 Net Inc. 1.4 bn 0.4 bn MARKET SHARES IN C
Slide 28: DFCV: Strong brand and truck line-up
DFCV: Strong brand and truck line-up Company brand Product brands Name Logo （D310 Cab） （D310 Cab） Newly launched and updated （D530 Cab） product portfolio Basic products Dongfeng, Jiayun Volvo Group Headquarters Investor Day February 2013 28 28
Slide 29: Further strengthening of China as one of our home markets
Further strengthening of China as one of our home markets Total operations 2011, including 100% of our partners 34,000 employees 41 bn 20 bn 1 bn • DFCV: • Dual brand strategy; • JV with SAIC for 142,000 HD trucks Volvo and SDLG city buses 49,000 MD trucks • 12% market share 2011 • JV with SAIC Net
Slide 30: Volvo Group Headquarters Investor Day February 2013
Volvo Group Headquarters Investor Day February 2013 30
Slide 31: Volvo Group Trucks Sales & Marketing Americas
Strategic Direction 2013-2015 Volvo Group Trucks Sales & Marketing Americas Dennis Slagle – Executive Vice President Volvo Group Trucks Sales & Marketing Americas
Slide 32: Trucks Sales & Marketing Americas
Trucks Sales & Marketing Americas Today… … Growth opportunities • 3,102 employees • Distribution development • 398,000 truck market 2012 • Integrated powertrain • 912 private outlets • Uptime management / remote • 35 owned outlets diagnostics • 800,000 active population • Brand optimization Volvo Gr
Slide 33: Delivering our full potential: Distribution development
Group Trucks’ strategic objectives 2013-2015 Delivering our full potential Distribution development Volvo Group Trucks Sales & Marketing Americas Volvo Group Investor Day 2012 4
Slide 34: Continue significant improvements in N.A. network coverage & quality support
Continue significant improvements in N.A. network coverage & quality support • +50 outlets since 2010 • >$175M in private investment • +25% in service capacity • Record profitability in 2011/12 • +800 technicians • +125% in “Master Techs” Volvo Group Trucks Sales & Marketing Americas Volvo Group Inv
Slide 35: Delivering our full potential: Powertrain share growth
Group Trucks’ strategic objectives 2013-2015 Delivering our full potential Powertrain share growth Volvo Group Trucks Sales & Marketing Americas Volvo Group Investor Day 2012 6
Slide 36: Drive profitability & fuel economy via continued growth in powertrain components
Drive profitability & fuel economy via continued growth in powertrain components 90 % Volvo PT Share 79% 80 70 60 50 40 • AMT is “Game Changer” – 30 36.1 Volvo Group acknowledged 03 04 05 06 07 08 09 10 11 12 leader • Integration key to meeting 50 46% % AMT Share fuel efficiency demands 40 30 27% •
Slide 37: Delivering our full potential: Remote diagnostics
Group Trucks’ strategic objectives 2013-2015 Delivering our full potential Remote diagnostics Volvo Group Trucks Sales & Marketing Americas Volvo Group Investor Day 2012 8
Slide 38: Anticipate and address potential downtime events
Anticipate and address potential downtime events Before a downtime incident: • Problem diagnosed • Parts availability validated • Repair instructions and part numbers provided During incident: • Progress monitored via geo-fencing Volvo Group Trucks Sales & Marketing Americas Volvo Group Investor Day
Slide 39: Delivering our full potential
Group Trucks’ strategic objectives 2013-2015 Delivering our full potential Volvo Group Trucks Sales & Marketing Americas Volvo Group Investor Day 2012 10
Slide 40: Untapped potential in Brazil
Price level Market size Untapped potential A PREMIUM SEGMENT in Brazil (> 95%) 25% HIGH-END • Leverage on strong market presence: B SEGMENT • Industrial footprint (95-85%) • Network Volvo VM • 2012: C VALUE #1 Customer satisfaction SEGMENT #1 Brand image (85-65%) #1 In HD trucks with 27% market Bran
Slide 41: Construction Equipment
Strategic direction 2013-2015 Construction Equipment Growth in new markets and segments Volvo Group Headquarters 41
Slide 42: Significant growth opportunities
Significant growth opportunities Good starting point Significant opportunities • Increased leverage and reduced • Grow Volvo share in emerging break-even point markets • Broad and competitive • Leverage Chinese position product portfolio • Grow SDLG share globally • Committed and aligned distributio
Slide 43: Volvo Construction Equipment 2013-2015 Strategy
Volvo Construction Equipment 2013-2015 Strategy Profitably grow SDLG business Develop Volvo branded products Significantly increase globally for emerging markets Customer Solutions revenues • Achieve significant increase of • Develop emerging market product to • Increase Customer Solutions revenues
Slide 44: New brand positions to reach all customers
