Volvo Car AB (publ.)

Good morning and a very warm welcome to this Volvo Cars press conference where we will be talking about our first quarter financial results and our strategic direction as a company. My name is Ron and as always this morning I'm joined by President and Chief Executive Håkon Samuelsson, our Chief Financial Officer Frederick Hansen and we're also joined by our Chief Commercial Officer Eric Severinsson. At the start of this press conference, Hakan, Eric and Frederick will walk us through our performance and thereafter we'll throw it open for a question and answer round. You can participate in the Q&A round in two ways. Either you can send in a question via the chat. So then simply type in your question. You should be able to see the chat window at the bottom of your screen, in which case I'll read out the questions on your behalf. you can also have the opportunity to be able to ask a question. Use the link at the bottom of your screen, in which case the operator can help you navigate and we can hear you directly in this room. But I'll come back with more information ahead of the Q&A round. But for now, I'll hand it over to you, Håkan.

Thank you, Ron. And welcome to the presentation of our quarter one result. It has been a mixed bag. I mean, external factors, extremely turbulent geopolitical situation, tariffs, currency also has been negative for us altogether. That has given us a revenue drop of 12 percent, 11 percent volume drop. But we have also seen a very successful internal work with the cost and cash. And that is really the reason why we have closed the quarter despite 11% volume drop. We have a profitability level more or less equal to first quarter last year. And that is thanks to the really good progress on factors we can influence and control. Looking into the quarter a bit closer, in a situation like this, it's really important to concentrate on factors we can control. We have six unique benefits from Volvo. The first one is electrification. And there we see a real opportunity and electrification will be our driver for growth now going into the second half year. We will also remain a strong global brand despite a rather clear movement to a regionalized world. So we need to, in China, for example, work much more with the sort of China for China strategy. We will see much more locally adapted cars to really be competitive on that very tough market. And there, of course, we have a unique opportunity to work together with Geely to really... develop the cars that will really fulfill the demands of that market. China is also a very special market when it comes to supply of mechanical components. I think we can lower our cost structure a lot by using China's suppliers for even cars in Europe as one example. Fourth factor is really when it comes to electrification. We really have developed a car and the technology which is really leading on the market, including a core compute technology, which I think is something you need to really develop a true software defined car. And this is something where all suppliers need to go this way and we are really glad that we have this transition behind us because it's a very tough period to go from a distributed electronics to a central computer architectures five is that we are now entering a phase where we are back to more normal investment levels and also investment levels we defined with an affordable frame and that will of course also be very supportive for cash flow looking forwards And last but not least, we need also to understand this business is not just producing cars. It is also meeting customer expectations in the way we sell and service those vehicles. And we will hear a bit more from Erik about that later on. If you look into electrification, first quarter, BEV growth for Volvo was 12% up, and that was the fastest growth in the premium segment. We reached then a BEV share of 24%, also leading amongst our peers, and even higher percentage if you include chargeable cars, as all cars which can be charged is now very close to half of our production, which is also class leading. So strong momentum from electrification. And on that market also, of course, very important now to have a really top product. EX60 is really a car without compromise. It is developed as an electric car. is introducing some new groundbreaking technologies, cell to body for a longer range, more batteries installed in the car, and mega costing to bring down cost, eliminating more than 100 sheet metal parts into one single casted big body part. We also introduced with this car the HygienCore game-changing core system, the base for software-defined cars, as I said earlier. This is also a system which has been very proud to be recognized by standards and poor as the only established carmaker who are on the Level 5 level when it comes to software readiness. And this is thanks to the HuginnCore technology. We will also sell this car in a very transparent way. It will be a seven-base model. You choose color, you choose interior trim, and you can choose a couple of other options like wheels or tow bars. That's it. So it will be easier than ever to find your favorite Volvo on our new car selector site. Production started successfully. Demand is way above expectations. And also very important to see that the profitability of the orders are also above expectations. So it's really an important car now for the second half year when we, with electrification, will come back to growth. But it's not only this car. It's also important to add other cars to production. really increase addressable markets. For example, our smallest electric cars will be updated with a better interior, but we will also introduce a new entry-level powertrain to really increase the addressable market. In China, we do similarly with the XC70. There will also now be a front-wheel drive. version to addressing a lower price point and really having a china developed car fulfilling the expectation of chinese customers our flagship cars the ex90 and es90 will also be introduced on further markets in in asia Another thing not related to the hardware is the update. We have always said that Volvo will be a car that will be better during its life. And now we do a very big example of that. Two and a half million of our cars already delivered to customers will be updated and get it updated. totally new, improved user experience inside the car. So I think this is also an example of what we will see more of. But there will also come more car news in the future, so stay tuned for that. Let me then stop by looking into really what we are working on, on this very turbulent, tough market. we are increasing our efforts in cost and cash we had a very successful year last year eight billion saved we had an ambition to to do five billion more this year and in quarter one we saw 1.4 of that being materialized so we are well on track to see the 5 billion happening during this year. And as I said, investments will now be on an affordable level to really support our development back into positive cash flows for the company. Synergies, we are increasing our efforts to jointly with Geely, work with procurement to bring down material cost of our cars here in Europe as well. Another example of synergies is we are consolidating the production of the Polestar 3 car, which we contract produce for Polestar, has been earlier done in China and US. Now we concentrate that to Charleston in the US to have a better utilization of the factory. another example is lincoln co which we have introduced volvo will take over the full responsibility and add those car as an addition to the volvo offered products to our customers and this will of course be a very valuable addition for us we have a broader program we can go down in price pricing for certain models and for our partners is also, of course, a very valuable addition, especially as we are going into an electrified future with less service. top line is also something we need to focus on much more we have been successful with the cost focus now we need to focus on the top line and it's of course electrification as driver for growth but it's also operational sales performance what can we do more short term how can we activate our network to to be sharper in selling our cars it's also about bringing out a new way of offering our cars, a more customer-centric offer, and that is where we start with our EX60. So I think that's a good transition to leave the world over to you, Erik, to talk a bit more about what we do on the commercial side.

Thank you, Oke.