Volvo Car AB Class B · OMXSTO:VOLCAR_B
Volvo Car AB Class B — Debt Investor Presentation (2019)
27 slides from Volvo Car AB Class B's debt investor presentation, Apr 26, 2019
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation 2019
Slide 2: Disclaimer
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 d
Slide 3: Agenda
AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix
Slide 4: Our Strategic Journey
OUR STRATEGIC JOURNEY Personal and direct relationship with consumers Sustainable products and business Strengthened brand Safe mobility with leading AD technology Completely new vehicle range Purpose driven organization Truly global presence Standalone governance 2018 GAME CHANGING BUSINESS TRANSFO
Slide 5: Successful Business Transformation...
SUCCESSFUL BUSINESS TRANSFORMATION... 2015 2016 2017 2018 2019-2021 New Launches XC90 S90 XC60 S60 SPA V90 / V90CC SPA XC40 BEV XC90 BEV XC40 V60 / V60CC S90L SPA CMA SPA Portfolio age 3.0 2.5 2.4 (years) Modular Architecture Modular Powertrain Scalable Product Architecture (SPA) • Consolidation of
Slide 6: ...Yielding Strong Performance
…YIELDING STRONG PERFORMANCE Strong Revenue Development… …With Solid Earnings Growth… SEKbn SEKbn EBITDA EBITDA margin, % % 40 16% 11.9% 12.5% 11.3% 253 30 9.8% 12% 209 6.9% 29 20 26 8% 164 181 22 138 16 10 4% 9 0 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 …And Strong Cash Flow Generation…
Slide 7: Volvo Cars at a Glance
VOLVO CARS AT A GLANCE Overview FY18 Financial Highlights Premium Products • Fastest growing premium OEM SEK, % PRICE New Price and New Premium Positioning • Standalone business with an own corporate 253bn 14.2bn High Previous Price and governance, under ownership of Zheijang Geely Holding Revenue O
Slide 8: A Structure for the Future
A STRUCTURE FOR THE FUTURE HUMAN- EMBRACING PIONEERING SYNERGIES TRULY GLOBAL CENTRIC DISRUPTION PARTNERSHIPS The Volvo Car Group Strategic Affiliates Care by Volvo (Volvo Cars 50% ownership) (Volvo Cars 30% ownership) (Volvo Cars 50% ownership) Strong brand Subscription Solutions & Spearheading Cap
Slide 9: Positive Rating Trajectory
POSITIVE RATING TRAJECTORY 06 May 2016 10 May 2017 20 November 2018 S&P assigns BB rating with positive outlook; S&P raises rating to BB+ with stable outlook citing good S&P affirms BB+ rating and revises outlook to positive; the Positive outlook based on possibility of raising progress in strengthe
Slide 10: Longer Term Ambitions
LONGER TERM AMBITIONS >5 million direct consumer relationships 50% recurring subscription based revenues 50% pure electric cars 30% autonomous cars Naturally hedged global production Superior growth Premium OEM profitability | VOLVO CARS – DEBT INVESTOR PRESENTATION | 10
Slide 11: Agenda
AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix
Slide 12: Key Credit Highlights
KEY CREDIT HIGHLIGHTS 1 HUMAN-CENTRIC BRAND IDENTITY WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY 2 ROBUST GROWTH TRAJECTORY TRACK RECORD OF INDUSTRY OUTPERFORMANCE 3 TRULY GLOBAL WITH UNIQUE CHINA POSITIONING 4 SYNERGIES STRATEGIC AFFILIATES DRIVING SYNERGIES AND EAR
Slide 13: 1. Human-Centric Brand Identity
1. HUMAN-CENTRIC BRAND IDENTITY WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY Purpose, Culture and Customer Promise Sustainability Visions Full transparency of our 3TG and cobalt supply FREEDOM TO MOVE – IN A PERSONAL, chain by 2020 SUSTAINABLE AND SAFE WAY 50% of sale
Slide 14: 2. Robust Growth Trajectory
2. ROBUST GROWTH TRAJECTORY TRACK RECORD OF INDUSTRY OUTPERFORMANCE Strong Track Record of Outgrowing Market1 Key Growth Levers Unit Sales CAGR 2014-18A 8.4% Well-known brand with momentum Full range now being rolled out including strong SUVs 5.6% All cars to be fully electric or plug-in hybrids Imp
Slide 15: 3. Truly Global
