AB Volvo

welcome to the volvo group second quarter report today we'll do as always we'll listen to the presentation from our ceo and cfo martin and mats and then follow up with a q a session so with that i hand over to you martin

Thank you, Johan, and also welcome from my side. So as we conclude now the second quarter of 2024, I would like to start by thanking all colleagues, business partners and of course customers for a continuous very good cooperation during this quarter as well. In very challenging conditions, a lot of moving parameters, close and trustful relations are more important than ever. So thanks for that. and also when it comes to the business side as expected and following the trend we have seen for a while now demand continued to normalize across many of volvo groups major markets during the second quarter but still despite lower sales we did see or volumes i should say we did see sales coming in on the same level as last year also with strong operating income and strong operating margin also posted a number of records when it comes to return on capital employed and earnings per share. Operationally as a company, we are continuing to focus on being extremely close to our customers. Of course, the service operation also continue to execute on price and commercial realization flexibility in our industrial system and continuous tight cost control. But we are also maneuvering from a position of strength. In times when transformation in different shapes and forms are more important than ever, we are continuing to pursue also a very strong agenda, a strong investment and activity agenda when it comes to research and development, launches of new products and services, not at least also during this quarter. as well as digitalization as some examples. And that is of course to execute here and now, but also to make sure that we are competitive for the future. So if we summarize a number of the highlights for quarter one, starting then with sales on par with last year at 140 billion SEK. Adjusted operating income of 19.4 billion with a margin of almost 14% at 13.9%. Operating cash flow was 9.1 billion SEK in quarter two, which brought also the financial position in our industrial operation to a level of 59.3 billion SEK, almost on par with last year. We also, as I said, posted two records, a return on capital employed exceeded 40% for industrial operations, increased to 41.3%. And also when it comes to earnings per share, that rose to 7.65%. So all in all, we summarize another strong result. And again, I would like to thank everyone involved for the achievements. Then when we go to volumes, on the back of the normalized demand, our truck deliveries softened by 8% to 58,900 vehicles. And we are continuing to adapt our operations to the normalized demands in steps. And you will hear us talk more about that today, both me and Mats here. Also, construction equipment deliveries continued to normalize and softened 10% with Europe and North America down, while China showed signs of bottoming out now after rather major corrections over the last quarters and years here. So for both trucks and VC, it was a good job done, continue to work with the flexibility tools that we have in the group and to gradually and firmly adjust to the different demands in different regions. Electrification. Underlying electric demand is slowing down currently, and the switch over to zero emission transport is still driven by early adopters. In quarter one, booked orders were down 16%, one six percent, compared to last year. but we regard this as mid or short term temporary mainly related to uncertainty in the general economy interest rates incentives but also when it comes to energy prices and infrastructure availability and those components must continue to come together in order to to really ramp up here Deliveries on the other hand increased with 52%, but the broad adoption at scale will happen when enabling conditions are coming in place in a broader sense. We now have equipment available when it comes to the machines, when it comes to the comes to the trucks when it comes to the buses. But customers are still a bit hesitant before they know how exactly, for example, TCO will play out in relation to current powertrains in relation to the to the future powertrains but also and maybe more and more important also infrastructure availability both availability of different charging stations but also when it comes to grid capacity and energy availability But with that said, we are first out in our core markets and pushing the envelope here. Seven out of ten trucks in Europe are coming from the Volvo Group, still from low levels, but we are building a lot of knowledge. We are building a lot of relations with our customers. But we will continue also to be clear for society and the ecosystem as a whole that this is a coordinated effort to make it happen. And even if there is a short-term hesitation, we all know, both from a business perspective, but also from a societal perspective, that we need to deliver on these targets in order to be truly sustainable moving forward. Coming to the sales figures and then starting with equipment sales, on the back of continuing price carryover from 2023, vehicle sales remained at high level in Q2. Group vehicle sales excluding currency was down with 2%. Truck sales growing with 2% despite the lower volumes. Construction equipment down 19% primarily due to lower volumes in Europe and North America. Volvo buses, higher deliveries at higher value, gave a vehicle growth of 22%. And Penta had lower sales, minus 7%, and especially in the marine segment. We continue also our focus to grow services and had a 5% growth year over year for the second quarter adjusted for currency. Rolling 12 months, service sales exceeded 130 billion SEK. All business areas are growing during the quarter, mainly driven by improved commercial conditions. Efforts to increase service contract penetration and other services are also paying off step by step. Specifically in this quarter, the solid service growth for buses was mainly driven by more coach activities and VFS service growth was supported by the higher interest rates and a continued good penetration. When it comes to group news, Volvo Group and Daimler Truck, we share this ambition to lead now the transformation and implementation of software-defined heavy-duty commercial vehicles, which will enhance customer efficiency, customer experience, and also enable a more swift and solid transition into sustainable solutions. And building from that, Volvo and Daimler announced during the quarter the intention to form a joint venture for software-defined vehicle platform. Of course, still subject to necessary approvals from authorities. And just after the end of the second quarter on July 2nd, the divestment of Arcus to John Cockerill of Belgium was completed. And this was another step of pruning the Volvo Group's business portfolio and at the same time giving Arcus and the colleagues of Arcus a good home for their future development. And we thank all of them for a great job done within the Volvo Group. When it comes to truck news, we are also, in order to complete our roadmap for fossil-free solutions when it comes to powertrains, developing hydrogen-powered combustion engine trucks. As can be seen in this picture, you see part of the execution and not the details with injectors, etc. But on-road tests with trucks with using hydrogen for combustion