q1 2017 kortversion bok - volvo cars/media/files/v/... · will be crucial in supporting volvo cars...

VOLVO CAR GROUP

REPORT ON FIRST QUARTER 2017q1

Volvo Car GROUP REPORT ON FIRST QUARTER 2017

q1 / 2017

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VOLVO CAR GROUPREPORT ON FIRST QUARTER 2017q1

FIRST QUARTER

• Retail sales increased by 7.1 per cent to 129,148 (120,591) units

• Net revenue increased by 13.2 per cent to MSEK 47,592 (42,027)

• Operating income (EBIT) increased by 11.0 per cent to MSEK 3,491 (3,145)

• Net income increased by 26.0 per cent to MSEK 2,606 (2,069)

• Cash fl ow from operating and investing activities at MSEK –2,304 (–323) due to continuous invest-ments in new products

• Launch of the new XC60

• Volvo Cars recognised on the list 2017 of the World’s Most Ethical Company® by the Ethisphere Institute

VOLVO CAR AB (PUBL.) (556810–8988)

REPORT ON FIRST QUARTER 2017, GOTHENBURG APRIL 28TH 2017q1

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VOLVO CAR GROUP


Key figuresQ1

2017Q1

2016

Net revenue, MSEK 47,592 42,027

Research and development expenses, MSEK –2,672 –2,413

Operating income (EBIT), MSEK 3,491 3,145

Net income, MSEK 2,606 2,069

EBITDA, MSEK 6,361 5,588

Cash flow from operating and investing activities, MSEK –2,304 –323

EBIT margin, % 7.3 7.5

EBITDA margin, % 13.4 13.3

Retail sales (units)Q1

2017Q1

2016

EMEA 78,820 72,169

whereof Sweden 17,716 16,047

Asia-Pacific 32,872 28,348

whereof China 23,335 19,636

Americas 16,641 19,300

whereof US 13,476 16,361

Other1) 815 774

Retail sales total 129,148 120,591Wholesales total2) 139,052 127,966

1) Other sales refers to global specialist sales including e.g. diplomat sales.2) Wholesales refers to sales to dealers and importers.

All amounts are in MSEK unless otherwise stated. Amounts in brackets refer to the same period for the preceding year, unless otherwise stated.

This report contains statements concerning, among other things, Volvo Car Group’s financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Volvo Car Group’s future expectations. Volvo Car Group believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Such important factors include, but may not be limited to: Volvo Car Group’s market position, growth in the automotive industry, and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Volvo Car Group, its associated companies and joint ventures, and the automotive indus-try in general. Forward-looking statements speak only as of the date they were made and, other than as required by applicable law, Volvo Car Group undertakes no obligation to update any of them in light of new information or future events.

VOLVO CAR GROUP


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It has been a good start to 2017, the year we celebrate our 90th anniversary, with solid progress made towards all our strategic objectives. During the first quarter, net revenue increased by 13.2 per cent to MSEK 47,592 and we sold close to 130,000 cars, an increase of 7.1 per cent compared with the same period 2016. The operating profit of MSEK 3,491 for the quarter was sup-ported by our most popular model, the XC60, and by the S90 and V90 sales taking off. The operating profit is partly offset by the launch costs related to these new cars and the associated sales activities as well as continuous investments in new technologies and autonomous drive. This translates into an EBIT margin of 7.3 per cent.

In the first three months we have seen strong demand for our 90 series cars built on our in-house developed SPA platform, across all markets. Retail sales for the period grew by double dig-its in the Asia Pacific and the EMEA region. In the Americas, retail sales slowed on the back of a very strong sales development in 2016. The US market was affected by central distribution of 90 series cars to all markets in order to balance the strong demand for Volvo Cars’ SPA models globally.

In March, we unveiled the new XC60 at the Geneva motor show, which was very well received. Later in 2017, Volvo Cars will launch the XC40, which will be built on our new CMA platform, positioned in the fast growing compact SUV segment.

