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Volvo Car
Quarterly Report • Apr 24, 2024
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Quarterly Report
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VOLVO CAR GROUP
INTERIM REPORT FIRST QUARTER 2024
JANUARY–MARCH 2024
- Retail sales increased by 12% and reached 182.7 (162.9) thousand cars.
- Revenue amounted to SEK 93.9 (95.7) bn, and was impacted by lower contract manufacturing sales, as well as negative foreign exchange rate effects.
- EBIT excluding share of income in JVs and associates was SEK 6.8 (6.3) bn, supported by higher volume and lower material costs, partially offset by sales mix and pricing. Operating income (EBIT) was SEK 4.7 (5.1) bn.
- EBIT margin excluding share of income in JVs and associates was 7.2 (6.6)%. EBIT margin was 5.0 (5.3)%.
- Basic earnings per share was SEK 1.12 (1.21).
- Operating and investing cash flow was SEK –12.2 (–17.4) bn.
- Volvo Cars and the European Investment Bank (EIB) signed credit facility agreements of EUR 170 m to develop a new all-electric vehicle platform.
- Winfried Vahland left the Board of Directors to assume a board of directorship in Polestar.
- On 26 March, the AGM resolved, in accordance with the Board of Directors' proposal, to distribute 62.7 per cent of Volvo Cars' shareholding in Polestar to Volvo Cars' shareholders. The AGM decision was pending a final formal approval from UK regulators.
UPDATES AFTER THE PERIOD FORWARD LOOKING
• On 5 April, the Board of Volvo Cars decided on the final terms and timetable for the distribution of 62.7 per cent of its Polestar shareholding to its shareholders. Prior to the decision, Volvo Cars had received all necessary regulatory clearances, approvals and decisions. After the distribution, the remaining shareholding in Polestar will be 18.0 per cent.
• For 2024, Volvo Cars expect a higher year-over-year growth rate in retail sales than in 2023, provided there are no major disruptions. Supported by our newly launched cars we are expecting to considerably increase the share of fully electric cars versus 2023.
| Jan–Mar SEKbn unless otherwise stated 2024 Retail sales, k units1) 182.7 |
Jan–Mar 2023 |
∆% | ||
|---|---|---|---|---|
| LTM | Full year 2023 |
|||
| 162.9 | 12 | 728.5 | 708.7 | |
| Revenue 93.9 |
95.7 | –2 | 397.5 | 399.3 |
| Research and development expenses2) –3.8 |
–2.9 | 33 | –13.8 | –12.9 |
| Operating income (EBIT)3) 4.7 |
5.1 | –8 | 19.5 | 19.9 |
| EBIT excl. share of income in JVs and associates3) 6.8 |
6.3 | 8 | 26.0 | 25.6 |
| Net income2) 3.6 |
4.0 | –10 | 13.7 | 14.1 |
| Basic earnings per share, SEK2) 1.12 |
1.21 | –7 | 4.29 | 4.38 |
| EBITDA3) 10.1 |
9.2 | 10 | 38.3 | 37.4 |
| Cash flow from operating activities2) –0.9 |
–2.4 | –61 | 44.3 | 42.9 |
| Cash flow from investing activities2) –11.3 |
–15.1 | –25 | –48.0 | –51.8 |
| Gross margin, %3) 19.3 |
17.9 | 8 | 19.7 | 19.4 |
| EBIT margin, %3) 5.0 |
5.3 | –6 | 4.9 | 5.0 |
| EBIT margin excl. share of income in JVs and associates, %3) 7.2 |
6.6 | 10 | 6.6 | 6.4 |
| EBITDA margin, %3) 10.8 |
9.6 | 12 | 9.6 | 9.4 |
1) Non-financial operating metric.
3) Non-IFRS measure (alternative performance measure), see Alternative performance measures on page 25.
2) IFRS measure.
Strong business performance with continued momentum
Dear shareholders and other members of our Volvo Cars community,
We have had a strong start to the year, with our first quarter results laying solid foundations for the year ahead. We reported double-digit retail sales volumes growth during the quarter and set a new all-time sales record for a single month in March. We continued to ramp up production and customer deliveries of our smallest SUV, the fully electric EX30. Our operating profit margin, excluding joint ventures and associates, reached a solid 7.2 per cent on the back of improved gross margins on our fully electric cars (EVs) of 16 per cent. The share of EVs to sales reached 21 per cent, up from 18 per cent last year. We also secured shareholder support to divest a majority of our shareholding in Polestar, allowing us to fully focus on the core operations of Volvo Cars.
At the same time, we started production of our first ever fully electric MPV, the EM90, while setting the stage for the first EX90 SUVs to roll off the production line during the first half of the year. We also remain focused on costs and capital allocation to ensure healthy cash and liquidity. I am confident that these actions will make 2024 another milestone year in our ongoing transformation towards becoming a leader in nextgeneration mobility.
In a turbulent and uncertain world, our strong and differentiated brand focused on safety, sustainability and human centric technology, coupled to our balanced product portfolio, continued to resonate with customers around the world. The result was a strong business performance with continued momentum and growth.
"We realised a strong business performance with continued momentum and growth"
Strong retail sales deliver solid financials
During the first quarter, retail sales rose by 12 per cent yearon-year to 182,687 cars, with a new all-time sales record for a single month in March. A strong performance in Europe and the US contributed to our sales growth, and we recorded new sales records for the first quarter in 11 markets, including in Germany, France, the Netherlands, Canada and Turkey. This demonstrates that we are on track towards our annual sales volumes target of at least 15 per cent growth in 2024.
In the quarter, 41 per cent of our global volume consisted of plug-in hybrid and fully electric cars, while our EV share of sales rose to 21 per cent. This reflects our balanced premium product strategy that offers exciting EVs alongside attractive plug-in and mild hybrids. In Europe, we were the third largest brand in EV sales, while our XC60 plug-in hybrid was the best-selling plug-in hybrid in the region during the first quarter.