New brand positions to reach all customers Price level PREMIUM SEGMENT (70-100%) VALUE SEGMENT BRIC (40-70%) BASIC SEGMENT (<40%) Technology level Volvo Group Headquarters Investor Day February 2013 INCREASING SOLUTION REQUIREMENT 44
Slide 45: Significant potential for share growth in China for SDLG
Significant potential for share growth in China for SDLG Total market 2012 SDLG brand - Strong brand image in the value segment - Pan-Chinese dealer network EXCAVATORS - New range of competitive excavators 105,000 3.5% To do: Upgrade dealer network to sell and support excavators (advanced technology
Slide 46: Significant potential for share growth in China for Volvo
Significant potential for share growth in China for Volvo Total market 2012 Volvo brand - Strong brand image - Committed dealer network EXCAVATORS 105,000 6.5% To do: Ramping up production of the new low-cost wheel loader (BRIC-loader) LOADERS 143,000 0.1% Volvo Group Headquarters Investor Day Febru
Slide 47: Great potential for Common Architecture and Shared Technology (CAST)
Great potential for Common Architecture and Shared Technology (CAST) - implementation started Western technology Low cost solutions New excavator range Volvo BRIC-loader • Leveraging SDLG 2012 2013 cost base • Attracting new customers • For China and other emerging markets Volvo Group Headquarters I
Slide 48: Rollout of SDLG to start in emerging markets
Rollout of SDLG to start in emerging markets Targeting 10,000 SDLG units per year outside China by 2015 (Today 3,900 units/year) Volvo Group Headquarters Investor Day February 2013 48
Slide 49: Set for growth with two global brands
Set for growth with two global brands • Improve Volvo share in emerging markets • Stronger position in China • SDLG going global • Share architecture, appropriately differentiated, between Volvo and SDLG • Competitive Tier 4f engines Volvo Group Headquarters Investor Day February 2013 49
Slide 50: Volvo Financial Services
Strategic direction 2013-2015 Volvo Financial Services Martin Weissburg – President Volvo Group Trucks Financial Sales & Marketing APAC Services
Slide 51: VFS – well positioned to help drive Group product sales with profitable solutions
VFS – well positioned to help drive Group product sales with profitable solutions VFS today... … opportunities • 1,377 employees • Organic growth – Group • Offering financial solutions in deliveries 40 countries around the world • Geographic growth • Serving all Volvo Group brands • Integrated comme
Slide 52: Diversified portfolio, scalable operations
Diversified portfolio, scalable operations Portfolio as of December 2012 Finance product distribution Business Area distribution Geographic distribution Dealer financing EMEA Operating lease Volvo Group Trucks Finance lease Americas Volvo CE Installment credit Volvo Bus APAC Dec 2012 Number of units
Slide 53: Good profitability level restored following financial crisis
Good profitability level restored following financial crisis Stable / strong earnings Financial crisis / global Growth / recovery recession Target 12-15% Volvo Group Trucks Financial Sales & Marketing APAC Services Volvo Group Investor Day 53
Slide 54: VFS' strategic impact
Group Trucks’ strategic objectives 2013-2015 VFS’ strategic impact Volvo Group Trucks Financial Sales & Marketing APAC Services 54
Slide 55: VFS' strategic impact – focused examples
Group Trucks’ strategic objectives 2013-2015 VFS’ strategic impact – focused examples Volvo Group Trucks Financial Sales & Marketing APAC Services 55
Slide 56: Roll-out of integrated customer interface tool
Roll-out of integrated customer interface tool Strategic Objective 2.2 • Best in class point-of-sale technology • Implementation starting in Europe • Supports speed in sales process • Allows for bundled / value selling • Supports multiple revenue streams over product lifecycle Volvo Group Trucks Fin
Slide 57: Drive sales and customer retention for all Group brands
Drive sales and customer retention for all Group brands Strategic Objective 3.1 • Branded financial offer in each VFS market • Integrated commercial offers • Support through business cycle, consistency for our customers • Customer interaction through product lifecycle Volvo Group Trucks Financial Sa
Slide 58: Realizing the full potential
Realizing the full potential Volvo Financial Services 2013-2015 • Aligned and integrated strategies • Strong coverage of Volvo Group sales with financial solutions • Productivity through growth and global process optimization • Solid shareholder return on equity Volvo Group Trucks Financial Sales &
Slide 59: Funding and Treasury strategy
Strategic direction 2013-2015 Funding and Treasury strategy Anders Osberg CFO and EVP Corporate Finance & Control Volvo Group Headquarters 59
