AB Volvo

good morning and welcome to this second quarter presentation uh today we'll cover the second quarter of the volvo group and we will do as always we'll listen to the our ceo martin lunstedt followed by our cfo matt spackman and then follow up with the q a session so without further ado i hand over to you martin

Thank you, Johan, for that introduction and also welcome from my side. And to start with, this second quarter has been characterized by a general stabilization in European markets and more of uncertainty and wait-and-see mood among customers in North America. We did see a solid performance with an adjusted operating margin of 11%. The societal transformation, not at least in Europe, to zero-emission solutions is slower than anticipated and therefore also one of costs have had a negative impact on the reported operating income. Across the group, we have continued to prioritize a high quality in the business by focusing on our customer deliveries and service operation. We did see good service activity levels, but also volume flexibility in the industrial system, tight cost control combined with commercial discipline and price management. We've had a good traction to adapt cost while we at the same time are maintaining high priority on innovation and technology. But also in these areas, we are now gradually adjusting for the right timing in relation to the speed of the transformation. Specifically for volume flexibility, we are in good balance for almost all markets. The only exceptions are group trucks in North America and partly South America, where we continue to have more cost related to specific situations. Firstly, there is a wait-and-see mood among customers in North America to place orders given the current uncertainties. We are therefore continuing to adjust production levels for group trucks in North America to minimize the under-absorption in production going forward, and that work is ongoing in good pace here. And that goes also that we have done for South America. Secondly, the continuous ramp up of the all new on road ranges for both Volvo and Mack, where extra resources still have been needed. That said, the ramp up costs have continued to improve during the course of the second quarter, as we also did see in quarter one. But even if the situation in Group Trucks North America affected the global trucks margin negatively yet another quarter, we have high ambitions for North America and our customers over there. And it's important that we continue to build a strong platform for the future. Another good proof point in that regard was the launch of Mac's all-new Anthem regional hall models following already introduced at the Q3 and Q4 last year Volvo VNL and also this year the Volvo VNR and the Mac Pioneer. So moving forward in these turbulent times for global trade, we focus on activities that we can influence ourselves. Here and now, we'll continue to build on our strong regional value chains combined with global capabilities to mitigate the effects from tariffs and other uncertainties. And in times of uncertainty, it is also essential to take a step back. And it's motivating to know that transport logistics will remain exciting growth opportunities for many years to come. In addition, we start also to see and feel how the emerging investments in defense and infrastructure, for example in Europe, will further enhance growth opportunities. So as we conclude the second quarter of 2025 with strong resilience and solid margins, a big thanks to customers, business partners, and of course, to colleagues. If we then summarize the quarter in figures, net sales declined to 123 billion on the back of lower truck volumes. It was a year-over-year drop of 12% and minus 5% when adjusting for currency. Regardless, we delivered a solid result with an adjusted operating income of 13.5 billion SEK and an operating margin of 11%. Cash flow amounted to 2.9 billion, which resulted in a net cash position in industrial operations of 43.1 billion. Return on capital employed in industrial operations was at 25.7%, rolling 12. And earnings per share was 3.64 krona. In the quarter, we also accounted for two one-timers which are excluded from the adjusted operating income. Firstly, as a result of the slower than previously anticipated societal transformation to zero emission vehicles, operating income includes impairment of battery electric assets and renegotiated battery volume commitments to Samsung with a total negative effect of close to 4.5 billion. Secondly, the creation of CoreTura, the software-defined vehicle platform joint venture, along with Daimler, resulted in a positive effect close to one billion SEK. So all in all, we summarize another solid result and quarter in turbulent times. When it comes to volume development, truck deliveries declined by 10% in the quarter, with lower volumes in North and South America, while deliveries of heavy-duty trucks in Europe were on the same level as last year. For construction equipment, deliveries increased by 11%. For the Volvo brand, it was flat year over year, while SDLG increased by 22%. When it comes to electrification, with different uncertainties related to the electrification, underlying demand has been slowing down, and the switch over to zero-emission transport is still driven by early adopters. Still, orders for fully electric vehicles increased with 59%, with increases across the business areas, and in