Our first quarter performance also demonstrates the prospects of the EX30. In only a few months, the EX30 has lived up to its promise of being a profitable growth driver for our business while collecting numerous awards – most recently it won the 2024 World Urban Car of the Year and the Red Dot 'Best of the Best' Design award. In the first three months, thousands of customers across Europe got behind the wheel, with many more in line as we start delivering EX30 cars in other countries as well like the US, China, South Korea and Canada in the coming weeks and months. This means by the end of this year, EX30 will be sold in over 90 countries.
Along with the EX30, we have now also started producing the EM90 for China with the first customer deliveries made in March. During the first half of the year, we will also start production of the EX90 flagship SUV. This means that we will bring three EV models with our newest technologies in three different segments to the market in 2024. At the same time, we will offer very attractive plug-in hybrids and mild hybrids for years to come, as part of our balanced premium product strategy. We have updated several of those models recently and will continue to do so.
However, our focus is not only on delivering the best EVs with the latest technologies, but to do so with solid margins. During the first quarter, gross margins on our EVs improved to 16 per cent versus 7 per cent in the same quarter last year, which is among the best in the industry. This reflects the strength of the EX30, which brings in gross margins of 15–20 per cent, but also improved margins on the EX40 and the EC40. We will continue to work diligently to further close the margin gap with combustion engine-powered cars.
Helped by our sales performance, Q1 revenue came in at SEK 93.9 billion, compared to SEK 95.7 billion in the first quarter of 2023. Revenue was affected primarily due to less contract manufacturing. In addition, some foreign exchange effects as well as a sales mix that now includes the EX30 also affected revenues, although we maintained a healthy price discipline.
Our operating profit (EBIT) excluding joint ventures and associates landed at SEK 6.8 billion, an increase of 8 per cent versus the same period in 2023. The corresponding EBIT margin came in at 7.2 per cent, up from a margin of 6.6 per cent versus Q1 last year.
Our free cash flow in the quarter came in as planned at –12 bn SEK due to increased production and build-up of EX30 inventory, in addition to usually seasonally lower cash flow in Q1. We continue to focus on internal efficiency and take cost actions where we can, while ensuring capital allocation across our business to support our investments. As a result, we expect free cash flow generation to be neutral in 2024 and 2025. From 2026 onwards, we expect to deliver strong cash flows as the scale of investments declines and we start reaping the long-term benefits of our strategy with higher revenue and profitability.
Volvo Cars shareholders recently also approved our plan to lower our shareholding in Polestar to 18 per cent from 48 per cent during our third annual meeting of shareholders as a listed company. As previously communicated, this is a good and natural moment for a transition of our relationship with Polestar. It allows us to fully focus on our own investment plans, while Geely has expressed they will take full responsibility for continued operational funding for Polestar going forward. However, the close collaboration between Polestar and Volvo Cars in various areas will continue to the benefit of both companies.
Another highlight of the quarter was the reveal of our sharpened sustainability strategy. Among other parameters, we are boosting our focus on biodiversity and aim to link all debt to our green financing framework by 2025. We remain committed to being climate neutral and reaching net zero greenhouse gas emissions by 2040.
Already during the first quarter of the year, our CO2 emissions per car were 25 per cent lower versus our 2018 benchmark. Our factory in Taizhou became our first climate-neutral plant in China during the quarter. Following our Torslanda plant, which achieved this status in 2021, this is another important step towards our goal of having climate-neutral manufacturing operations by 2025.
Looking ahead
We expect demand for our cars to remain robust in coming quarters in line with our guidance of full-year sales volumes growth of at least 15 per cent. This is borne out by our balanced premium product portfolio and the fact that we continue to set new sales records in several markets across several regions. We also expect cash flow to improve in coming quarters, with a view to us being cash-neutral for the full year.
We remain firmly focused on achieving profitable growth and we expect 2024 to be another solid year after the record year of 2023. At the same time, we are mindful that the external environment continues to be challenging. Geopolitical uncertainties and macroeconomic headwinds remain. Yet I believe our mixed product portfolio of both fully electric cars and world class plug-in and mild hybrids, along with our increased focus on cost actions, will help us navigate these headwinds.
All of this positions us to achieve our ambitions of posting revenues of between SEK 550–600 billion and an EBIT margin above 8 per cent during 2026. I look forward to discussing those ambitions in more detail at our annual Capital Markets Day, scheduled for 5 September.
To conclude: our strategic planning and execution are working well and our balanced strategy positions us to deliver on our transformation journey, as it allows us to react to changing market demands quicker than many of our competitors.
Our balanced strategy is focused on 5 areas:
- Product we have cars in many sizes and segments: 30, 40, 60 and 90 range, SUVs, sedans, wagons and MPVs to meet the various needs of our global customer base.
- Propulsion we have mild hybrids, plug-in electric hybrids and fully electric cars.
- Production we have manufacturing facilities in every region: Asia, Europe and the USA. This aspect has become more important as trade environments continue to change across the world.
- Pricing we have maintained balanced price discipline across our various model choices, via our Core, Ultra or Plus variants.
- Partnerships we have carefully balanced our investment choices between internal development and building key partnerships with some of the world's leading tech companies, such as NVIDIA, Qualcomm, Google and Apple. We have also developed a strong retail and service dealership structure in all regions, with over 2,200 retail partners across the globe.
This balanced approach to our strategy has been created over many years and it positions us well globally. It is a key aspect towards continued growth. As I have said many times over my career: business is not a game of perfection, it is a game of continuous progress. This balanced strategy allows for that.
Throughout our 97-year history, everything we do has remained firmly rooted in our four brand pillars of safety, sustainability, human-centric technology and Scandinavian design, and this has taken us to where we are today. With these foundations we will continue to invest in the talent and technologies that will allow us to become a leader in next-generation mobility.
