Volvo Car AB Class B · OMXSTO:VOLCAR_B
Volvo Car AB Class B — Volvo Cars — H1 2020 Earnings Presentation
28 slides from Volvo Car AB Class B's earnings presentation, Jul 21, 2020
Slide 1: Volvo Cars 2020 First Half Year Update
Volvo Cars 2020 First Half Year Update Carla De Geyseleer, Per Ansgar, Therese Jandér 2020-07-21
Slide 2: Disclaimer
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 “Recipient”) agrees to be bound by the document and any such liability is expressly disclaimed. following obligations and limitations. Analyses and opinions contain
Slide 3: First Half Year 2020, Financial Review, Outlook
1 2 3 First Half Year 2020 Financial Review Outlook 2020-07-21 Volvo Cars 2020 First Half Year Update 3
Slide 4: Market share gains despite Covid-19 impact
Market share gains despite Financial performance Accelerated transformation Covid-19 impact • Proactive and pragmatic • Revenue and EBIT reduction • Share of PHEV sales doubled actions from volume decline • XC40 Recharge production • China returning to growth in • Continued strong mix starts in H2 A
Slide 5: Half Year 2020 Financial Performance
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 5
Slide 6: Covid-19 impacted financial performance
COVID-19 IMPACTED FINANCIAL PERFORMANCE 2020 H1 KEY FIGURES Retail sales Revenue EBIT / margin Cash flow (K UNITS) (MSEK) (MSEK/%) from operating and investing activities (MSEK) -20.8% -14.1% -117.9% -364.0% 341 130,095 5,519 111,759 270 -2,759 4.2% -0.9% -989 -12,803 2019 2020 2019 2020 2019 2020 2
Slide 7: Growth trajectory affected, electrification accelerated
GROWTH TRAJECTORY AFFECTED ELECTRIFICATION ACCELERATED 2020 H1 SALES BY MARKET, CARLINE AND POWERTRAIN Model range distribution H1 14% CAGR XC +4.7% -9.9% V 17% 705 S 69% 642 635 57 Sweden 572 535 504 341 290 47 UK PHEV sales (k units) 318 299 Germany +79.8% 291 44 282 BeLux* 19 38 155 Italy 131 153
Slide 8: Financial performance
FINANCIAL PERFORMANCE 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 2020
Slide 9: Revenue decline less than volume
REVENUE DECLINE LESS THAN VOLUME 2020 H1 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS MSEK -18,336 -14.1% 130,095 14% 1,070 111,759 -16,860 -2,546 22% 49% 15% Revenue Volume, sales Foreign Used cars, Revenue 2019 H1 mix and pricing exchange rates P&A* and 2020 H1 Europe US China O
Slide 10: Mitigating measures and disciplined cost efficiencies
MITIGATING MEASURES AND DISCIPLINED COST EFFICIENCIES 3.2 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
Slide 11: Improved head count efficiency
IMPROVED HEAD COUNT EFFICIENCY 2020 H1 FTE* END OF PERIOD DISTRIBUTION BY REGION -1,917 46,414 Other -455 45,959 3% China -726 45,233 21% -736 44,497 44,497 US 4% 72% Europe Dec-18 Jun-19 Dec-19 Jun-20 *FTE: number of full time equivalents, includes both employees and agency personnel No impact of t
Slide 12: EBIT
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 12
Slide 13: EBIT mainly affected by volume decrease
EBIT MAINLY AFFECTED BY VOLUME DECREASE 2020 H1 EBIT (MSEK) MSEK -6,508 -117.9% 5,519 1,074 1,437 -6,020 -989 -1,320 -1,679 EBIT 2019 H1 Volume, sales Foreign Governmental Non-recurring** Efficiencies and other EBIT 2020 H1 mix and pricing* exchange rates support *New car sales ** Including recall a