will start in 2026 and we intend then to have a commercial launch at the end of this decade. And to further support this development, the joint venture together with the Westport Fuel System and Volvo Group is now operational. Also, Renault Trucks is moving ahead, decarbonizing its intrafactory logistics. The first stage involves the electrification of transport between their Bourg-en-Bresse and Lyon facilities. And in the quarter, the strategic alliance with Isuzu Motors took another important step when Volvo and Isuzu agreed to leverage Volvo technology also into Isuzu branded, and not only, if I may say so, Audi branded products in the coming years. When it comes to market forecast, starting in North America, we are reiterating our forecast from last quarter for this year, 290,000 units, and that is a correction of approximately 12% in relation to 2023. For Europe, we are also reiterating the correction, but we are making a small adjustment upwards to 290,000. from 280 000 that we had as a forecast in last in conjunction with quarter one and that means that we see a correction of around 15 percent in relation to 2023. Brazil slightly upwards, another correction upwards with 5%, up to 100,000 total market. India unchanged, but we are also correcting China downwards with another 50,000 units down to 750,000. When it comes to book-to-bill globally, and this is medium and heavy duty trucks, since that is more the complete value chain that we are sitting on, book-to-bill improved to 87% as the European manufacturing system was further and swiftly adjusted during the second quarter. Book-to-bill 12 months rolling was 84%. And the total heavy-duty order intake for the quarter improved with 11% year-over-year, and in Europe, book-to-bill for medium and heavy-duty was 87%, same as the global figure. In North America, we have mainly delivered out from the big order backlog that we have had, so book-to-bill was weak, even though the orders were improving year-over-year with 12%, mainly that related to MAC. We did see a continued good momentum in South America with a book-to-bill of 142%, and Asia was in good balance in the quarter. Then when it comes to truck market shares, and we can start in Europe, Volvo and Renault are on a combined level of the total market of 26%, and at 72% on battery electric vehicles. And in North America, the two brands, Mac and Volvo, have rebounded and had a combined market share of 17.6% for the first six months. Good performance in Brazil, market share of almost 23%, and the same goes for Australia with a combined market share for Volvo and Mac of 26%. Then moving into construction equipment, a lot of big news also here during the quarter, showing that we are, of course, forward leaning when it comes to the introduction of new products and services. As a matter of fact, Volvo CE unveiled during what they call the Volvo Days, well attended with customers and media in SC Stuna. biggest product renewal launch ever during this well attended event. And what you can see on the slide here is also the 12 ton wheel loader, fully electric. And you can also below see a full lineup of a lot of different news. For example, among the news, a complete range of excavators between 14 and 50 tons. were launched and also we are continuing to invest in vce for the preparation of a different type of powertrains in draws for example investments are ongoing to host different type of technologies Market forecast wise, slight adjustments. I mean, the continuous normalization and correction in our main markets are more or less on the expected levels as we already communicated in quarter one. But we are making two corrections. We are taking down Europe to minus 20% in relation to 23 as midpoint. And that is correction down with five percentage points. And the same goes for Europe. Latin America or South America where we are now expecting a flat market in relation to 2023 and also there it's a correction down with five percentage points for in relation to quarter one forecast. For book-to-bill orders and deliveries, the overall book-to-bill of VC was 89% in quarter one and 87% 12-month rolling. In Europe, we had a book-to-bill of 65% and we have been adjusting pretty heavy downwards there now. Dealer inventories need further reduction and hence we have reduced production accordingly and work with flexibility tools to balance with the order intake. And in North America book to bill is 75% as the market is also softening but from high levels. Dealer inventories are somewhat elevated both in Europe and in Latin America and we are having a very close watch on that obviously. But we are also showing with the flexibility tools that we can manage that in a good way. In South America, book-to-bill was down to 73%, but it should seen also on the back of a very strong first quarter. If you look at the 12 months ruling, it is in good balance, 96%. And that goes also for Asia, Africa and Oceania that were on basically 100%. Volvo Buses, strong quarter, strong structural improvements. If we start with the news, buses continue to introduce new smart safety systems which support the drivers and bring also more safety features for other surrounding people, not at least vulnerable road users, so a very important element for passenger transport. And the restructuring program and the introduction of a modified and partly new business model in Europe is progressing well and supports the structurally improved profitability for Volvo buses moving forward. Book to bill was 84% in the quarter and 93% 12 months rolling. Here it should be said that the order book is really full and Volvo Buses for the time being selective in placing orders since the order book is full for the year. Penta then. On the news side, a lot of interesting development. Maybe some of you did see the film just before the press conference started here. We have developed a fully electrified rural tractor, of course, in application with high potential. in partnership with the Belgian company MOL and the first unit is now operational in the DFD's terminals in Ghent. Good feedback there. In addition, and also related to applications where electrification is well suited, has retrofitted also a conventional crew vessel on the marine side with fully electric propulsion system installed with the inboard performance system, the so-called IPS system. And this is the first ever Volvo Penta IPS powered 100% by batteries and with no onboard diesel generators. And that is a really robust, sustainable and energy efficient solution. Book to bill 76% in the quarter and 84% for 12 month ruling and also here we are adapting our capacity as customers and especially in marine are destocking on the back of softer demand. Finally, when it comes to business update, VFS, Volvo Financial Services, good portfolio growth across most markets. The increase in the overall portfolio is related both to growth in the retail as well as in the dealer portfolios. Penetration level were good in competitive marketplace. The 12-month rolling penetration was 28% end of June. And VFS had stable performance and good earnings. The portfolio performance continued to be on an overall good level, although a return to more average business cycle conditions and behaviors are visible.

So that is the business update, Johan, and I leave back the word to you. Thank you, Martin, for the business update. Then we will start to take a look at the financial update from our CFO, Mats.