Slide 60: Financial management to create stability and flexibility for the Volvo Group
Financial management to create stability and flexibility for the Volvo Group Today... … tomorrow • Good liquidity position • Geographic growth – • Untouched committed facilities funding in new key markets • Limited refinancing needs • Operational excellence • Diversified funding sources • Capital ma
Slide 61: All Group funding activities coordinated by Corporate Treasury
All Group funding activities coordinated by Corporate Treasury Two debt portfolios Industrial Operations Funding strategy – executed by Corporate Treasury Customer Finance Volvo Group Headquarters Investor Day February 2013 61
Slide 62: Limited refinancing needs and good liquidity position for Industrial Operations
Limited refinancing needs and good liquidity position for Industrial Operations Industrial Operations – Debt portfolio maturity structure SEK Bn 25 20 15 • Limited refinancing needs 10 2013-2014 5 • Average portfolio maturity 0 3.4 years • Continued focus on term-out Industrial Operations – Liquidit
Slide 63: Well-matched Customer Finance portfolio
Well-matched Customer Finance portfolio Customer Finance – Debt portfolio maturity structure SEK Bn 25 20 15 • Portfolio driven by lending 10 to end customers 5 • Matching ratios 0 - Currency, interest rate and liquidity Customer Finance – Debt portfolio by currency • Average portfolio maturity SEK
Slide 64: Diversified funding sources give flexibility and support of global presence
Diversified funding sources give flexibility and support of global presence SEK CAD CP SEK 20* Bn CP EMTN USD 15* Bn CNY CAD 750* M Bilateral Loans Gothenburg Syndicated Loans CNY Bonds (SDLG) EUR USD ECP EUR 1.3* Bn CP USD 1 350* M Greensboro EMTN USD 15* Bn Beijing Bonds (144A) Term ABS Tokyo CNH
Slide 65: Key transactions 2012 & 2013
Key transactions 2012 & 2013 RCF, EUR 1,200 M, 5y Loan EIB, JPY 24 bn, 5y EMTN’s - EUR 325 M, 1y - SEK1,500 M 18 m - EUR 200 M, 18m - SEK 1,600 M, 2y - SEK 1,500 M, 3y - SEK 500 M, 4y - SEK 1,600 M, 5y - EUR 100 M, 8y Term ABS US USD 642 M Volvo Group Headquarters 65 Investor Day February 2013
Slide 66: A strong and stable credit rating important
A strong and stable credit rating important Present credit ratings Short- t Long- erm term Customers Moody’s (Global) P-2 Baa2, stable Debt S&P (Global) A-2 BBB, Suppliers investors stable S&P Nordic national K-2 - Credit rating scale DBRS (Canada) R-2 - (high) Equity Employees investors R&I (Japan)
Slide 67: Financial management is balancing the requirements of different stakeholders
Financial management is balancing the requirements of different stakeholders Shareholders Debt providers Strong credit rating Long-term attractive Financial strength total return and flexibility Financial objectives Financial objectives Industrial Operations Industrial Operations Net sales growth ≥
Slide 68: Financial management to create stability and flexibility for the Volvo Group
Financial management to create stability and flexibility for the Volvo Group • Overall objective to create Stability and Flexibility • Broad and well diversified Funding Sources and investor base • Manage growth of funding needs in New Key Markets • Strong and stable Credit Rating • Strong and commi
Slide 69: Volvo Group Headquarters Investor Day February 2013
Volvo Group Headquarters Investor Day February 2013 69
Slide 70: Volvo Group Headquarters Investor Day February 2013
Volvo Group Headquarters Investor Day February 2013 70
Slide 71: 35 roadmaps and 400 main activities defined to support the strategic objectives
VOLVO GROUP 34 35 roadmaps and 400 main activities defined to support the strategic objectives Consolidate industrial Launch of the new-generation foot print in Japan Volvo FH Acquisition of 45% of DFCV including the major part of Dongfeng’s medium and heavy commercial vehicles business New sales an
Slide 72: Entering 2014 with a competitive edge
Entering 2014 with a competitive edge Trucks Trucks China • New Premium & • Bangkok, Thailand • New strategic alliance High-end platform • Bangalore, India with Dongfeng – • New Value platform • Kaluga, Russia leading position in the • New Basic platform • Hangzhou, China truck market • #1 in Constr
Slide 73: Massive product renewal
Massive product renewal NEW RENAULT VOLVO FH BRIC-LOADER VOLVO L105 NEW BASIC TRUCK NEW VALUE TRUCK PLATFORM PLATFORM NEW TIER 4f ENGINES BANGALORE, INDIA NEW VOLVO I-TORQUE EU6 BANGKOK, THAILAND Volvo Group Headquarters Investor Day February 2013 73
Slide 74: Q&A
Q&A Volvo Group Headquarters Investor Day February 2013 74
Slide 75: Investor Day
THE VOLVO GROUP Investor Day New York, February 28 2013 Volvo Group Headquarters Investor Day February 2013 75