particular for SDLG machines in China. But also truck orders increased with 53%. Deliveries increased with 26% and a mixed picture, minus 7% on trucks, while construction equipment was up 82%, driven primarily by STLG. In summary, despite the slowdown, we continue to push, which is, for example, reflected in our high market shares for medium and heavy-duty trucks, with almost 60% market share in the European market for the quarter, and for the first five months. However, as we and the industry have the products and solutions ready, it is more than overdue now for policymakers and other key stakeholders to push for other enabling conditions such as charging infrastructure and actions to stimulate demand. When it comes to vehicle and machine sales development, on the back of lower volumes, over sales of vehicle and machines declined 6% adjusted for currency. Truck sales declined 9% with mainly North and South America down. Construction equipment sales were up 2% and sales for buses were also up but with 1%. Volvo Penta sales were strong, and up 18% driven mainly by Jenset Engines in the industrial segment. The service business amounted to 126 billion 12 months rolling. That was flat adjusted for currency. But when also adjusting for the Arcus divestment, service sales did grow with 2%. And that is, of course, a sign of strength. All businesses are essentially flat to positive, while Penta is impacted by lower service sales in the marine leisure segment in the United States. The outcome for services is showing that our efforts in this area are paying off and provide, and more importantly, will further provide increased resilience in uncertain times. So all in all, a good and strong result from services. It was with great sadness that we on May 18th announced the passing of our CPO and dear colleague and friend, Andrea Foder, following a short illness. Andrea successfully led the global purchasing team through numerous challenges during her tenure. She was instrumental in driving the group's transition and increased resilience. Andrea is deeply missed, but her legacy will continue to be strong. Thank you, Andrea. During the quarter, Volvo Group and Daimler Truck launched the new company Cortura, setting a new industry standard for software-defined vehicles. Another positive news is that Volvo Groups and Implant in Skövde, Sweden, has been awarded up to 49 million euro from the European Union Innovation Fund to support the carbon smart factory project that we are currently doing in Skövde. This initiative aims to advance Volvo's transformation through net zero innovation and clean technology. Moving then into truck news, Mack Trucks continued their model changeover with the launch of their new regional haul truck, the all-new Mack Anthem. There are truly exciting times for Mack, with the first new Mack Pioneer launched in April, and now the all-new Mack Anthem. This provides a very strong lineup in the on-road segments, and Mack Trucks is geared up for profitable growth, not least in segments where we see clear growth opportunities. Volvo Autonomous Solutions has reached a major milestone in mining efficiency and productivity, successfully hauling over one million tons of limestone autonomously for customer Brønnhøykalk in Norway. And this achievement underscores the transformative impact of autonomous technology also in the mining and quarry segments, alongside also the hub-to-hub segments. When it comes to market forecast for Europe, our forecast for 2025 is unchanged at 290,000 units. Utilization of trucks is on good levels and the market is still replacement driven. Forecast also unchanged for North America at 275,000 units. The total market in 2025 will be supported by deliveries from dealer inventory that we see across brands, while production levels are more muted and we have gradually adjusted. In Brazil, forecast unchanged at 85,000 on the back of good activity level in both agriculture and mining segments, while increased interest rates dampen demand in other segments. The Indian heavy duty and medium duty market is expected to reach 360,000 units, and that is 20,000 lower than previous forecast. And we maintain the forecast of 710,000 units for the Chinese market for medium and heavy duty trucks. The overall book-to-bill for medium and heavy-duty trucks amounted to 89% in the quarter and 100% 12-month rolling. The European book-to-bill reached 94% with a strong production push in quarter two to cope with the good order levels in previous quarters. European demand is overall stable and we are now booking orders for quarter four as quarter three is essentially full for the European industrial system serving both Europe and international markets. Softer order levels in North America in the quarter led to a book-to-bill of 63%, as I said, also the wait-and-see mood. But continuous adjustments are gradually being done to balance between order production inventory levels and to take out the under-absorption. For South America, Africa, Oceania, and Asia, the book-to-bill ratios had had a healthy balance during the quarter. For market shares in Europe, Volvo and Renault Trucks continue to deliver strong market shares year-to-date May, with Volvo at 19.8% and Renault Trucks at 10.5%, giving north of a 30% combined market share. On the battery side, giving a total share, and despite more OEMs are now delivering battery electric solutions, Volvo and Renault Trucks delivered a