Volvo Car AB Class B · OMXSTO:VOLCAR_B
Volvo Car AB Class B — FY2020 Earnings Presentation
38 slides from Volvo Car AB Class B's earnings presentation, Feb 4, 2021
Slide 1: Financial Update Full year 2020
FINANCIAL UPDATE Full year 2020 Carla De Geyseleer, Per Ansgar, Therese Jandér 2021-02-04
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: Highlights 2020, Financial Review, Outlook
Highlights 2020 Financial Review Outlook Volvo Car Group Results Presentation January – December 2020 3
Slide 4: Strong recovery, financial performance, accelerated transformation
Strong recovery Financial performance Accelerated transformation • Record-sales in second half of • Record revenue and EBIT in • Recharge car sales more than the year H2, partly offsetting Covid-19 doubled over the year effects • 31% Recharge share of sales • In China and the US, sales in Europe gro
Slide 5: Financial Review: Half Year 2020 Financial Performance
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 5
Slide 6: 2020 Financial Performance
2020 FINANCIAL PERFORMANCE Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK) -6.2% -4.0% +8.0% +82.5% YoY YoY YoY YoY -40.6% 661 263 9,500 YoY 26,100 8,500 +14.7% +7.4% +4.9% YoY YoY YoY 13,300 -20.8% 392 -14.1% 6.3% 3.2% YoY YoY 1
Slide 7: Accelerated Recharge volumes led to excess CO2 credits
ACCELERATED RECHARGE VOLUMES LED TO EXCESS CO2 CREDITS Recharge sales volume (k units) Recharge % of total volume Volvo Cars fleet CO2e decrease (WLTP, g/km EU Fleet) +151% 17.4% -17% 115 157 130 46 2019 2020 2019 2020 Polestar 2 XC40 Recharge “BEV only” (2021) XC90 BEV and more... 470km >400km 408h
Slide 8: Financial Performance: 2020 H2 Financial Highlights
FINANCIAL PERFORMANCE 2020 H2 FINANCIAL HIGHLIGHTS (MSEK) 2020 H2 2019 H2 Change (%) Revenue 151,074 144,022 4.9 Cost of sales -122,333 -116,597 4.9 Gross income 28,741 27,425 4.8 Gross margin 19.0% 19.0% - Operating income (EBIT) 9,505 8,784 8.2 EBIT margin 6.3% 6.1% - Net income 8,959 6,205 44.4 V
Slide 9: Revenue increase following record volume development
REVENUE INCREASE FOLLOWING RECORD VOLUME DEVELOPMENT 2020 H2 REVENUE COMPOSITION (MSEK) MSEK +7,052 +4.9% 4,087 151,074 -7,730 144,022 10,695 Revenue 2019 H2 Volume, sales Used cars, Foreign Revenue 2020 H2 mix and pricing P&A* and other exchange rates * P&A: parts & accessories Volvo Car Group Resu
Slide 10: EBIT growth from volume and efficiencies
EBIT GROWTH FROM VOLUME AND EFFICIENCIES 2020 H2 EBIT (MSEK) MSEK +721 +8.2% 2,946 1,425 9,505 8,784 -3,650 6.3% 6.1% EBIT 2019 H2 Volume, sales Efficiencies Foreign exchange rates EBIT 2020 H2 mix and pricing* and other *New car sales Volvo Car Group Results Presentation January – December 2020 10
Slide 11: Improved EBITDA and working capital drove strong cash flow
IMPROVED EBITDA AND WORKING CAPITAL DROVE STRONG CASH FLOW 2020 H2 CASH FLOW (MSEK) 8,676 13,844 -12,581 61,592 16,146 -7,781 43,288 MSEK +26,085 Cash EBITDA Net working Other** Investments Financing*** Cash June capital* December 2020 2020 * Change in inventories, accounts receivable and accounts p
Slide 12: Financial Review: Full Year 2020 Financial Performance
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 12
Slide 13: Return to pre-pandemic volume growth
RETURN TO PRE-PANDEMIC VOLUME GROWTH 2020 VOLUMES BY MARKET, CARLINE AND POWERTRAIN Model range distribution 15% CAGR XC +5.6% -6.1% V 14% 705 S 662 71% 642 H2 Sales 572 54 Sweden 535 504 341 288 +7.4% RECHARGE sales (k units) 318 47 UK 299 392 151% 291 365 282 47 Germany Europe 115 167 BeLux* 165 1
