Volvo Car AB (publ.)

flagship fully electric SUV, the Volvo EX90, on November 9. And that is another milestone for the company as we approach the back end of this year. We look to share of recharged cars. That has been affected by the supply constraint. So we saw that reduce from 31% to 25%. However, when you look at as those supply constraints start to free up within the third quarter and we look at September in isolation, then we actually see that bed sales accounted for 13%, which is the highest in the history of the company. And our overall recharge is tracking to 31% when you look at September as an isolated month within Q3. And of course, that bodes well for ambitions for Q4 and beyond. And with that, let me hand over to Johan Ekedal, who will take us through the financials and a bit more detail. Johan.

Thank you, Jim, and good morning. Okay, let's then go through the financials a little bit more in detail. Retail sales volume's down 8%, which is then driven by the production constraints, especially earlier in the quarter, based on the lockdowns for COVID in China, the power cuts in China on the heat waves, and also continued supply constraints in certain components. However, we did see actually a turning point where we had the year-over-year increase in retail sales in September. So this has been gradually improving also during this quarter. Revenue, very strong, 30% up. strong pricing on the back of the good demand, strong mixes of cars. We also have seen a tailwind on FX, especially on the US dollar, and also that we have an effect from the contract manufacturing of cars than for Polestar. EBIT at 3.5 billion or 4.4% in the quarter, a decrease from last year, which is then driven by higher cost for raw material especially on electrified cars and on the lithium prices but also on high cost for spot purchases of semiconductors and also a higher euro effects. We'll come back more on EBIT just shortly in detail. Cash flow Positive operating and investing cash flow in the quarter, 3 billion, which is also somewhat of a turning point here compared to the previous quarters this year. So revenue, again, very strong, up 30%. We have an effect from increased wholesale volumes during the quarter. We do see continued good pricing on the back of the high demand. We do see a positive sales mix effect. And also a very strong FX, especially on the U.S. dollar, which is then contributing with almost 6 billion. On top of that, we have contract manufacturing for both are contributing 6.5 billion in the quarter. So all in all, strong revenue. EBIT then, we also here see a positive effect from volume and sales. mixes and also on pricing. FX virtually flat. We have a positive effect on US dollar, but we also have a strong Euro rate, which then makes this offset, you could say, to more or less flat. In addition to that, in this quarter, we have seen increased costs for raw material and freight. an effect from the flow-through of the high spot prices during the second quarter, where we do see a certain lag in time, and also continued high prices on battery materials, especially on lithium. In addition to that, we have seen high costs for spot purchases of semiconductors during the period, and we also have some more temporary effects on the geographical mix, which is then especially a lower U.S. mix unusual due to certain logistics issues towards the end of the quarter. That is something that we now normalize during the fourth quarter. And including Davidson Associates, EBIT at 2.1 billion, which is then affected 1.5 billion of results from Davidson Associates in the period. Epic development over time. As we see, we have been quite stable over time. Then we have this big uptake in Q2, including Davis & Associates, which is then, of course, driven then by the effects from the listing of Polestar. And then, as I just showed, we see a decline in the third quarter for the reasons just mentioned. Then margins, a deterioration during the quarter. which is driven by several things, one being then the increased cost for the raw material, especially batteries, and driven by the lithium prices. But we also, and that stands for say around half of this effect, but then we also see some other more temporary effects, especially on FX, also driven by the low US mix that I just mentioned, and also the U.S. dollar effects, which further affects the prices for batteries. And when we now go forward into the fourth quarter, we will see a more normalized geographical mix, and we will also see price increases further flowing through into the fourth quarter and also even further into 2023. On liquidity, we are at a solid liquidity level. We have a positive free cash flow of $3 billion in the third quarter, mainly driven by a positive working capital development now in doing this ramp up phase of the gradually improved production situation. We see also included in investments is $3 billion of what we have called pre-IPO transactions, which in this case is a shareholder loan to our JD with Geely or Bay in China. So the underlying operating free cash flow is actually even better. So with that short financial summary, I will be back to Jim to take us through the summary of the quarter.

Thanks, John. Okay, so end summary. The road to good remains robust and stable across the globe. Overall semiconductor situation is better, but the continued lockdowns in China caused by COVID and some of the heat waves have impacted our production. If we look at production for the year, especially if we're focusing on Q3, then production at 145,000 units is up 54,000 units year over year, with September dead production being the highest in the history. Recharge production in Q3 was 37%, 14% of that was fully electric. The effects of the lithium prices will continue to affect or put pressure on our raw material and overall prices as well as gross margins as we go into the fourth quarter. As we continue to put in cost measures to focus on productivity and efficiency to offset some of those additional costs. The additional pricing actions that we'll put in place are further to materialize in Q4 and beyond. And again, that will have a positive effect. Now, assuming that there is no further major supply chain disruption, production wholesale and retail are expected to grow in the second half of this year. However, we do expect a slightly lower wholesale volume by 2021. And this means that we'll be tracking towards double-digit dev sales for the full year as a regular client. despite all the uncertainties and they remain high we are fully focused on and remain fully committed to our long-term strategic objectives as outlined earlier in the call so one last point and that is the ex90 reveal in november 9th this is the reveal of our first spa 2 product which will be a flagship ex90 that we are excited to bring to the public and announce that on November 9th. With that, I will hand over to Ron, who will now take us through the question and answer session.