strong 57.4% market share combined. In North America, Mack Trucks continue to deliver market share gains on their improved supply chain, and they are now at 7.2% year-to-date May. And Volvo Trucks have stabilized their changeover process into the new models and reached 7.6% year-to-date May. In Brazil, Volvo remains solid and market leader in Brazil with 23.3%. And Australia is transitioning from Euro 5 to Euro 6. And for now, Volvo and Mac are at 21% combined. We see that other actors are still selling Euro 5 from inventory, but expect a better second half in terms of market share when the whole market has transitioned into Euro 6. Volvo CE have, during the quarter, taken a number of significant steps in different fields. Number one, Volvo CE invests in crawler excavator production capabilities in South Korea to start with, where we have our center for heavy excavators, but also building new capabilities in Sweden and in the United States. We are thereby coming closer to customers, shortening our response and lead times to customer demand, and we are improving the resilience through a stronger regional value chain setup. During the quarter, Volvo Construction Equipment has also come to an agreement with Lantmännen to acquire Swecon's business, i.e. dealer operations in Sweden, Germany and the Baltics, and the acquisition moves Volvo CE closer to their customer in several of our key markets, thereby strengthening the service business and further enabling total solution sales. Closing of the transaction is anticipated in the second half of 2025. And also during the quarter, VCE signed a contract to sell its 70% ownership stake in China-based SDLG to a fund predominantly owned by the current minority owner Lingong Group. Going forward, Volvo CE will be targeting focused customer segments in China and enhance our strong footprint in utilization of the Chinese supplier ecosystem for China, but also to some extent for the rest of the world. When it comes to the market environment, rather undramatic in relation to previous forecast. Europe flat development versus 2024, that is an unchanged forecast. North America minus 10% as midpoint, also unchanged in relation to previous. We also guide for South America and Asia excluding China, flat development versus 24, also that is unchanged. And the only change we are doing is that government stimulus in China towards real estate driving demand primarily of compact machines and thereby increasing with five percentage points to a plus 10% midpoint market in relation to 2024. Overall, Volvo Construction is in balance when it comes to its book-to-bill, 19% in Q2 and 102% 12-month rolling. The European book-to-bill reached 100% in the quarter as European dealers are also gradually building up their inventories, especially excavators with long lead times. That is a sign also of a comeback here. The North American book-to-bill reached 95% in the quarter and 85% 12-month rolling. And the North American market is still in a destocking mood in the anticipation of a softer 2025 than previous year. And that is the minus 10% midpoint that we have guided for. South America, Africa, Oceania and Asia maintain a healthy balance in the quarter. Moving into Volvo buses, Prevost Buses in North America delivered the first bus to New York City's Metropolitan Transport Authority out of its plant in St. Clair, Canada. This marked the start of delivery of the largest contract in Prevost's history, including the firm order of 250 buses signed in December 23 for deliveries in 25 and 26. Volvo Buses also started the production of its first electric bi-articulated bus chassis. The Curitiba plant in Brazil will from now on be capable of exporting the electric chassis to BRT system worldwide. Book-to-bill reached 64% in the quarter, but this is more of a timing matter rather than a sign of slower markets, as Volvo buses had a very strong order level in quarter one and have good order coverage for the full year 2025. The 12-month book-to-bill is 97%. Volvo Penta, a very strong quarter and continues to push the boundaries of sustainable innovation. Now also in the marine IPS systems are available with fully electric propulsion. The aim is to electrify all five drivelines in the Volvo Penta IPS range, targeting power outputs from 220 kilowatt up to 1.1 megawatt per driveline. Book-to-bill continued to improve to 77% in Q1 and to 107% 12-month rolling. The good demand in the industrial segment continues, and especially for power generation, but now we also see that the marine business, and especially the commercial side, is starting to regain momentum. And financial services, the portfolio performance continued to be good, with customer delinquencies trending at average business cycle levels. Credit provisions increased slightly year over year with a reserve ratio at 1.33%, write-offs were stable compared to last year. During the quarter, the credit portfolio for financial services continued to grow, plus 5% adjusted for FX, and the new business volume reached 27.8 billion SEK, which is a record for a second quarter, equaling a 9% increase year-over-year adjusted for currency. And the 12-month rolling penetration reached 31% in quarter two, up by three percentage points versus last year. So by that, Johan, I leave the word to you.

Thank you, Martin, for your business update. We will now start to dig into the financial performance, and I leave the word to you, Mats.