We are also making good progress on our strategic focus areas, with relentless attention on autonomous drive and safety, and the commercialisation of new technologies. We are con-stantly striving for new opportunities to make life easier for peo-ple through new mobility solutions, connectivity and electrifica-tion. With this in mind, we are recruiting outside of the traditional automotive industry, to enhance both our knowledge and exper-tise. Since the first quarter of 2016, we have welcomed almost 5,000 employees in to the Group, many of whom have previously worked for us as consultants. This includes engineers to our R&D function in Gothenburg, new working forces to our assembly plant in Ghent, as well as to our local production at Zhangjiakou and Daqing. This investment in people will support Volvo Cars as we expand our business.

To further support our strategy and organisation, we have strengthened the Executive Management Team with colleagues that have a diverse background in the technology and automotive industries. They, along with our colleagues across the company,

ceo COMMENT

will be crucial in supporting Volvo Cars in becoming the world’s most progressive and desired premium car company.

In April, we celebrated 90 years since our founders Assar Gabrielsson and Gustaf Larson first saw an opportunity for car manufacturing in Sweden. Today, Volvo Cars is one of the most well-known and respected car brands in the world. I am convinced that the next years will be the most exciting in our company’s history.

Håkan SamuelssonCEO

VOLVO CAR GROUP


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VOLVO CAR GROUP

REPORT ON FIRST QUARTER 2017q1 VOLVO CAR GROUP


Volvo Car AB (publ.), with its registered office in Gothenburg, is majority owned (99 %) by Geely Sweden Holdings AB, owned by Shanghai Geely Zhaoyuan International Investment Co., Ltd., reg-istered in Shanghai, China, owned by Zhejiang Geely Holding Group Ltd., registered in Hangzhou, China.

OverallDuring the first quarter, Volvo Cars sold 129,148 (120,591) cars, an increase of 7.1 per cent. The overall sales growth was sup-ported by Volvo Cars’ continued strong momentum in Asia Pacific and EMEA. Two of Volvo Cars’ key home markets, China and Swe-den, both achieved double-digit growth. During the same period, Volvo Cars’ total wholesale accounted for 139,052 (127,966) cars, an increase of 8.7 per cent.

The XC60 remained Volvo Cars’ most popular model during the first quarter, with 41,143 (34,315) units sold. This was followed by the V40/V40 Cross Country, selling 23,546 (23,330) units. Fur-thermore, the S90/S90L and V90/V90 Cross Country reached customers worldwide, contributing to robust sales of 7,328 (–) and 11,055 (–) units respectively. The global demand for 90 series cars is strong and during the ramp up phase of the SPA produc-tion Volvo Cars is centrally balancing production and distribution to all markets. The decided distribution of available SPA capacity resulted in a slight decrease of the XC90 sales to 19,170 (20,815).

Volvo Car AB (publ.) holds shares in its subsidiary Volvo Car Corporation and provides the Group with certain financing solu-tions. Volvo Car AB (publ.) indirectly, through Volvo Car Corpora-tion and its subsidiaries, operates in the automotive industry with business relating to the design, development, manufacturing, mar-keting and sales of cars and thereto related services. Volvo Car Group and its global operations are referred to as “Volvo Cars”.

EMEAIn line with positive economic developments, the general market for passenger car sales in Western Europe achieved strong growth of more than 7 per cent at the end of March. In particular, strong auto sales were recorded in Germany and the UK, with both countries delivering growth of more than 6 per cent. Demand for passenger cars also remained strong in Sweden and grew by more than 7 per cent. Following the wider industry trend, sales of SUVs increased at the highest rate among all vehicle segments.