Jim Rowan
Chief Executive, Volvo Cars
Quarterly highlights
Volvo EX30 named 2024 World Urban Car
The fully electric Volvo EX30 was awarded the title of 2024 World Urban Car at the New York International Auto Show in March. The model was also named as one of the top three cars in the world out of a list of 38 nominees. Since the reveal in June 2023 the EX30 has won more than 15 major awards and proven to be a strong addition to the Volvo Cars' product portfolio.
Volvo Cars' industry-first connected safety technology
During the quarter, Volvo Cars introduced a pioneering connected safety feature: for the first time, cars can alert drivers of accidents ahead directly using real-time data from a traffic management centre. The Accident Ahead Alert feature is currently available in Denmark on all 40, 60 and 90 series Volvo car models, from model year 2016 and onwards. It will be made available on the same car models in more European markets soon.
Volvo Cars has streamlined model names to aid customer transparency
The fully electric XC40 Recharge and C40 Recharge models have been renamed to EX40 and EC40 respectively, to seamlessly fit in with the other fully electric Volvo car models: the EX30, EX90 and EM90. The XC40 name remains for internal combustion-powered variants of the model.
Volvo Cars partners with Breathe for next generation fast charging
Volvo Cars, through the Volvo Cars Tech Fund, has partnered up with Breathe Battery Technologies (Breathe), becoming the first car company to get access to the latest version of its patented, algorithm-enabled charging software. The aim is for the new technology to be implemented in our new generation fully electric cars, where it is expected to reduce the time it takes to charge a fully electric Volvo from 10 to 80 per cent charging state by as much as 30 per cent, while maintaining the same energy density and range.
Operational progress
Our industry is changing, and we strive to be a leader in that change. The purpose of this section is to keep our stakeholders updated on the operational events that have taken place during the quarter.
AMBITIONS
1) excl. JVs & associates.
FULL ELECTRIC SALES
The battery electric car volume share was 21% in the quarter, which was a 3% increase from the share in the same quarter last year. Total electrified sales share was flat at 41% compared to the same period last year. Supported by our new car introductions, retail orders remained stable at a global level.
Denmark, Brazil, Thailand, Ireland, Colombia and Iceland all had 100% electrified sales in the quarter, closely followed by Norway, Finland and a few other markets.
% Share of BEVs & PHEVs to total volume
Spaltbredd 82mm
BEV/Non-BEV profitability and share of investments
Compared to the first quarter of 2023 the fully electric new car gross income per unit has been positively affected mainly by lower costs for raw materials, increased pricing and cost efficiencies. The gross margins for BEV cars also improved compared to the fourth quarter 2023. This was mainly due to a further decline of raw material costs and from the introduction of EX30.
| Jan–Mar 2024 | Full year 2023 | ||||||
|---|---|---|---|---|---|---|---|
| BEV | Non BEV |
Com mon |
BEV | Non BEV |
Com mon |
||
| Retail sales (k units) | 38 | 145 | — | 113 | 595 | — | |
| Revenue per Car (SEKk/unit)1) |
416 | 428 | — | 465 | 440 | — | |
| Gross Income per Car (SEKk/unit)1) |
67 | 107 | — | 40 | 103 | — | |
| Gross Margin (%) | 16 | 25 | — | 9 | 23 | — | |
| Share of Investing Cash Flow (%)2) |
68 | 8 | 24 | 68 | 6 | 26 |
1) Revenue and gross income refer to new cars including emissions credits, excluding after sales, subscription and foreign exchange hedge effect. Labour and overhead are set to standard cost and fixed manufacturing costs are distributed by volume.
2) Investments refer to plant, property, equipment and capitalised product development only. Common investments are not defined as either BEV or non-BEV investments and consist of manufacturing efficiency, replacements & maintenance and infotainment development.
Sustainability
In January, we released our updated sustainability strategy with ambitious goals for 2030 and 2040, including CO2 emission reduction, energy, waste and water reduction in own operation and ambition to increase the recycled content across our fleet.
In the first quarter of 2024, we produced our last dieselpowered car – a significant milestone in our company's 97-year-old history. It will also be key in helping us reach our ambitions of reducing our CO2 emissions per car by 40% by 2025 and 75% by 2030, compared to the 2018 base year. For the full year of 2023, we reached a reduction of 20%. And for the first quarter of 2024, our efforts have resulted in a 25% reduction. We are making good progress towards our ambitions and acknowledge that our electrification plan is critical to this.
In March the EX30's LCA (Life Cycle Analysis) was published, which revealed that the car has the lowest carbon footprint of any fully electric Volvo to date (over 200,000 kms of driving and using the same energy mix during the use phase).
| CO2-reduction per car |
Total CO2-emissions per car (tonnes) |
Reduction (%) |
|---|---|---|
| 2018 | 54.9 | — |
| 2024 Jan–Mar1) | 41.0 | –25 |
| 2025 ambition | 32.9 | –40 |
| 2030 ambition | 13.7 | –75 |
| 2040 ambition | 0 | Net zero GHG emissions |
1) The greenhouse gas emissions (GHG) results did not include production and distribution of fuel and electricity.
We also made progress in our use of on-site renewable energy generation with the activation of the first batch of solar panels at our Chengdu plant, which have a capacity of approximately 2.1 GWh per year. A second batch is expected in early 2025, adding another 2.4 GWh of annual capacity. These sustainability-focused investments will lead to both environmental and cost benefits. In January, we expanded our green financing portfolio by signing a credit facility with the European Investment Bank of EUR 170 m, which together with the agreement signed in December 2023 takes the total to EUR 420 m. This supports our ambition to transfer all our funding into green or sustainability-linked funding by 2025 and provides us with the ability to fund our investments in green technology.
CO2 reduction (tonnes/car)
First quarter financial summary
SALES AND MARKET DEVELOPMENT
The overall global passenger car market grown slightly year over year during the first quarter of 2024 with regional differences. The BEV segment continues to grow at a faster pace than the overall market.
