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Carla De Geyseleer, Per Ansgar, Therese Jandér2020-07-21
Volvo Cars 2020 First Half Year Update
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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 other 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
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2020-07-21 Volvo Cars 2020 First Half Year Update 2
2020-07-21 Volvo Cars 2020 First Half Year Update 3
1First Half Year 2020
3Outlook
2Financial Review
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
2020-07-21 Volvo Cars 2020 First Half Year Update 5
1First Half Year 2020
Half Year 2020 Financial PerformanceEBIT
Balance SheetCash flow
Financial Summary
3Outlook
2Financial Review
2020 H1 KEY FIGURES
COVID-19 IMPACTED FINANCIAL PERFORMANCE
Revenue(MSEK)
Retail sales (K UNITS)
EBIT / margin (MSEK/%)
341
270
2019H1
2020 H1
-20.8%
130,095
111,759
2020 H1
2019H1
-14.1%
5,519
-989
2019H1
2020 H1
-117.9%
Cash flow from operating and investing
activities (MSEK)
-2,759
-12,803
2019H1
2020 H1
-364.0%
4.2%
-0.9%
2020-07-21 Volvo Cars 2020 First Half Year Update 6
GROWTH TRAJECTORY AFFECTED ELECTRIFICATION ACCELERATED
2020 H1 SALES BY MARKET, CARLINE AND POWERTRAIN
70 70 77 95 101 91
70 83 8298 108 101
82 91 114131
155 153
282291
299
318341
290
2019 LTM20182015 2016 2017
504535
572
642
705
635
CAGR+4.7% -9.9%
XC
V
S
USEurope China Other
18
19
44
47
57 Sweden
Italy
UK
Germany
BeLux*
Model range distribution H1
PHEV sales (k units)
* BeLux: Belgium & LuxembourgH1 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
FINANCIAL PERFORMANCE
2020-07-21 8Volvo 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
REVENUE DECLINE LESS THAN VOLUME
2020 H1 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS
1,070111,759
Revenue 2019 H1
Used cars, P&A* and
others
-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%
OtherEurope US China
* P&A: parts & accessories
2020-07-21 Volvo Cars 2020 First Half Year Update 9
➢ 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
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-20Dec-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 personnelNo impact of technical unemployment included
44,497
2020-07-21 Volvo Cars 2020 First Half Year Update 12
1First Half Year 2020
Half Year 2020 Financial Performance
EBITBalance Sheet
Cash flowFinancial Summary
3Outlook
2Financial Review
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 H1Governmental support
1,0741,437
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
2020-07-21 Volvo Cars 2020 First Half Year Update 14
1First Half Year 2020
Half Year 2020 Financial PerformanceEBIT
Balance SheetCash flow
Financial Summary
3Outlook
2Financial Review
BALANCE SHEET REMAINS STRONG
2020-07-21 Volvo Cars 2020 First Half Year Update 15
ASSETS (MSEK)
JUNE2020
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
DECEMBER2019
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
2020-07-21 Volvo Cars 2020 First Half Year Update 16
1First Half Year 2020
Half Year 2020 Financial PerformanceEBIT
Balance Sheet
Cash flowFinancial Summary
3Outlook
2Financial Review
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
BUILDING THE FUTURE THROUGH FOCUSED AND CONTROLLED INVESTMENTS
ANNUAL CAPITAL
EXPENDITURE (BNSEK)
ANNUAL RESEARCH AND DEVELOPMENT
EXPENSES (BNSEK)
9.213.1
17.013.6 11.8 10.9
4.7
6.2
8.7
7.3 9.2 9.2
7.9%
10.8%
8.7%
201920162015
12.3%
2017
8.3%
2018
7.7%
25.7
2020 June LTM
13.9
19.320.9 21.0 20.1
% of Revenue Tangible investmentsIntangible investments
9.510.2 10.2
10.911.4 11.5
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
2015 2017
5.9% 5.7%
2018 20192016
3.6%4.3% 4.2% 4.5%
2020June LTM
R&D expenses% of Revenue
2020-07-21 Volvo Cars 2020 First Half Year Update 18
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
4,187524
13,593
2020June
Liquidity
3,518
51,997
2019DecemberLiquidity
Investments
68,094
FinancingOther**
24,282
43,288
Net working capital*
EBITDA
-11,252
69,108
-9,330
CashUndrawn 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
STRONG NET CASH POSITION
2020-07-21 Volvo Cars 2020 First Half Year Update 20
2020 MATURITY PROFILE AND SPLIT (MSEK)
1,800 5,2003,000 2,000
6,200 5,200200
2,4004,400
450
43,300
500
24,300
LiquidityJune 30
2020
2020 2021
7,400
2022 2023
450
2024
2,450650
2025 2026
68,100
7,6006,650
5,850
BondsUndrawn credit facilities Marketable securities LoansCash & cash equivalents
32,000
32%
68%
Loans Bonds
Net cash
11,800
2020-07-21 Volvo Cars 2020 First Half Year Update 21
1First Half Year 2020
Half Year 2020 Financial PerformanceEBIT
Balance SheetCash flow
Financial Summary
3Outlook
2Financial Review
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 witha net cash position of 12bn
2020-07-21 Volvo Cars 2020 First Half Year Update 22
2020-07-21 Volvo Cars 2020 First Half Year Update 23
1First Half Year 2020
3Outlook
2Financial Review
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
Thank You.
2020-07-21 Volvo Cars 2020 First Half Year Update 25
Appendix
2020-07-21 Volvo Cars 2020 First Half Year Update 26
FINANCIAL DEVELOPMENT
2020-07-21 Volvo Cars 2020 First Half Year Update 27
101 98 99
198 185 161 116170
273 359 445424254
LTM
69
642
2017
42
20192016 2018
572
95
535
705635
+4.4%
-9.9%
SUV
Sedan
Estate
Other
181209
253274 256
20192016 2017 2018 LTM
+9.1%-6.6%
26.2 27.429.9
23.4
0
5
10
15
0
10
20
30
12.5%
2018
10.8%12.1%
2016 2017
10.9%
2019
9.1%
LTM
21.5
EBITDAmargin, %
EBITDA
2725 27
32
22
20172016 2018 2019 LTM
RETAIL SALES REVENUE
OPERATING CASH FLOWEBITDA
BUSINESS RECOVERY
2020-07-21 28
2020 MONTHLY SALES* BY MARKET AND PRODUCTION RESTART (K UNITS)
EUROPE CHINA US
23 2324
9
15
28
AprJan MarFeb JunMay
10
1
10
15 15 15
JunJan MarFeb MayApr
6
8
6
4
1010
JunMayFebJan AprMar
* Sales: Volvo Cars retail sales
Volvo Cars 2020 First Half Year Update