Volvo Cars reported retail sales of 78,820 (72,169) units, a solid increase of 9.2 per cent. Key markets, such as Sweden, UK and Germany, all delivered good growth. Sweden recorded double- digit growth of 10.4 per cent and sold 17,716 (16,047) cars. With these robust sales figures, Volvo Cars kept its leading position in Sweden with a market share of 20 per cent. Further-more, sales in the UK grew by 10.4 per cent, totaling 12,681 (11,485) cars sold.

The XC60 was the best-selling model for Volvo Cars in EMEA and contributed to the sales increase. The V90/V90 Cross Country also supported the overall sales increase with 10,493 (–) sold units.

The Volvo Car Group

Sales development

Retail sales, (units)Q1

2017Q1

2016 Change %

EMEA 78,820 72,169 9.2

whereof Sweden 17,716 16,047 10.4Asia Pacific 32,872 28,348 16.0

whereof China 23,335 19,636 18.8Americas 16,641 19,300 –13.8

whereof US 13,476 16,361 –17.6Other 815 774 5.3

Retail sales total 129,148 120,591 7.1Wholesales total 139,052 127,966 8.7

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VOLVO CAR GROUP


Retail sales by model, (units)Q1

2017Q1

2016

XC60 41,143 34,315

V40/V40 Cross Country 23,546 23,330

XC90 19,170 20,815

V60/V60 Cross Country 14,346 13,215

S60/S60L/S60 Cross Country 12,323 12,747

V90/V90 Cross Country 11,055 —

S90/S90L 7,328 —

XC70 128 7,668

V70 101 6,395

S80/S80L 8 1,220

XC90 Classic — 886

Total 129,148 120,591

Top 10Retail sales by market, (units)

Q1 2017

Q1 2016

China 23,335 19,636

Sweden 17,716 16,047

US 13,476 16,361

UK 12,681 11,485

Germany 8,999 8,562

Belgium 5,062 5,308

Italy 4,809 4,515

France 4,156 3,897

Japan 4,108 3,666

Spain 3,273 3,175

VOLVO CAR GROUP


Asia PacificDuring the first quarter, the general market for passanger car sales in China increased by 10 per cent. SUVs and sedans were the fastest growing segments. Purchase tax for cars with engines less than 1.6 liters was raised to 7.5 per cent from 5 per cent in January. This increase in purchase tax slightly weakened auto sales growth in the overall market.

During the first quarter, Volvo Cars continued its sales momen-tum in China and delivered another strong quarter, with dou-ble-digit growth of 18.8 per cent, and 23,335 (19,636) sold units. This solid performance was on the back of good demand for Volvo Cars’ SPA models. Sales of the XC90 reached 2,526 (1,217) units, while the S90/S90L supported the sales result with 2,302 (–) units.

The XC60 was the best-selling model in Asia Pacific, followed by the S60/S60L. Sales of the XC90 doubled in the region and contributed to the strong volume growth.

AmericasDuring the first quarter, the general market for vehicle sales in the US fell by 2 per cent versus last year. While low financing rates and a solid economy continue to support sales, rising interest rates and falling used- vehicle prices threaten further US auto market growth in 2017 after the record auto sales high in 2016. Demands for crossovers and SUVs continue to outgrow other segments.

Volvo Cars’ sales in the US were affected by the Groups’ prior-itisation to centrally distribute 90 series cars to all markets to balance the strong global demand for Volvo Cars’ SPA models. As a result, Volvo Cars experienced a sales drop in the US. A total of 13,476 (16,361) cars were delivered to customers in the US, and total sales excluding the XC90 were up 4.5 per cent.

The XC90 remained the best-selling model in Americas.

RETAIL SALES BY MARKET JAN–MAR 2017

RETAIL SALES BY CARLINE JAN–MAR 2017

Americas 13%Asia Pacific 25%EMEA 62%

XC 47%

V 38%

S 15%

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VOLVO CAR GROUP


FIRST QUARTER 2017

Launch of the new XC60In March, Volvo Cars revealed the new XC60 premium SUV at the Geneva Motor Show, replacing the current XC60. The model rep-resents the first 60 cluster car produced based on SPA and is the next step in the Volvo Cars’ transformation plan. The new XC60 is set to go into production in mid-April at the Torslanda Plant in Sweden.