Volvo Cars' retail sales increased by 12% compared with the first quarter of 2023. Wholesales increased by 14% and production increased by 30%. The growth in retail sales was mainly driven by a successful roll out of EX30 supporting an increased production rate, with the first quarter marking the strongest production quarter ever with 235 (181) thousand cars produced.
The production volume development of the automotive markets is likely to stay at a similar level as last year according to S&P Global. As global supply situation eases, this will be largely determined by the consumer demand.
For Volvo Cars globally the overall demand for our cars remained robust. EM90, the fully electric MPV, started production and customer deliveries in China. With the ramp-up of EX30, Volvo Cars' share of BEV and PHEV combined was 41%, whereof BEV share was at a record 21 (18)%.
| Volvo Cars' market share per propulsion type1) 2) |
Jan–Feb 2024 |
Jan–Feb 2023 |
|---|---|---|
| BEV | 1.73% | 1.63% |
| PHEV | 4.31% | 5.85% |
| ICE (incl. mild hybrids) | 0.76% | 0.68% |
| Total | 1.08% | 0.97% |
| Total industry volume share and growth by propulsion type1) 2) |
Jan–Feb 2024 |
Growth YoY |
|---|---|---|
| BEV | 13% | 31% |
| PHEV | 6% | 49% |
| ICE (incl. mild hybrids) | 81% | 0% |
| Total | 100% | 4% |
1) Volvo Cars is and will continue to be positioned in the premium segment of the automotive market. As the market is transforming with electrification and digitalisation the definition of premium is being redefined. To simplify and to avoid the risk of excluding important parts of the market, we will report our market share in relation to the global passenger market.
2) Source: Includes content supplied by S&P Global Mobility Industry Performance, February 2024, capturing more than 85% of total world sales. All rights reserved.
Europe
The overall European passenger car market increased by 5%, while the BEV segment increased by 4%. The overall demand remains robust, although there are variances between different countries.
Volvo Cars' gained market share with retail sales increasing by 23%. The share of BEVs and PHEVs accounted for 61 (62)% in the quarter, whereof BEV sales accounted for 35 (29)% of retail sales.
China
The total Chinese passenger car market increased by 16%, while the BEV segment increased by 19%. The competition in the Chinese car market continued to be strong, with new domestic EV brands gaining attractions.
Volvo Cars' retail sales increased by 4%. BEV and PHEV share combined accounted for 6 (11)% in the quarter, whereof BEV sales accounted for 2 (3)% of retail sales.
US
The total US passenger car market increased by 5% while the BEV segment increased by 14%. The market has seen an increase in incentives as it is normalising after the past years' supply chain disturbances.
Volvo Cars' gained market share with retail sales increasing by 17%. BEV and PHEV share combined accounted for 26 (29)% in the quarter, whereof BEV sales accounted for 3 (11)% of retail sales.
Other markets
Volvo Cars' retail sales in other markets decreased by –12%. The largest markets were Turkey (+54%), Japan (–22%) and South Korea (–25%). The share of BEV and PHEV sales combined in other markets was 40 (40)%, whereof BEV accounted for 22 (19)%.
Sales development per carline
The SUVs, comprising of Volvo Cars' XC and EX models, accounted for 82 (82)% of total sales, driven by the best selling models XC60 and XC40. During the first quarter, the ramp-up of sales and retail deliveries of the EX30 continued, after the first cars reached customers during the previous quarter. The Sedan and Wagon segments' share of total sales amounted to 12 (11)% and 6 (7)% respectively.
| 3 Months | 12 Months | ||||||
|---|---|---|---|---|---|---|---|
| Retail sales (k units) | Jan–Mar 2024 |
Jan–Mar 2023 |
∆% | RTM | 2023 | ∆% | |
| Europe | 89.7 | 72.6 | 23 | 311.8 | 294.8 | 6 | |
| China | 38.0 | 36.5 | 4 | 171.6 | 170.1 | 1 | |
| US | 31.0 | 26.5 | 17 | 133.2 | 128.7 | 3 | |
| Other | 24.1 | 27.3 | –12 | 111.9 | 115.1 | –3 | |
| Retail sales total | 182.7 | 162.9 | 12 | 728.5 | 708.7 | 3 | |
| Electrified cars | 75.0 | 67.4 | 11 | 273.6 | 266.0 | 3 | |
| whereof BEVs | 38.2 | 30.1 | 27 | 121.5 | 113.4 | 7 | |
| Electrified cars share | 41% | 41% | 38% | 38% | |||
| whereof BEV share | 21% | 18% | 17% | 16% | |||
| Wholesales | 198.4 | 174.1 | 14 | 756.5 | 732.3 | 3 | |
| Production volume | 235.5 | 181.1 | 30 | 820.7 | 766.7 | 7 |
| 3 Months | 12 Months | ||||||
|---|---|---|---|---|---|---|---|
| Top 10 Retail sales by market (k units) |
Jan–Mar 2024 |
Jan–Mar 2023 |
∆% | RTM | 2023 | ∆% | |
| China | 38.0 | 36.5 | 4 | 171.6 | 170.1 | 1 | |
| USA | 31.0 | 26.5 | 17 | 133.2 | 128.7 | 3 | |
| Germany | 15.1 | 10.3 | 46 | 50.3 | 45.5 | 10 | |
| UK | 13.6 | 11.8 | 15 | 51.9 | 50.1 | 4 | |
| Sweden | 10.7 | 9.3 | 14 | 42.3 | 41.0 | 3 | |
| Netherlands | 8.4 | 4.8 | 74 | 19.8 | 16.3 | 22 | |
| Belgium | 6.9 | 5.9 | 18 | 24.9 | 23.9 | 4 | |
| Italy | 6.6 | 4.8 | 36 | 20.9 | 19.2 | 9 | |
| France | 5.5 | 3.7 | 48 | 17.1 | 15.3 | 12 | |
| Poland | 5.0 | 3.7 | 35 | 13.6 | 12.3 | 11 |
| 3 Months | 12 Months | ||||||
|---|---|---|---|---|---|---|---|
| Retail sales by model (k units) | Jan–Mar 2024 |
Jan–Mar 2023 |
∆% | RTM | 2023 | ∆% | |
| BEV | |||||||
| EX40 | 17.4 | 21.1 | –18 | 71.9 | 75.7 | –5 | |
| EX30 | 14.5 | — | — | 15.2 | 0.6 | — | |
| EC40 | 6.0 | 9.0 | –33 | 34.2 | 37.1 | –8 | |
| EM90 | 0.2 | — | — | 0.2 | — | — | |
| Non-BEV | |||||||
| XC60 | 56.4 | 50.1 | 12 | 234.9 | 228.6 | 3 | |
| XC40 | 29.0 | 28.9 | — | 125.1 | 125.0 | — | |
| XC90 | 26.3 | 24.4 | 8 | 109.5 | 107.5 | 2 | |
| S60 | 10.9 | 8.1 | 35 | 43.0 | 40.2 | 7 | |
| S90 | 10.8 | 10.4 | 4 | 49.7 | 49.3 | 1 | |
| V60 | 8.8 | 7.7 | 14 | 31.5 | 30.4 | 3 | |
| V90 | 2.3 | 3.2 | –27 | 13.4 | 14.2 | –6 | |
| Total | 182.7 | 162.9 | 12 | 728.5 | 708.7 | 3 |
V60 and V90 include the cross-country versions.
