AB Volvo

Good morning and welcome to the Volvo Group second quarter press conference. Today we do as we always do. We listen to our president and CEO, Martin Lundstedt, and then follow up with Matt Sparkman, our CFO, and then finalize with the Q&A. With that, I leave it over to you, Martin.

Thank you very much for that, Johan, and also welcome from my side. Even if it was a short introduction, I have to say it's always a little bit emotional to see our fantastic products in action. So second quarter 2026, and I would like to start by saying that the group and in reality, of course, all colleagues and business partners delivered very strong and solid results in the quarter with Just an operating income of 14.8 billion and a margin that expanded to 11.7%, demonstrating strong earnings resilience and growth despite the many moving parameters such as continuous geopolitical turmoil, tariffs as well as higher freight and material costs. Performance was good across business areas with high customer confidence in our products and services reflected in a strong order intake and low cancellations throughout the quarter. The group also launched several new business offerings as well as portfolio moves to further improve our competitive set. And I will get back to that during the course of this presentation. Quarterly order intake developed also positively with an increase year over year of 33% for group trucks as one example. And when it comes to the market forecast for the full year, we are for trucks continuing to revise slightly upwards Europe. while reiterating the forecast for North America, given that the first half year was relatively weak when it comes to deliveries into the market in North America and a catch-up will be needed there. But order intake has been strong as you have seen. Another example is the rapidly growing demand for power solutions. not at least linked to data center and AI infrastructure, resulting in an impressive 21% of Volvo Penta's order book value now is related to data center built out. Looking ahead, we continue to focus on what we as a group together with our partners can impact by staying close to our customers, thereby driving growth and resilience. And we remain responsive to geopolitical developments, trade policy shifts and the speed of transition into zero emission transport. Operationally, here and now, our flexibility toolbox serves us well to execute on the strong order book, but also maintaining balance between demand and supply and keeping inventories at the right level. The ramp up for trucks in North America is currently a key priority. Our focus also remains regarding effective cost control and we actively pursue commercial efforts to mitigate the increases in freight and material cost. The priority of the service business is giving good results, and services did grow with 7% organically, showing that our customers have a good utilization in their fleets. All in all, our flexible business model creates maneuverability to leverage the current environment to grab the opportunities and to continue to create value for customers, for employees, and for shareholders. And there is a continuous and growing structural demand in the world for efficient and effective transport infrastructure and not at least energy solutions. And the group is well positioned to move ahead and to grab these opportunities. Looking then at the figures, the first quarter net sales amounted to 126 billion SEK with an organic sales growth of 7%. We continue to focus on earnings quality and the adjusted operating income amounted to 14.8 billion with an expanded margin to 11.7% in the quarter. Operating cash flow amounted to 5.8 billion, mainly driven by higher earnings, and the industrial operation net financial position at the end of quarter one amounted to 34.7 billion. Return on capital employed reached almost 27%, and earnings per share amounted to 5.1 krona per share. So we can conclude another strong quarter, and I would like to take the opportunity also to thank all colleagues and business partners for great effort during this quarter. Coming into group news then, in the quarter, Volvo Financial Services and Eicher Motors Limited intend to form a joint venture, tapping into both Volvo and Eicher branded commercial vehicles. And the intended joint venture will provide financing, leasing and other financial services for customers of, as I said, Volvo and Eicher branded commercial vehicles in the Indian market. And that is a great opportunity. The closing of this deal is expected during the first half of 27, pending approvals from authorities. But it is a very important next step in a market that is expanding rapidly and where we have a strong position. On June 10th, we held the Volvo Group's Capital Markets Day in Eskilstuna, Sweden, built for resilience and growth. Well attended day with a lot of good interaction with our investor base, but also other key stakeholders and a lot of good interaction and feedback on that. Also Volvo Group and Renault Group together with CMA CGM has completed the strategic change for the joint venture Flexis and the transaction meaning that Flexis is moving into Renault Group was closed in June. And Volvo Group also reached a settlement with the California Air Resources Board during the quarter. When it comes to volume developments, truck deliveries increased by 6% to 55,700 vehicles with higher volumes in Europe and South America, but with