3. TRULY GLOBAL HIGHLY FLEXIBLE MANUFACTURING NETWORK WITH UNIQUE CHINA POSITION Global Presence Why Volvo Car Group Is Uniquely Positioned in China • Only fully integrated global car group in China – Enabled VCG to move fast (3 plants in 4 years) – Unique JV setup • Parent with track record of crea
Slide 16: 4. Synergies
4. SYNERGIES STRATEGIC AFFILIATES DRIVING SYNERGIES AND EARNINGS Joint Venture with Veoneer R&D / Distribution / Powertrain Architecture Production Profitability Procurement Service • Pure electric • CMA • Cars • Faster to market • Increased • Earnings increase • Hybrids • SPA • Engines • Lower cost
Slide 17: 5. Embracing Disruption and Pioneering Partnerships
5. EMBRACING DISRUPTION AND PIONEERING PARTNERSHIPS OPEN APPROACH TO TECHNOLOGY AND MARKET CHANGE CONSUMER EXPERIENCE FOCUS FLEXIBLE AND FAST MOVING NO LIMITING LEGACY Well-positioned on EU CO2 target having flexibility to launch BEV at right time Sharing costs with broader Volvo-Geely eco
Slide 18: 6. Solid Financial Performance
6. SOLID FINANCIAL PERFORMANCE TRANSFORMATION FULLY SELF FINANCED Cash Flow From Operating and Investing Activities Net Cash (Net Debt) Position Development SEKbn SEKbn SEK SEK 9.9bn Free cash 18bn Net cash flow position 2018 7.2 2014-2018 6.5 18.9 18.1 4.7 0.9x 0.5x 12.5 0.6x 0.5x 7.7 (0.1x) (4.8)
Slide 19: Agenda
AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix
Slide 20: Premium Product Portfolio Drives Growth
PREMIUM PRODUCT PORTFOLIO DRIVES GROWTH Retail Revenue Units ‘000 SUV Estate Sedan Other SEKbn +12% +21% 98 253 42 101 68 69 185 209 71 64 68 170 198 181 168 359 164 173 254 273 138 203 155 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 Average Revenue per Unit SEK ‘000 2014 2015 2016 2017 2018 +
Slide 21: Profitability Trajectory
PROFITABILITY TRAJECTORY EBIT EBITDA SEKbn SEKbn 14.1 14.2 28.6 26.2 11.0 21.5 16.0 6.6 6,7% 6,1% 11,9% 12,5% 5,6% 9.5 11,3% 9,8% 4,0% 2.1 6,9% 1,5% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 % margin EBIT % margin EBITDA Benefiting from increased pricing and stronger sales mix Expects co
Slide 22: Cash Flow Trajectory
CASH FLOW TRAJECTORY R&D Expenses Capex SEKbn SEKbn 12.8% 12.1 10.2 10.1 10.1% 8.7% 9.5 10.8% 9.7 8.5% 6.4 8.5 7.2 5.9% 5.2 4.7 5.2% 5.7% 17.0 4.9% 4.8% 13.1 13.6 8.6 9.2 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 % of Revenue R&D expenses Intangible and tangible investments % of Revenue Inta
Slide 23: Liquidity and Net Cash Position
LIQUIDITY AND NET CASH POSITION AS PER FY 2018 Liquidity and Debt Position Net Cash Position SEKm SEKbn 55,100 SEK 18bn 13,300 Net cash position 2018 1,600 31,400 18.9 18.1 18,100 0.9x 23,700 0.5x 12.5 0.6x 2,200 40,200 0.5x 7.7 21,500 (0.1x) (0.9) Liquidity Debt 2014 2015 2016 2017 2018 Undrawn Cre
Slide 24: Diversified Funding Structure
DIVERSIFIED FUNDING STRUCTURE AS PER FY 2018 Funding by Type Loan and Bond Amortization Schedule of SEK 23.7bn % MSEK Prior to issuances during 2019 Bank loans 7,490 2,360 5,550 420 44% 3,850 3,420 56% 420 2,240 5,130 5,130 3,000 420 530 210 Bonds 2019 2020 2021 2022 2023 2024 2025 2026 Loans Bonds
Slide 25: Key Credit Highlights
KEY CREDIT HIGHLIGHTS 1 HUMAN-CENTRIC BRAND IDENTITY WITH SUSTAINABILITY BEING AN INTEGRATED PART OF COMPANY CULTURE AND STRATEGY 2 ROBUST GROWTH TRAJECTORY TRACK RECORD OF INDUSTRY OUTPERFORMANCE 3 TRULY GLOBAL WITH UNIQUE CHINA POSITIONING 4 SYNERGIES STRATEGIC AFFILIATES DRIVING SYNERGIES AND EAR
Slide 26: Agenda
AGENDA • Volvo Cars at a Glance • Key Credit Highlights • Financials • Appendix
Slide 27: Volvo Car Group Ownership Structure
VOLVO CAR GROUP OWNERSHIP STRUCTURE Zhejiang Geely Holding Group Co., Ltd. 100 % Geely Sweden Holdings AB Other Investors 99 % 1% Volvo Car Group Volvo Car AB Issuer 100 % Volvo Car Corporation Guarantor of the Notes Volvo Cars (China) Investment Volvo Cars consolidated Non-consolidated entities wit