Slide 14: Financial Performance: 2020 Financial Highlights
FINANCIAL PERFORMANCE 2020 FINANCIAL HIGHLIGHTS (MSEK) 2020 2019 Change (%) Revenue 262,833 274,117 -4.1 Cost of sales -216,813 -222,047 -2.4 Gross income 46,020 52,070 -11.6 Gross margin 17.5% 19.0% - Operating income (EBIT) 8,516 14,303 -40.5 EBIT margin 3.2% 5.2% - Net income 7,788 9,603 -18.9 Vo
Slide 15: Revenue decline less than volume
REVENUE DECLINE LESS THAN VOLUME 2020 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS MSEK -11,284 -4.1% 274,117 -6,165 15% 1,541 -6,660 262,833 46% 23% 15% Revenue 2019 Volume, sales Used cars, Foreign Revenue 2020 Europe US China Other mix and pricing P&A* and other exchange rates
Slide 16: Disciplined cost efficiencies throughout the year
DISCIPLINED COST EFFICIENCIES THROUGHOUT THE YEAR COST REDUCTION 2020 vs 2019 (BNSEK) 3.0 6.2 • Direct cost efficiencies intensified during H2 • Indirect cost reduction continued in all areas throughout the year 3.2 • Continuous implementation of headcount efficiencies and competence shift • Efficie
Slide 17: Continuously improved headcount efficiency
CONTINUOUSLY IMPROVED HEADCOUNT EFFICIENCY 2020 FTE* END OF PERIOD DISTRIBUTION BY REGION -2,952 46,414 Other -1,181 2% 45,233 China 20% -1,771 43,462 US 4% 43,462 74% Europe Dec-18 Dec-19 Dec-20 *FTE: number of full time equivalents, includes both employees and agency personnel No impact of technic
Slide 18: EBIT impacted by volume decrease and forex
EBIT IMPACTED BY VOLUME DECREASE AND FOREX 2020 EBIT (MSEK) MSEK -5,787 -40.5% 14,303 2,750 1,013 -4,580 8,516 -4,970 5.2% 3.2% EBIT 2019 Volume, sales Governmental Efficiencies Foreign EBIT 2020 mix and pricing* support related and other exchange rates to Covid-19 *New car sales Volvo Car Group Res
Slide 19: Financial Review: Balance Sheet
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 19
Slide 20: Balance sheet remains strong
BALANCE SHEET REMAINS STRONG ASSETS DECEMBER DECEMBER EQUITY AND LIABILITIES DECEMBER DECEMBER (MSEK) 2020 2019 (MSEK) 2020 2019 Intangible assets 37,168 32,786 Total equity 70,418 63,648 Property, plant and equipment 57,453 69,738 Provisions for post-employment benefits 14,187 12,583 Operating leas
Slide 21: Financial Review: Cash flow
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 21
Slide 22: Controlled investments with focus on electrification
BUILDING A SUSTAINABLE FUTURE THROUGH CONTROLLED INVESTMENTS WITH FOCUS ON ELECTRIFICATION ANNUAL CAPITAL ANNUAL RESEARCH AND DEVELOPMENT EXPENDITURE (BNSEK) EXPENSES (BNSEK) 12 11.4 11.4 14 26.7 10.9 10.2 10.2 12.3% 10 9.5 12 9.7 20.9 21.0 19.3 10 18.6 8 10.8% 13.9 7.3 9.2 8 6.2 8.7% 8.3% 8.5 6 5.9
Slide 23: Strong liquidity at 94 BNSEK
STRONG LIQUIDITY AT 94 BNSEK 2020 LIQUIDITY (MSEK) CHANGE IN NET WORKING CAPITAL (MSEK) 94,379 3,740 8,395 2.1% 2,600 2,592 24,700 22,965 1.0% 69,108 8,087 13,593 -20,670 -3,687 -0.1% 3,518 -0.8% -403 MSEK 13,282 51,997 61,592 -1,961 -2.1% -4,385 Liquidity EBITDA Net working Other** Investments Fina
Slide 24: Financial Review: Debt and Maturity profile
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 24
Slide 25: Strong net cash position