lower volumes still in North America from a delivery standpoint and also in Asia. Volvo Construction Equipment's Volvo-branded volume did grow 14% in the quarter, driven mainly by North America, but also to some extent by Europe. When it comes to electrification progress, orders of electrical vehicles increased 39% to 5,500 units 12 months' ruling. The increase was primarily driven by Renault light commercial vehicles, but also that Volvo trucks took more orders for their heavy-duty electric trucks year over year, and that is also coming with the introduction of the new long-range and versatile platforms for Volvo. Deliveries were largely flat on a minus 2% level. Sales development, vehicle and machine organic sales growth was 6% in the quarter. Trucks did grow also with 6% fixed adjusted driven by sales in Europe and South America. Volvo CE had sales growth at 14% in the quarter driven by good sales across Europe, North and South America. And bus net sales were down 2%, mainly caused by somewhat softer sales in Europe. And Penta net sales were down 4%, mainly caused by lower sales to the Middle East, where some of the deliveries of power generation equipment has been temporarily paused due to the conflict situation that is happening for the time being in the region, unfortunately. But we are expecting that to come back, so that is temporarily paused. Service sales development, organic service growth amounted to an impressive 7% in the quarter. And what was very positive, it was broad-based positive development across business areas. The 12-month rolling service sales increased to 126 billion. And this is also showing that what we discussed during the Capital Markets Day, that our work with the total offer for every customer is really paying off here. Services is a very important focus area, and our efforts are paying off when it comes to not at least our service contract portfolio. We see that when we have service contracts, also it gives higher retention with our customer base, but also higher resilience and less volatility for the group. Moving into trucks then, in May Volvo Trucks showcased their brand new high performing 13 liter combustion engine platform, which will be implemented now step by step globally. The platform is also alongside with diesel fuel. Ready for renewables and alternative fuels such as biodiesel, HVO, biogas and green hydrogen. And sales will begin during the third quarter 2026. In June, Renault Trucks followed also Volvo, showed their next generation of battery electric heavy duty, the Renault Trucks E-Tech T, which has an impressive range of up to 660 kilometers and with maybe in that sense a leading payload reaching up to 27 ton. Sales started for Renault here end of June. And Mack Trucks, and you can see that on the image here, celebrated America's 250th anniversary with the debut of a limited-edition America 250 tribute truck. A custom-designed Mack Pioneer, as you can see here, honoring the company's deep American roots and its long-standing role in helping move the country forward. Then when we move into the market forecast for trucks in North America, we repeat our market outlook at 265,000 units in retail sales. That is sales out from dealers to customers. Orders levels have been elevated in recent months, while retail sales pace or the deliveries then is expected to gain momentum in the second half of the year. And any EPA 27 pre-buy is included in our current view. But it means that we need really now to get deliveries out during the last part of the year here. And for Europe, the forecast for 2026 is increased by 5,000 units to 350,000 on the back of continued strong underlying demand in the market. Brazilian market continues to hold up on the back of the Finame financing support package, and we repeat our market forecast of 80,000. Demand in India has continued to grow, supported by steady freight activity, continued investments in infrastructure and supportive government policies and healthy replacement need. Repeat our Indian market forecast of 400,000 medium and heavy duty trucks. And the total market forecast for China had been lifted with 120,000 units up to 880,000 on the back of extended trade-in program aimed to modernize the fleet. And that is really to continue to decouple the transport sector from fossil fuel dependence in China and continue to boost battery electric vehicle sales. Book to Bill, of course, very positive picture here. Recent order momentum across region supports a continued positive Book to Bill. And for globally, the book to build was at 170% in the quarter and 106% 12-month rolling. And we have gradually been ramping up and are well balanced on the industrial side to meet the customer demand. But as I said already, focus will be on a continuous ramp up in North America during the second half of the year here. North America itself has been strong with 150% in Q2 and 133% 12-month rolling. Europe in balance, but should be remembered that that is on really good and solid levels. And South America strong given Finami programs. On the truck market share side, in Europe, to start with, Volvo and Renault trucks continue to deliver strong market shares through May. Volvo at 19.6 and Renault at 9.3, giving a total share of almost 29%. And on the battery electric side, more OEMs are now delivering. Battery electric solutions, Volvo and Renault trucks delivered a 24% combined market share for the quarter. But to be remembered