New shared mobility businessIn January, Volvo Cars announced that a new shared mobility business will be set up, as part of a broad expansion of its car sharing and mobility services strategy. The new business will be based around Sunfleet, one of the world’s first car sharing compa-nies that has been operated by Volvo since 1998.

New appointment to the Executive Management TeamIn January, it was communicated that Xiaolin Yuan, as from March 1st, would become Senior Vice President for Asia Pacific, replac-ing Lars Danielson who will retire. Mr Yuan brings local knowl-edge and experience to a role that will be central to Volvo Cars’ global development as he leads the company’s continued growth in this key region.

Significant events

VOLVO CAR GROUP


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VOLVO CAR GROUP


Income Statement (MSEK)Q1

2017Q1

2016

Net revenue 47,592 42,027

Gross income 10,639 9,714

Operating income 3,491 3,145

Income before tax 3,244 2,768

Net income 2,606 2,069

During the first quarter, Volvo Cars generated net revenue of MSEK 47,592 (42,027)*, an increase of 13.2 per cent. The increase was mainly a result of volume and a positive sales mix, driven by the most popular model, the XC60, and by the S90 and V90 sales.

Cost of sales increased by MSEK 4,640 to MSEK –36,953 (–32,313)*. The increase was attributable to higher sales volume and richer mix resulting in increased material cost. Gross income increased to MSEK 10,639 (9,714).

Volvo Cars’ continuous expansion and product renewal impacted research and development, selling as well as adminis-trative expenses, which increased to MSEK –7,601 (–6,647) in total. This is a result of continued renewal of the product portfolio, investments in new technology and autonomous driving, market-ing and events associated with the new SPA models, as well as new recruitments following the expanded business. For details regarding research and development expenses, see table below.

Other operating income and expense, net, amounted to MSEK 388 (–14)*, where sold licenses is the main driver.

In summary, operating income (EBIT) increased to MSEK 3,491 (3,145), mainly as a result of the positive volume and sales mix, partly offset by increased fixed costs, and negative foreign exchange effects resulting in an operating margin of 7.3 (7.5) per cent.

Net financial items amounted to MSEK –247 (–377), mainly related to a positive net foreign exchange result on financing activities and decreased interest expenses on external funding. Income tax is partly offset by withholding tax credit.

Net income amounted to MSEK 2,606 (2,069).

* Prior year net revenue and cost of sales have been restated to hedged currency rates.

Financial summaryFIRST QUARTER 2017 – INCOME AND RESULTThe comparative figures refer to the consolidated income statement of the first quarter 2016 if not otherwise stated.

Research and development (MSEK)Q1

2017Q1

2016

Research and development spending –3,476 –2,668

Capitalised development costs 1,834 1,158

Amortisation and depreciation of Research and development1) –1,030 –903

Research and development expenses –2,672 –2,413

1) Includes amortisation of capitalised development cost and a portion of depreciation of other intangible assets.

VOLVO CAR GROUP


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For the first quarter, cash flow from operating and investing activ-ities amounted to MSEK –2,304 (–323).

Cash flow from operating activities amounted to MSEK 3,019 (3,232). Operating income increased by MSEK 346 but was off-set by a negative development in working capital. The changes are related to inventories, due to increased production related seasonality and product mix, and other working capital assets/liabilities, partly offset by a positive effect from accounts paya-bles.

Cash flow from investing activities amounted to MSEK –5,323 (–3,555). Investments in tangible assets amounted to MSEK –3,573 (–2,534), following the ongoing construction of the US plant and special tool investments related to new car models, such as the new XC60 and S90/S90L and the upcoming XC40. Investments in intangible assets amounted to MSEK –1,826 (–1,176) as a result of continuous investments in new and upcom-ing car models and related products.