STRONG NET CASH POSITION 2020 MATURITY PROFILE AND SPLIT (MSEK) 94,400 24,700 Net cash 8,100 35,200 15% 34,500 24% 7,100 7,400 6,400 2,100 400 5,600 5,000 61,600 4,400 600 2,400 6,000 61% 5,000 400 5,000 3,000 2,000 200 Liquidity 2021 2022 2023 2024 2025 2026 2027 2020 Undrawn credit facilities Cash
Slide 26: Green financing aligned with sustainability strategy
GREEN FINANCING FUNDING ALIGNED WITH OUR SUSTAINABILITY STRATEGY First Green bond successfully issued in October 2020 • Aligns our sustainability strategy with financing opportunities • Cicero Second Party Opinion with a Dark Green shading • Use of proceeds: • Zero emission vehicles, new electric po
Slide 27: Financial Review: Financial Summary
Highlights 2020 Financial Review Outlook Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary Volvo Car Group Results Presentation January – December 2020 27
Slide 28: Financial Summary
FINANCIAL SUMMARY Strong recovery Market share gains PHEV sales increase in volume, revenue and EBIT in most markets with strong more than double share of sales during H2 sales mix outperforming CO2-targets Disciplined cost efficiencies Strong cash flow Green financing showing effect and paving the
Slide 29: CEO Håkan Samuelsson, Financial Review, Outlook
CEO Håkan Samuelsson Financial Review Outlook Volvo Car Group Results Presentation January – December 2020 29
Slide 30: Outlook
OUTLOOK Assuming market conditions continue to normalise, we anticipate: • Continued growth in sales volume and revenue • Improved profitability to pre-corona levels • Investments in new technologies and new products – similar level of capital expenditure • Cash flow to remain strong • Reduction in
Slide 31: Volvo Car Group Results Presentation January – December 2020
Volvo Car Group Results Presentation January – December 2020 31
Slide 32: Slide 32
Slide 33: Appendix
Appendix Volvo Car Group Results Presentation January – December 2020 33
Slide 34: SEK appreciation during H2 2020 vs H2 2019
SEK APPRECIATION DURING H2 2020 VS H2 2019 30.5% 21.9% 9.9% 9.0% 8.8% 6.6% 6.9% 5.6% 6.2% 5.5% 3.9% 3.2% 3.0% 1.4% EUR USD GBP CNY JPY KRW CHF PLN NOK CAD TWD TRY AUD RUB Yearly average change % (+ Appreciation – Depreciation) Volvo Car Group Results Presentation January – December 2020 34
Slide 35: SEK appreciation during 2020 vs 2019
SEK APPRECIATION DURING 2020 VS 2019 20.3% 12.4% 8.9% 3.7% 4.1% 3.8% 3.6% 2.7% 2.2% 2.6% 0.9% 0.7% -2.0% -3.0% EUR USD GBP CNY JPY KRW CHF PLN NOK CAD TWD TRY AUD RUB Yearly average change % (+ Appreciation – Depreciation) Volvo Car Group Results Presentation January – December 2020 35
Slide 36: Strong second half financial performance
STRONG SECOND HALF FINANCIAL PERFORMANCE 2020 H2 KEY FIGURES Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK) +7.4% +4.9% +8.0% +82.5% 392 151 9,500 26,100 365 144 8,800 6.1% 6.3% 14,300 2019 2020 2019 2020 2019 2020 2019 2020 H2
Slide 37: 2020 full year financial performance impacted by Covid-19
2020 FULL YEAR FINANCIAL PERFORMANCE IMPACTED BY COVID-19 2020 KEY FIGURES Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK) +14.7% -6.1% -4.0% -40.6% 705 274 14,300 13,300 662 263 11,600 5.2% 8,500 3.2% 2019 2020 2019 2020 2019 20
Slide 38: Financial development
FINANCIAL DEVELOPMENT RETAIL SALES REVENUE +5.4% +9.8% -6.2% -4.0% 705 661 274 263 642 253 535 572 209 SUV 181 273 359 445 Estate 254 469 Sedan 170 198 185 161 94 69 101 98 99 98 Other 42 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 EBITDA OPERATING CASH FLOW 29.9 35 30 26.2 27.4 15 32 21.5 23.