is that our recent launches of the next generation long-range and versatile electric trucks will regain momentum both for Volvo and Renault. And we proceed with our three-pronged approach with diesel, electric and hydrogen to drive both decarbonization and to meet the demands from the customers. In North America, we had a combined share of 17%. Mack Trucks is at 8.4% and Volvo at 8.6%. Volvo Trucks are back on the right track and regain gradually their position. And further support from over the road or the sleeper segments is expected for Volvo. In Brazil, remains at good level and reached a market share of 23.2%. And in Australia, the combined Volvo and Mac market share reached 21.4%. Moving then into construction equipment, Volvo Construction Equipment had, first and foremost, the Volvo Days 2026, a big customer event that was held in Eskilstuna. Focus was on, of course, a lot of our new products and services, productivity, sustainability, and long-term customer competitiveness. Over 8,000 guests participated over the course of four weeks, of course, including mainly customers from all over the world, but also retail partners and employees, but also representatives from society at large, policymakers, investors and suppliers. And in mid-June, we held also the groundbreaking ceremony for the new excavator factory in Eskilstuna. together with Sweden's prime minister and deputy prime minister. And this 700 million investment reinforces Volvo construction equipment, competitiveness, industrial footprint and proximity to customers in the important European market for excavators. And the new factory is set for completion in 2028. And in the quarter, Volvo CE also delivered the world's first electric articulated hauler, the Volvo A30 electric. And that is, of course, also fit for good operation, given the more confined nature, as you can see on the picture here. And we see an increasing customer interest around this and showcased not at least during the Volvo days here. Market forecast, no drama at all. On the other side, we are lifting, if we start with North America, we are lifting North America with five percentage points. We guided flat as midpoint previously, but now we guide plus five percent in relation to previous year, supported by investments in data centers, energy infrastructure and manufacturing on shoring. Europe, we had already plus 5% as midpoint in relation to last year, and we keep that at the same level as previous quarterly report on the back of continued infrastructure development, good machine utilization. South America also keeping unchanged, but in this case on a flat development in relation to last year. We are a little bit taking down and decreasing Asia from flat to minus 5% as midpoint on the back of the softer markets in Turkey and Middle East and somewhat in India as well. And China, we are lifting from plus 5% midpoint to plus 10%. And here we see growth supported by government policies to stimulate the real estate market and export industries. When it comes to the book-to-bill, they reached 92% in the quarter and 102% 12-month rolling. And here it's important to mention that orders were up 8% and deliveries up 14% for the Volvo brand. So we have a good order coverage for both Europe and North America. In Asia, the lower book to build is driven by somewhat decreasing markets in Turkey, Middle East and India, as I previously mentioned. Buses. First and foremost, the airport coaches operating between main cities in Sweden and the airports placed an order of new 25 coaches. and also complete the gold service contracts to be used for as I said then for between the cities and the airports. We also introduced the Volvo buses new electric coach into operations and start on the route between Gothenburg and Landvetter airport. Book-to-bill was 62%. Someone's seasonality in this from a loader order intake in the quarter. But Volvo buses have a balanced fill rate for the year and book-to-bill 12-month rolling at 92%. Volvo Penta continued to introduce new versions of the IPS hybrid platform, expanding its hybrid electric marine offering into the professional vessels segment with a strong customer interest given the performance of this execution. Volvo Penta also strengthened its position in the growing data center segment and expanded its strategic collaboration with Utility Innovation Group, Data centers, as I said, now represent 21% of Volvo Penta's total order book value. And the image on the screen here is from the switch data center in Las Vegas, produced by Volvo Penta's partner Central Power and powered by Volvo Penta D16 gensets. Volvo Pentas book to bill at good balance with 96% in quarter two and 97% 12 month rolling. Moving then into financial services, continued to profitably grow their portfolio on a currency adjusted basis through solid new retail financing. And the 12-month rolling penetration rate was sustained at 30%. Portfolio performance continued to be good with maintained earnings resilience. And, of course, we are now continuing to focus on the total offer, as again described during the capital market stay, where VFS, together with our business areas, are playing a very important role, both for customer finance, but also in the growing insuring segment.

So by that, Johan, I leave the word back to you. Thank you, Martin. Thank you for the business update. Now we're turning to Mats to take us through the financial numbers for the second quarter.