Cash flow from financing activities amounted to MSEK 2,871 (1,515) which is mainly attributable to matured marketable secu-rities of net MSEK 3,090 (1,737). Proceeds from credit institu-tions MSEK 534 (54) was offset by repayment of liabilities to credit institutions of MSEK –701 (–135).

Cash and cash equivalents including marketable securities decreased to MSEK 40,840 (43,373). The revolving credit facility of MEUR 660 remains undrawn. Net cash decreased to MSEK 16,608 (18,873).

Total equity increased by MSEK 3,194 to MSEK 46,504 (43,310), resulting in an equity ratio of 27.8 (26.8) per cent. The change is attributable to the positive net income of MSEK 2,606 and positive effects in other comprehensive income, mainly related to change in cash flow hedge reserves of MSEK 404 and remeasurement of post-employment benefits of MSEK 144.

NET FINANCIAL POSITION AND LIQUIDITYThe presented figures refer to the consolidated figures for the first quarter 2017 if not otherwise stated. The comparative figures for the cash flow items refer to the consolidated cash flow statement for the first quarter 2016 if not otherwise stated. The comparative figures for the balance sheet items refer to the consolidated balance sheets of December 31, 2016 if not otherwise stated.

VOLVO CAR GROUP


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SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD Joint venture with AutolivIn December 2016, Volvo Cars and Autoliv signed an agreement to establish a new joint venture company, Zenuity AB, to develop software for autonomous driving and driver assistance systems. During April 2017, all approvals from relevant competition author-ities have been received. Closing took place on April 18th 2017 and the operations of Zenuity AB started.

New appointment to the Executive Management TeamIn April, Martina Buchhauser was appointed Senior Vice Presi-dent Procurement and joins the Volvo Cars Executive Manage-ment Team. Ms. Buchhauser was previously the Senior Vice Pres-ident of Purchasing and Supplier Network for Interior at BMW since 2012.

RISKS AND UNCERTAINTY FACTORSRisks are a natural element in all business activities. In order to achieve Volvo Cars’ short- and long-term objectives, enterprise risk management is part of the daily activities at Volvo Cars. For a more in-depth analysis of risks, see the Volvo Car Group Annual Report 2016 page 76.

PRODUCTION Volvo Cars produced 152,626 (135,713) cars in the first quarter of 2017, an increase of 12.5 per cent.

EMPLOYEESDuring the first quarter of 2017, Volvo Car Group employed on average 32,980 (28,000) full-time employees. Furthermore, the Group employed on average 4,200 (3,455) consultants. The increased number of employees and consultants is mainly related to higher production volumes and the continuous development of future car models.

PARENT COMPANYThe parent company conducts no operations and has no employ-ees.

OUTLOOK 2017Revenue growthThe premium segment is expected to continue to develop posi-tively globally. While continuing the industrial transformation and renewal of our product portfolio, Volvo Cars expects further growth of revenue supported by retail sales growth in 2017.

Operating incomeWe expect a more premium model mix, following the introduction of the 90 series, partly offset by increased expenses for sales and R&D, to maintain a strong profit level.

InvestmentsIn 2017, we will continue to invest in our global manufacturing footprint, the renewal of our product portfolio and new technolo-gies. Capital expenditure is therefore predicted to increase slightly.

