AB Volvo

Welcome to the Volvo Group first quarter report. We will do as always, we'll listen to the presentation from our CEO and CFO, Martin Mads, and then we'll follow up with the Q&A session. So with that, I hand over to you, Martin.

So thank you, Johan, and also from my side, most welcome. And as we conclude now the first quarter of 2024, I would like to start with thanking our customers, business partners and colleagues for a good continued cooperation and partnership also during this quarter. As all of us now know, we are living in a world with lots of uncertainties and in a world with lots of uncertainties, strong relations are more important than ever. When it comes to the quarter, as expected, demand continued to normalize across many of Volvo Group's major markets during the quarter. And still, despite lower volumes and lower deliveries of primarily vehicles, sales were on the same level as in the same quarter of 2023 of 131 billion SEK, with an operating income of 18.2 billions and an operating margin of 13.8%. Earnings per share increased with almost 10% to 6 kronor and 92 öre per share. And as a company, we continue now to prioritize high quality in the business by having a strong focus on our service operations, serving our customers, volume flexibility in the industrial system, tight cost control combined with commercial and pricing discipline. At the same time, we will continue to drive our R&D investments in the new technologies and services that are transforming our industries and thereby also securing our current and future competitiveness. If we summarize the quarter, the group continued, as I said, to deliver strong results with sales in line with last year. Our adjusted operating income came in on 18.2%, corresponding to a margin then of 13.8%. With a combination of strong earnings and focus on inventory management, we had a level of operating cash flow amounting to almost 9 billion, which elevated our net cash position to almost 89 billion SEK. And that was before then the distribution of shareholders' dividend in April. Return on capital employed in industrial operation increased to 37.7%. And as I said, EPS or earnings per share to 6.92%. So all in all, we summarize another strong result thanks to great work by colleagues supported by strong commercial and operational execution. On the back of normalized demands, our truck deliveries softened by 10% to 55,500 vehicles. And we are continuing to adapt our operations to the normalized demands in steps. We started at the end of last year and anticipate now to be fully in balance during quarter two with already decided measurements. The deliveries of Volvo construction equipment were flat, with increased deliveries by SDLG in China, while Volvo deliveries in Europe and North America decreased. But given the still complex situation, it was a great job done by everyone. When it comes to the electrification progress, underlying electric demand is slowing down somewhat. In quarter one, booked orders were slightly lower compared to last year, but we regard this more as a blip on the curve, mainly related to the uncertainties that we see right now. Uncertainties related to interest rates, inflation, incentive systems, but also energy prices and infrastructure availability. In addition, the lower order intake is partly also related to supply issues that we had during last year in North America that slowed down deliveries and built further the order book and order backlog. So from a customer and a little long order book and thereby it's a little bit of hesitations when it comes to the order intake. But from a customer perspective, it is still the early adopters that drive the current demand and the current order intake. With that said, we are first out in our core markets with the electrification offer and to push the envelope and we will continue to push. That is also reflected in our high market shares in our main markets that I will come back to. With that said, group electric orders amounted to 1,000 units in quarter one and deliveries to 1,300. And book-to-bill rolling 12 months was more or less in balance. When it comes down to sales of vehicle and machines, we had sales adjusted for currency decreasing with 2%. Trucks' invoicing level was flat versus same quarter last year. Sales of construction equipment were down with 9% due to the product and brand mix, lower volumes in Europe and North America, and increased deliveries in China. Sales of buses increased 24% linked with higher deliveries at higher value, primarily driven by our coach business. And sales of Penta declined with 9% with lower deliveries in most of the segments. We had a good continued solid demand for services with also good growth, plus 6% if we adjust the currency. This is the result of improved commercial conditions together with a continuous good and solid activity level amongst our customers. efforts to increase contract penetration and other services are also paying off step by step the group is now pacing at the solid level 12 months rolling of 129 billion group group trucks had a sales of three percent whereas construction equipment had a decline of three percent related to Somewhat softer machine utilization and more cautious deliveries to North American dealers after a very strong delivery quarter in Q4 2023. Volvo buses continue to show strong service sales development as people travel fortunately has continued to come back after the big hit that we did see during the pandemic. And for Volvo Penta, marine leisure was softer. Strong Volvo Financial Services growth thanks to a growing business portfolio. So all in all, a solid result from services and impressive achievement by the organization. And still, we have a good potential to continue that journey step by step. The quarter also contains several important group news. The acquisition of the battery business from Proterra in the US is now completed. Following also the letter of intent, we have in March signed an agreement with Westport Fuel Systems of the establishment of a joint venture for high-pressure direct injection fuel systems aimed for biofuels and hydrogen in combustion engines, also a very important piece of the puzzle when it comes to our journey towards fossil-free solutions. And at the end of March, Volvo hosted our AGM, where our shareholders decided for a total dividend of 18 kronor per share, corresponding to approximately 36.6 billion SEK in total. In addition, Per Boman was elected chair of the board, succeeding Carl-Henrik Svanberg, who stepped down after 12 years as chair. And we would like to take this opportunity to again thank Carl-Henrik for his great contribution to the group. We also had lots of exciting news at the beginning of 2024 in our truck business areas. Volvo Trucks has unveiled the all-new heavy-duty VNL product family for the North American market. And last week, Volvo Group also announced the establishment of a third hub for truck manufacturing in North America, and it will be located in Mexico. The new plant will be multi-brand and serve both Volvo and Mac and will be operational from 2026. This plant will complement our existing facilities in Virginia and Pennsylvania and add further capacity, so it will be a structural uplift. These news, in addition to previous announcements, will further support our growth plans for North America. In Europe, Volvo