INCOME AND RESULT
The comparative figures refer to the consolidated income statement of the first quarter 2023 if not otherwise stated.
Volvo Cars' revenue amounted to SEK 93.9 (95.7) bn. Wholesale volumes increased by 14% to 198.4 (174.1) thousand cars, resulted in a SEK 4.5 bn increase in revenue. The revenue was impacted by decreased contract manufacturing sales, amounting to SEK –4.3 bn, as well as negative foreign exchange rate effects, including hedges, of SEK –2.1 bn. See complete revenue bridge below.
Gross income increased by 6% to SEK 18.1 (17.1) bn, resulting in a gross margin of 19.3 (17.9)%. The gross margin increased mainly due to lower costs for raw materials. Foreign exchange rate effects, including hedges, in cost of sales were positive amounting to SEK 1.7 bn. The net effect of foreign exchange rates, including hedges, in gross income was negative and amounted to SEK –0.4 bn.
Research and development expenses increased by 33% to SEK –3.8 (–2.9) bn, primarily relating to more projects starting amortisation phase. For details regarding research and development expenses, see the Research and development table on page 10. Selling expenses remained consistent with the prior year and amounted to SEK –5.8 (–5.8) bn. Similarly, administrative expenses amounted to SEK –2.8 (–2.8) bn.
Other operating income and expenses increased by 71% to SEK 1.1 (0.6) bn mainly related to positive exchange rate effects from the valuation of operating assets and liabilities. Share of income in joint ventures and associates decreased to SEK –2.1 (–1.2) bn.
Operating income (EBIT) excluding share of income in joint ventures and associates, increased to SEK 6.8 (6.3) bn, corresponding to a margin of 7.2 (6.6)%, supported by higher volume as well as lower material cost. EBIT amounted to SEK 4.7 (5.1) bn, resulting in an EBIT margin of 5.0 (5.3)%. The exchange rate effects, including hedges, had a positive impact on EBIT of SEK 0.4 bn, see the table below.
Net financial items increased to SEK 0.4 (0.3) bn, primarily driven by the market revaluation of the investments in Volvo Cars Technology fund. The effective tax rate increased to 29.6 (26.2)%, mainly due to high non-tax deductible loss linked to share of income in joint ventures and associates. Net income was SEK 3.6 (4.0) bn and 3.8 (4.2)% in relation to revenue. Basic earnings per share amounted to SEK 1.12 (1.21).
| Changes to Revenue, SEK bn | Jan–Mar |
|---|---|
| Revenue Q1 2023 | 95.7 |
| Volume | 4.5 |
| Sales mix and pricing | –1.9 |
| Sale of licences | 0.3 |
| Foreign exchange rates | –2.1 |
| Contract manufacturing | –4.3 |
| Other1) | 1.7 |
| Revenue Q1 2024 | 93.9 |
| Change, % | –2 |
1) Including used cars and parts and accessories.
| Changes to Operating income, SEK bn | Jan–Mar |
|---|---|
| EBIT Q1 2023 | 5.1 |
| Volume | 1.1 |
| Sales mix and pricing | –2.0 |
| Sale of licences | 0.2 |
| Foreign exchange rates | 0.4 |
| Share of income in JVs and associates | –0.9 |
| Other2) | 0.8 |
| EBIT Q1 2024 | 4.7 |
| Change, % | –8 |
2) Mainly including cost efficiencies, used cars, and parts and accessories.
| 3 Months | |||||
|---|---|---|---|---|---|
| Research and development, SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
∆% | 2023 | |
| Research and development spending | –6,404 | –6,504 | –1.5 | –26,943 | |
| Capitalised development costs | 4,649 | 4,786 | –2.9 | 18,912 | |
| Amortisation of research and development | –2,072 | –1,160 | 78.6 | –4,853 | |
| Research and development expenses | –3,827 | –2,878 | 33.0 | –12,884 | |
Revenue & Gross Margin
Operating Income (EBIT) & EBIT Margin
CASH FLOW
The comparative figures for the cash flow items refer to the consolidated cash flow statement for the first quarter 2023 unless otherwise stated. The comparative figures for the balance sheet items refer to the consolidated balance sheets of December 31, 2023 unless otherwise stated.
Total cash and cash equivalents, including marketable securities, decreased to SEK 46.1 (57.8) bn. Net cash decreased to SEK 14.8 (27.5) bn. Liquidity amounted to SEK 65.9 (75.0) bn, including undrawn credit facilities of SEK 19.8 (17.2) bn.