VOLVO CAR GROUP


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CONSOLIDATED INCOME STATEMENTS

MSEKQ1

2017Q1

2016Full year

2016

Net revenue 47,592 42,027 180,847

Cost of sales –36,953 –32,313 –143,020

Gross income 10,639 9,714 37,827

Research and development expenses –2,672 –2,413 –9,374

Selling expenses –3,177 –2,683 –11,992

Administrative expenses –1,752 –1,551 –6,471

Other operating income 862 334 2,467

Other operating expenses –474 –348 –1,861

Share of income in joint ventures and associates 65 92 418

Operating income 3,491 3,145 11,014

Financial income 75 57 218

Financial expenses –322 –434 –1,711

Income before tax 3,244 2,768 9,521

Income tax –638 –699 –2,061

Net income 2,606 2,069 7,460

Net income attributable toOwners of the parent company 2,253 1,833 5,944

Non-controlling interests 353 236 1,516

2,606 2,069 7,460

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CONSOLIDATED COMPREHENSIVE INCOME

MSEKQ1

2017Q1

2016Full year

2016

Net income for the period 2,606 2,069 7,460Other comprehensive income, net of income taxItems that will not be reclassified subsequently to income statement:Remeasurements of provisions for post-employment benefits 144 –460 –1,157

Items that may be reclassified subsequently to income statement:Translation difference on foreign operations 43 –86 514

Translation difference of hedge instruments of net investments in foreign operations 3 –17 –124

Change in cash flow hedge 404 1,025 –3,074

Other comprehensive income, net of income tax 594 462 –3,841Total comprehensive income for the period 3,200 2,531 3,619

Total comprehensive income attributable toOwners of the parent company 2,872 2,365 2,070

Non-controlling interests 328 166 1,549

3,200 2,531 3,619

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VOLVO CAR GROUP


CONSOLIDATED BALANCE SHEETS

MSEKMar 31,

2017Dec 31,

2016

ASSETSNon-current assetsIntangible assets 26,231 25,368

Property, plant and equipment 48,195 45,468

Assets held under operating leases 2,551 2,483

Receivables on parent company 54 54

Investments in joint ventures and associates 2,483 2,498

Other long-term securities holdings 78 79

Deferred tax assets 4,248 4,112

Other non-current assets 1,751 2,013

Total non-current assets 85,591 82,075

Current assetsInventories 25,850 21,198

Accounts receivable 8,803 8,717

Current tax assets 601 293

Other current assets 5,859 5,757

Marketable securities 1,666 4,738

Cash and cash equivalents 39,174 38,635

Total current assets 81,953 79,338TOTAL ASSETS 167,544 161,413

EQUITY & LIABILITIESEquityEquity attributable to owners of the parent company 42,402 39,536

Non-controlling interests 4,102 3,774

Total equity 46,504 43,310

Non-current liabilitiesProvisions for post-employment benefits 6,114 6,348

Deferred tax liabilities 1,716 1,209

Other non-current provisions 6,454 6,995

Liabilities to credit institutions 13,683 13,910

Bonds 7,679 7,699

Other non-current liabilities 4,240 5,818

Total non-current liabilities 39,886 41,979

Current liabilitiesCurrent provisions 16,211 15,371

Liabilities to credit institutions 2,776 2,813

Advance payments from customers 617 652

Accounts payable 32,620 30,508

Current tax liabilities 796 626

Other current liabilities 28,134 26,154

Total current liabilities 81,154 76,124TOTAL EQUITY & LIABILITIES 167,544 161,413