also launched the all-new Volvo Aero. Truck range and customer receptions are very positive. Also in March, Volvo Group together with Renault SIS or Renault Group and CMA CGM completed the creation of a joint venture Flexis SIS for an all new generation of electric vans for urban logistics built on a complete new way including a software defined vehicle platform. Renault Trucks and Renault Group have since many years a successful cooperation in the light commercial vehicle market, and this joint venture will further strengthen this cooperation, not at least targeting the growing last mile deliveries for e-commerce and retailers. When it comes to the truck market forecast around the globe, it is rather undramatic, since we are actually reiterating most of our forecasts that we've had from last quarter, and most of them actually already in relation to Q3 2023. So for the full year in North America and in Europe, we reiterate what we have already said, 290 for North America and 280,000 for Europe. And it is important to remember that those levels are still representing good and solid levels and more the underlying trend line. For Brazil, we increase the forecast with, again, I should say, with 5,000 units up to 95, reflecting also a good recovery. For India, a little bit of hesitation given also the election year. We are taking down the forecast with 35,000 units, but we see that this is the plateau and preparing for that. And for China, we are keeping the forecast in relation to last forecast unchanged. And maybe to say this, with this anticipated normalization, we have gradually and swiftly taken steps to adjust our capacity and cost base accordingly using the flexibility tools we have in the group. We will, given the current situation, be in balance in our operations during the second quarter, and we are implementing as we speak starting at the end of last year. When it comes to... Let's see here if it works. There. Looking a little bit to the book-to-bill situation for trucks in quarter one, group trucks had approximately 48,700 orders and 55,500 deliveries, leading to a book-to-bill of 88%. This is still in line with our expectation of a normalization of demand in our main markets, and I will come to the specific details here that I think are of importance. In Europe, The book-to-bill increased to 86% and moves towards balancing the industrial system during Q2, with the capacity adjustments that I just talked about and started end of last year. In North America, we had a book-to-bill of 64% as Mac production slots were moved into 2024 due to the strike during the fall of 2023. This move came on top of an already good order coverage for Mack Trucks. Hence, Mack has been very restrictive in taking new orders during quarter one. And I think that is important to take into consideration. In South America there is a continued good momentum in Brazil with growing order books and a book to bill of impressive 156% in the quarter. Also Africa, Oceania and Asia had good order coverage. So we will continue to make sure that we have the right balance between order intake production inventory and deliveries so we have an order book with the right quality to manage delivery reliabilities on one hand of course serving our customers while at the same time manage inflation and other uncertainties the main priority remains to maintain our commercial and pricing discipline When it comes to market shares, Volvo and Renault in Europe had a combined level of almost 26% when it comes to the total market and at almost 75% of battery electric vehicles. In North America, max share has been affected by the strike last fall. The two brands had a combined market share of 14.4% for the first quarter. That actually was in line with last year. But also in North America, we had a leading position when it comes to electric vehicles with a market share close to 50%. Volvo's performance in Brazil remains on a good level, market share above 22%, and Volvo and Mac in Australia had an impressive combined market share of 27%. For Volvo Construction Equipment, VCE introduced a new fully electric and grid-connected material handling machine, the EW240. And this is the latest addition to its range of zero-exhaust emission machines and an application well suited for grid connection. The machine is now available for select customers initially in Europe, but then we will continue to launch it in other regions as well. When it comes to market forecast of the construction market, it is following our expected normalizations in all our markets and in our main markets. Therefore, no changes have been made to the market forecast. And as the market are normalizing also here, we have and are gradually continuing to adjust our capacity and costs. When it comes to book-to-bill, the overall book-to-bill was 96% in quarter one and 82% 12 months rolling. In Europe, we had a book-to-bill of 88% and we are gradually adjusting our capacity to come in balance between order intake, order book and deliveries. very similar as for trucks. And in North America, book-to-bill was 83% with a somewhat softer market for excavators, but wheel loaders and haulers holding up. And in South America, we see a continued good momentum in Brazil and a very similar pattern to what we see for trucks. Also in Asia, book-to-bill was on a good level of 97%, and Africa and Oceania are reporting good order coverage. Volvo buses, book-to-bill in the quarter was lower at 67%, but with also the order patent, more important, book-to-bill of 105% for 12 months rolling, as Volvo buses came into 2024 with a high order coverage. The global BSET air electric chassis for City and Coach was launched in March. This truly flexible chassis platform enabling both platform synergies moving forward, but at the same time highly customized bodies for our customers. Volvo Buses also finalized the production of bodies in Poland, the restructuring activities in March, according to plan. And now the implementation of the new business model in Europe continues. And our external bodybuilding partners are preparing for production start during the course of the year and customer deliveries in 2025. And this is another important step to structurally improve the performance of Volvo Buses. Volvo Penta had a book to bill of 87% in the quarter and 84% 12 months rolling and is continuing to adapt its capacity gradually as Penta customers are destocking now on the back of the softer demand. During the quarter, Volvo Penta launched a successful IPS marine drive solution also for commercial ships and super yachts. The IPS professional platform. The technology builds on Volvo Penta's inboard performance system and electronic vessel control technology with enhancements now to accommodate even larger vessels. And Volvo Financial Services had good portfolio growth of 16% and growth across most markets, both for retail as well as wholesale. Penetration levels are stable, 12 months rolling, but have increased in relation to quarter one last year, both in Europe and North America. We did see solid earnings and stable portfolio performance in the VFS portfolio. Delinquencies are somewhat up from last year, but still on reasonable levels. And that, Johan, concludes the business report.

And I hand over back to you. Thank you, Martin, for your presentation. That brings us into the financial update by Mats. So please go ahead.