Slide 14: Balance Sheet
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 14
Slide 15: Balance sheet remains strong
BALANCE SHEET REMAINS STRONG ASSETS JUNE DECEMBER EQUITY AND LIABILITIES JUNE DECEMBER (MSEK) 2020 2019 (MSEK) 2020 2019 Intangible assets 33,960 32,790 Total equity 62,880 63,650 PPE 67,700 69,740 Operating leases 3,720 3,240 Provisions for post-employment benefits 13,820 12,580 Investments in JVs
Slide 16: Cash flow
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 16
Slide 17: Covid-19 amplified cash flow seasonality
COVID-19 AMPLIFIED CASH FLOW SEASONALITY (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 ta
Slide 18: Building the future through focused and controlled investments
BUILDING THE FUTURE THROUGH FOCUSED AND CONTROLLED INVESTMENTS ANNUAL CAPITAL ANNUAL RESEARCH AND DEVELOPMENT EXPENDITURE (BNSEK) EXPENSES (BNSEK) 12 11.4 11.5 14 10.9 25.7 10.2 10.2 12.3% 10 9.5 12 20.9 21.0 20.1 19.3 8.7 10 8 10.8% 13.9 7.3 9.2 8 6.2 9.2 8.7% 8.3% 6 5.9% 5.7% 7.7% 7.9% 6 4.7 4.3%
Slide 19: Liquidity remains strong at 68 BNSEK
LIQUIDITY REMAINS STRONG AT 68 BNSEK 2020 H1 LIQUIDITY (MSEK) CHANGE IN NET WORKING CAPITAL (MSEK) 69,108 68,094 3,740 13,593 6,819 24,282 3,518 867 -11,252 4,187 524 -403 -9,330 2.1% 51,997 43,288 MSEK -1,961 -0.2% -12,896 -2.1% -0.8% -1.6% -4,385 -4,200 2019 EBITDA Net working Other** Investments
Slide 20: Strong net cash position
STRONG NET CASH POSITION 2020 MATURITY PROFILE AND SPLIT (MSEK) 68,100 24,300 Net cash 500 11,800 32% 32,000 43,300 7,600 68% 7,400 6,650 2,400 450 5,850 4,400 650 2,450 6,200 1,800 5,200 450 5,200 3,000 2,000 200 Liquidity 2020 2021 2022 2023 2024 2025 2026 June 30 2020 Undrawn credit facilities Ma
Slide 21: Financial Summary
1 2 3 First Half Year 2020 Financial Review Outlook Half Year 2020 Financial Performance EBIT Balance Sheet Cash flow Financial Summary 2020-07-21 Volvo Cars 2020 First Half Year Update 21
Slide 22: Financial summary
FINANCIAL SUMMARY Covid-19 impact Market share gains PHEV sales increase volume, revenue and in all regions with strong with a doubling share of sales EBIT decline sales mix reaching CO2-targets Disciplined cost efficiencies Strong liquidity and structural transformation maintained on 2019 level wit
Slide 23: Outlook
1 2 3 First Half Year 2020 Financial Review Outlook 2020-07-21 Volvo Cars 2020 First Half Year Update 23
Slide 24: Outlook H2 2020
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
Slide 25: Thank You.
Thank You. 2020-07-21 Volvo Cars 2020 First Half Year Update 25
Slide 26: Appendix
Appendix 2020-07-21 Volvo Cars 2020 First Half Year Update 26
Slide 27: Financial development
FINANCIAL DEVELOPMENT RETAIL SALES REVENUE +4.4% +9.1% -9.9% -6.6% 705 274 256 642 635 253 535 572 209 SUV 181 273 359 445 Estate 254 424 Sedan 170 198 185 161 116 69 101 98 99 95 Other 42 2016 2017 2018 2019 LTM 2016 2017 2018 2019 LTM EBITDA OPERATING CASH FLOW 29.9 32 30 26.2 27.4 15 27 23.4 25 2
Slide 28: Business recovery
BUSINESS RECOVERY 2020 MONTHLY SALES* BY MARKET AND PRODUCTION RESTART (K UNITS) 28 24 23 23 15 15 15 15 10 10 10 10 9 8 6 6 4 1 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun EUROPE CHINA US * Sales: Volvo Cars retail sales 2020-07-21 Volvo Cars 2020 First Half Year Update