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VOLVO CAR GROUP


CONDENSED CHANGES IN CONSOLIDATED EQUITY

MSEKMar 31,

2017Dec 31,

2016

Opening balance 43,310 34,635Net income for the period 2,606 7,460

Other comprehensive income, net of income tax 594 –3,841

Total comprehensive income 3,200 3,619Transactions with owners –6 5,056

Closing balance 46,504 43,310

Attributable to Owners of the parent company 42,402 39,536

Non-controlling interests 4,102 3,774

Closing balance 46,504 43,310

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VOLVO CAR GROUP


CONSOLIDATED STATEMENTS OF CASH FLOWS

MSEKQ1

2017Q1

2016Full year

2016

OPERATING ACTIVITIESOperating income 3,491 3,145 11,014

Depreciation and amortisation of non-current assets 2,870 2,443 10,527

Interest and similar items received 75 57 218

Interest and similar items paid –43 –66 –953

Other financial items –16 –76 –418

Income tax paid –523 –371 –1,705

Adjustments for items not affecting cash flow 35 –63 522

5,889 5,069 19,205

Movements in working capitalChange in inventories –4,647 –1,992 –231

Change in accounts receivable –76 –95 730

Change in accounts payable 2,184 1,514 4,023

Change in items relating to repurchase commitments 207 –70 –342

Change in provisions 39 178 3,497

Change in other working capital assets/liabilities –577 –1,372 –21

Cash flow from movements in working capital –2,870 –1,837 7,656Cash flow from operating activities 3,019 3,232 26,861

INVESTING ACTIVITIESInvestments in shares and participations, net — 155 –1,462

Dividends received from joint ventures and associates 78 — 187

Investments in intangible assets –1,826 –1,176 –6,394

Investments in property, plant and equipment –3,573 –2,534 –12,669

Other –2 — –8

Cash flow from investing activities –5,323 –3,555 –20,346Cash flow from operating and investing activities –2,304 –323 6,515

FINANCING ACTIVITIESProceeds from credit institutions 534 54 1,696

Proceeds from bond issuance — — 7,579

Proceeds from issuance of preference shares, net –32 — 4,979

Repayment of liabilities to credit institutions –701 –135 –7,634

Investments in marketable securities, net 3,090 1,737 –1,189

Other –20 –141 361

Cash flow from financing activities 2,871 1,515 5,792Cash flow for the period 567 1,192 12,307

Cash and cash equivalents at beginning of period 38,635 25,623 25,623Exchange difference on cash and cash equivalents –28 –99 705

Cash and cash equivalents at end of period 39,174 26,716 38,635

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VOLVO CAR GROUP


GENERAL DEFINITIONS

Volvo Car Group and Volvo CarsVolvo Car AB (publ.), Volvo Car Corporation and all its subsidiaries.

Joint venture companiesJoint ventures refer to companies in which Volvo Car Group, through contractual cooperation together with one or more parties, has a joint control over the operational and financial management.

EBITEBIT represents earnings before interest and taxes. EBIT is syn-onymous with operating income which measures the profit Volvo Car Group generates from its operations.

EBIT marginEBIT margin is EBIT as a percentage of net revenue and meas-ures Volvo Car Group’s operating efficiency.

EBITDAEBITDA represents earnings before interest, taxes, depreciations and amortisation, and is another measurement of the operating performance. It measures the profit Volvo Car Group generate from its operations without effect from previous periods capitali-sation levels.

EBITDA marginEBITDA margin is EBITDA in percentage of net revenue.

Equity ratioTotal equity divided by total assets, is a measurement of Volvo Car Group’s long-term solvency and financial leverage.

Net cash/net debtNet cash/net debt is an indicator of Volvo Car Group’s ability to meet its financial obligations. It is represented by liabilities to credit institutions, bonds and other interest-bearing non- current liabilities, less cash and cash equivalents and marketable securi-ties. If negative, the performance measure is referred to as net cash and if positive the performance measure is referred to as net debt.

EMEAEMEA is defined as countries in Europe, Middle East and Africa.

Asia PacificAsia Pacific is defined as China, Japan, Australia, Taiwan, Korea, India, Thailand, and Malaysia, as well as importer markets in the region.

AmericasAmericas is defined as the United States, Canada, Mexico, Brazil and Latin American importer markets.

Performance measures disclosed in the interim report are those that are deemed to give the most true and fair as well as relevant view of Volvo Car Group’s financial performance for a reader of the interim report.

DEFINITIONS OF PERFORMANCE MEASURES

CONTACT

Nils MöskoVice President, Head of Investor Relations+46-(0)31–59 21 [email protected]

Volvo Car Group Headquarters405 31 Gothenburgwww.volvocars.com

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VOLVO CAR GROUP


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