Cash flow from operating activities
Cash flow from operating activities amounted to SEK –0.9 (–2.4) bn. The amount consists of operating income of SEK 4.7 (5.1) bn, adjusted for depreciation and amortisation of SEK 5.4 (4.1) bn, together with paid income tax of SEK –0.9 (–1.2) bn.
The change in working capital amounted to SEK –12.1 (–11.1) bn. Cash flow from changes in inventories amounted to SEK –13.7 (–3.9) bn mainly due to seasonality but also due to increased ramp up of EX30 and cars under repurchase contracts. The latter is also the main driver to the movements in account receivables SEK –6.7 (4.2) bn and to other working capital SEK 10.0 (–2.9) bn, together with changes in VAT receivables.
Cash flow from investing activities
Cash flow from investing activities amounted to SEK –11.3 (–15.0) bn. Cashflow from investments in tangible assets amounted to SEK –5.6 (–6.0) bn, mainly driven by the industrial structure to prepare for future products. Investments in intangible assets amounted to SEK –5.1 (–5.5) bn as a result of continuous investments in new and upcoming car models and new technology, such as electrification technology and autonomous driving.
Cash flow from financing activities
Cash flow from financing activities amounted to SEK –0.3 (3.9) bn. The changes last year was mainly related to a change in marketable securities of SEK 3.4 bn.
Cash flow from Operating and investing activities
| 3 Months | Full year | |||
|---|---|---|---|---|
| Cash flow statement, SEK bn | Jan–Mar 2024 |
Jan–Mar 2023 |
2023 | |
| Cash flow from operating activities |
–0.9 | –2.4 | 42.9 | |
| Cash flow from investing activities |
–11.3 | –15.0 | –51.8 | |
| Cash flow from operating and investing activities |
–12.2 | –17.4 | –9.0 | |
| Cash flow from financing activ ities |
–0.3 | 3.9 | –5.3 | |
| Cash flow for the period | –12.5 | –13.5 | –14.2 |
EQUITY
Total equity increased to SEK 134.2 (130.5) bn, resulting in an equity ratio of 36.3 (36.6)%. The change is mainly attributable to a positive net income of SEK 3.6 bn and minor effects in share-based payments and other comprehensive income.
The change in other comprehensive income is related to a foreign exchange translation effect, including hedges of net investments in foreign operations of SEK 1.2 bn (net of tax). Remeasurements of provisions for post-employment benefits had a positive effect of SEK 1.2 bn (net of tax). The negative change in cash flow hedge reserve related to currency and commodity price risks of SEK –2.3 bn (net of tax). The change in value of cash flow hedges is mainly due to depreciated SEK compared to most of the major currencies.
Other Information
PARENT COMPANY
The parent company does not conduct any operations and has no employees. The income statements and balance sheets for the parent company are presented on page 23.
EMPLOYEES
During the first three months 2024, Volvo Car Group employed 42.0 (43.4) thousand full-time employees (FTEs) and 3.7 (4.0) thousand agency personnel. These decrease are mainly due to the cost-efficiency initiatives started during the first half of 2023.
RISKS AND UNCERTAINTY FACTORS
To ensure that Volvo Cars is able to achieve short- and longterm objectives, enterprise risk management is part of daily activities at Volvo Cars. For a more in-depth description of risks related to Volvo Cars, see the Volvo Car Group's Annual Report 2023 page 51. We consider the risk and uncertainty factors to remain the same as described in the annual report except for the following update:
Macroeconomics and geopolitical uncertainty
The uncertain macro and geopolitical environment continue, including high inflation, elevated interest rates, raw material price volatility, ongoing geopolitical complexity and regulatory changes such as subsidies, tariffs and duties or application of these by relevant authorities. The uncertainties in the financial markets are still high. The risks of potential impact on demand from higher interest rate levels and lower consumer confidence, remain at an elevated level.
Consolidated Income Statements
| SEKm | Note | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|---|
| Revenue | 2 | 93,878 | 95,705 | 399,343 |
| Cost of sales | –75,806 | –78,606 | –321,916 | |
| Gross income | 18,072 | 17,099 | 77,427 | |
| Research and development expenses | –3,827 | –2,878 | –12,884 | |
| Selling expenses | –5,772 | –5,789 | –26,056 | |
| Administrative expenses | –2,784 | –2,765 | –12,539 | |
| Other operating income and expenses | 1,106 | 648 | –381 | |
| Share of income in joint ventures and associates | –2,089 | –1,215 | –5,628 | |
| Operating income | 4,706 | 5,100 | 19,939 | |
| Interest income and similar credits | 681 | 499 | 2,495 | |
| Interest expenses and similar charges | –444 | –200 | –772 | |
| Other financial income and expenses | 3 | 155 | –15 | –802 |
| Income before tax | 5,098 | 5,384 | 20,860 | |
| Income tax | –1,511 | –1,409 | –6,794 | |
| Net income | 3,587 | 3,975 | 14,066 | |
| Net income attributable to | ||||
| Owners of the parent company | 3,342 | 3,611 | 13,053 | |
| Non-controlling interests | 245 | 364 | 1,013 | |
| Basic earnings per share (SEK) | 5 | 1.12 | 1.21 | 4.38 |
| Diluted earnings per share (SEK) | 5 | 1.12 | 1.21 | 4.38 |
Consolidated Comprehensive Income
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Net income for the period | 3,587 | 3,975 | 14,066 |
| Other comprehensive income | |||
| Items that will not be reclassified subsequently to income statement: | |||
| Remeasurements of provisions for post-employment benefits | 1,523 | –324 | –1,815 |
| Tax on items that will not be reclassified to income statement | –318 | 115 | 424 |
| Items that have been or may be reclassified subsequently to income statement: | |||
| Translation difference on foreign operations | 1,578 | 248 | –1,240 |
| Translation difference of hedge instruments of net investments in foreign operations |
–443 | –118 | 131 |
| Change in fair value of cash flow hedge related to currency and commodity price risks |
–2,972 | 81 | 1,976 |
| Tax on items that have been or may be reclassified to income statement | 704 | 7 | –435 |
| Other comprehensive income, net of income tax | 72 | 9 | –959 |
| Total comprehensive income for the period | 3,659 | 3,984 | 13,107 |
| Total comprehensive income attributable to | |||
| Owners of the parent company | 3,238 | 3,627 | 12,343 |
| Non-controlling interests | 421 | 357 | 764 |
| 3,659 | 3,984 | 13,107 |
Consolidated Balance Sheets
| SEKm | Note | 31 Mar 2024 |
31 Dec 2023 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 74,980 | 72,104 | |
| Tangible assets | 89,952 | 84,113 | |
| Financial assets | |||
| Investments in joint ventures and associates | 4 | 13,024 | 14,142 |
| Other securities holdings1) | 3 | 12,496 | 11,943 |
| Other interest-bearing receivables, non-current1) | 3 | 1,568 | 1,363 |
| Derivative assets, non-current Deferred tax assets |
3 | 612 11,026 |
2,094 10,135 |
| Other non-current assets1) | 3,644 | 3,513 | |
| Total non-current assets | 207,302 | 199,407 | |
| Current assets | |||
| Inventories | 72,684 | 57,058 | |
| Financial assets | |||
| Accounts receivable1) | 4 | 26,509 | 19,257 |
| Other interest-bearing receivables, current1) | 3 | 1,587 | 1,483 |
| Derivative assets, current | 3 | 885 | 1,988 |
| Marketable securities | 3 | 10,009 | 9,918 |
| Cash and cash equivalents | 3 | 36,053 | 47,861 |
| Current tax assets | 1,141 | 997 | |
| Other current assets1) | 13,450 | 18,393 | |
| Total current assets | 162,318 | 156,955 | |
| TOTAL ASSETS | 369,620 | 356,362 | |
| EQUITY & LIABILITIES | |||
| Equity | |||
| Equity attributable to owners of the parent company | 129,641 | 126,371 | |
| Non-controlling interests | 4,535 | 4,114 | |
| Total equity | 134,176 | 130,485 | |
| Non-current liabilities | |||
| Provisions for post-employment benefits | 6,083 | 7,610 | |
| Provisions, non-current | 8,464 | 7,582 | |
| Financial liabilities | |||
| Liabilities to credit institutions, non-current | 3 | 4,626 | 4,562 |
| Bonds, non-current | 3 | 12,907 | 18,087 |
| Derivative liabilities, non-current | 3 | 569 | 424 |
| Lease liabilities, non-current | 4,976 | 4,790 | |
| Contract liabilities to customers, non-current | 8,663 | 8,148 | |
| Deferred tax liabilities | 9,195 | 8,293 | |
| Other non-current liabilities | 5,331 | 5,385 | |
| Total non-current liabilities | 60,814 | 64,881 | |
| Current liabilities | |||
| Provisions, current | 15,274 | 13,117 | |
| Financial liabilities | |||
| Accounts payable | 4 | 61,461 | 62,304 |
| Liabilities to credit institutions, current | 3 | 958 | 937 |
| Bonds, current | 3 | 12,638 | 6,660 |
| Other interest-bearing liabilities, current1) | 3 | 391 | 466 |
| Derivative liabilities, current | 3 | 1,684 | 1,055 |
| Lease liabilities, current | 1,345 | 1,242 | |
| Contract liabilities to customers, current | 29,338 | 30,817 | |
| Current tax liabilities | 1,738 | 1,607 | |
| Other current liabilities1) | 4 | 49,803 | 42,791 |
| Total current liabilities | 174,630 | 160,996 | |
| TOTAL EQUITY & LIABILITIES | 369,620 | 356,362 |
1) In the first quarter 2024, Volvo Cars has changed the presentation of financial items. Presentation of the figures for 31 December 2023 have been adjusted accordingly. The change has no impact on EBIT.
Consolidated Statement of Changes in Equity
| SEKm | 31 Mar 2024 |
31 Dec 2023 |
|---|---|---|
| Opening balance | 130,485 | 117,278 |
| Net income for the period | 3,587 | 14,066 |
| Other comprehensive income, net of income tax | 72 | –959 |
| Total comprehensive income | 3,659 | 13,107 |
| Transactions with owners | ||
| Share-based payments | 32 | 109 |
| Change in the Group's composition | — | –9 |
| Transactions with owners | 32 | 100 |
| Closing balance | 134,176 | 130,485 |
| Attributable to | ||
| Owners of the parent company | 129,641 | 126,371 |
| Non-controlling interests | 4,535 | 4,114 |
| Closing balance | 134,176 | 130,485 |
| Consolidated Statement of Cash Flows | ||||
|---|---|---|---|---|
| -- | -- | -- | -- | -------------------------------------- |
| OPERATING ACTIVITIES Operating income 4,706 5,100 19,939 Depreciation and amortisation of non-current assets 5,418 4,129 17,449 Dividends received from joint ventures and associates 3 4 88 Interest and similar items received 681 499 2,495 Interest and similar items paid –715 –276 –1,710 Other financial items –694 154 178 Income tax paid –869 –1,243 –4,486 Adjustments for other non-cash items 2,674 332 6,087 11,204 8,699 40,040 Movements in working capital Change in inventories –13,664 –3,932 –11,341 Change in accounts receivable –6,670 4,178 4,750 Change in accounts payable –1,667 –8,948 –2,918 Change in provisions 969 711 –1,914 Change in contract liabilities to customers –1,100 –172 8,707 Change in other working capital 9,991 –2,916 5,543 Cash flow from movements in working capital –12,141 –11,079 2,827 Cash flow from operating activities –937 –2,380 42,867 INVESTING ACTIVITIES Investments in shares and participations –546 –533 –1,151 Divestment in shares and participations — — –178 Loans to affiliated companies –45 –3,114 –11,990 Investments in intangible assets –5,139 –5,545 –20,680 Investments in tangible assets –5,572 –5,962 –18,485 Disposal of tangible assets 38 85 642 Cash flow from investing activities –11,264 –15,069 –51,842 Cash flow from operating and investing activities –12,201 –17,449 –8,975 FINANCING ACTIVITIES Proceeds from credit institutions 116 776 3,970 Proceeds from bond issuance — 1,500 1,500 Repayment of bond — –2,000 –2,000 Repayment of liabilities to credit institutions –188 — –673 Repayment of interest-bearing liabilities –420 –429 –1,747 Investments in marketable securities — –360 –10,792 Matured marketable securities 288 3,781 4,115 Other –140 638 376 Cash flow from financing activities –344 3,906 –5,251 Cash flow for the period –12,545 –13,543 –14,226 Cash and cash equivalents at beginning of period 47,861 63,743 63,743 Exchange difference on cash and cash equivalents 737 123 –1,656 |
SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|---|
| Cash and cash equivalents at end of period | 36,053 | 50,323 | 47,861 |
NOTE 1 – Accounting policies
This interim report has been prepared in accordance with IAS 34 – Interim Financial Reporting and the Swedish Annual Accounts Act (1995:1554), with the required disclosures made in the notes to the financial statements and elsewhere in the interim report. The Volvo Car Group applies International Financial Reporting Standards (IFRS) as endorsed by the European Union. The parent company applies RFR 2 – Reporting for legal entities and the Swedish Annual Accounts Act. The accounting principles in this report are, in all material aspects, consistent with those described in Volvo Car Group's Annual Report 2023 (available at investors.volvocars.com).
The IASB has published amendments to standards effective on or after 1 January 2024. These amendments have not had a material impact on the financial statements.
Critical accounting estimates and judgements – The Polestar Group
Polestar Automotive Holding Group has delayed the release date of its full year 2023 financial results. As such Volvo Car Group's equity share in Polestar Automotive Holding Group is included with the 2023 preliminary unaudited financial results; and a forecast for this quarter aligned with normal reporting procedure.
NOTE 2 – Revenue
Revenue allocated to geographical regions:
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Europe | 51,555 | 44,102 | 184,894 |
| of which Sweden1) | 9,484 | 11,574 | 47,029 |
| of which Germany | 7,401 | 5,434 | 24,942 |
| of which UK | 5,935 | 4,575 | 21,661 |
| US | 15,182 | 19,490 | 75,172 |
| China | 14,901 | 16,585 | 73,545 |
| Other markets | 12,240 | 15,528 | 65,732 |
| of which South Korea | 1,521 | 2,176 | 8,336 |
| of which Japan | 1,359 | 2,286 | 7,673 |
| Total | 93,878 | 95,705 | 399,343 |
Revenue allocated to category:
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Sales of new cars | 73,937 | 73,875 | 307,549 |
| Sales of used cars | 5,171 | 3,774 | 18,505 |
| Sales of parts and accessories | 9,487 | 8,671 | 37,170 |
| Revenue from subscription, leasing and rental business | 1,336 | 1,207 | 5,463 |
| Sales of licences and royalties | 251 | — | 798 |
| Contract manufacturing | 1,992 | 6,482 | 22,357 |
| Emissions credits | 185 | 186 | 910 |
| Other revenue | 1,519 | 1,510 | 6,591 |
| Total | 93,878 | 95,705 | 399,343 |
1) Includes the Contract manufacturing sales channel.
NOTE 3 – Financial instruments
Valuation principles and classification of financial instruments, as described in the Volvo Car Group's Annual Report 2023, Note 21 – Financial instruments and financial risks and Note 22 – Marketable securities and cash & cash equivalents, have been applied consistently throughout the reporting period.
The table below presents financial instruments by category and measurement level.
| 31 Mar 2024 | 31 Dec 2023 | ||||
|---|---|---|---|---|---|
| Measure ment level |
Carrying value |
Fair value | Carrying value |
Fair value | |
| Financial assets carried at fair value through profit or loss | |||||
| Other securities holdings1) | 2 | 11,175 | 11,175 | 10,270 | 10,270 |
| Other securities holdings2) | 3 | 1,218 | 1,218 | 1,507 | 1,507 |
| Other securities holdings2)6) | 1 | 103 | 103 | 166 | 166 |
| Derivatives for hedging of currency risk | 2 | 172 | 172 | 411 | 411 |
| Derivatives for hedging of commodity price risk | 2 | 13 | 13 | — | — |
| Derivatives for hedging of interest rate risk | 2 | — | — | 4 | 4 |
| Interest-bearing securities3) | 2 | — | — | 50 | 50 |
| Financial assets carried at fair value through profit or loss designated hedging instruments |
12,681 | 12,681 | 12,408 | 12,408 | |
| Derivatives for hedging of currency risk | 2 | 1,112 | 1,112 | 3,557 | 3,557 |
| Derivatives for hedging of commodity price risk | 2 | 200 | 200 | 110 | 110 |
| 1,312 | 1,312 | 3,667 | 3,667 | ||
| Financial assets carried at amortised cost | |||||
| Accounts receivable6) | — | 26,509 | 26,509 | 19,257 | 19,257 |
| Other non-current and current interest-bearing assets6) | — | 3,155 | 3,254 | 2,846 | 2,928 |
| Time deposits4) | — | 11,171 | 11,300 | 16,533 | 16,602 |
| Cash and cash equivalents | — | 34,891 | 34,891 | 41,197 | 41,197 |
| 75,726 | 75,954 | 79,833 | 79,984 | ||
| Financial liabilities carried at fair value through profit or loss | |||||
| Derivatives for hedging of currency risk | 2 | 157 | 157 | 56 | 56 |
| Derivatives for hedging of commodity price risk | 2 | 28 | 28 | — | — |
| Derivatives for hedging of interest rate risk | 2 | 325 | 325 | 297 | 297 |
| 510 | 510 | 353 | 353 | ||
| Financial liabilities carried at fair value through profit or loss designated hedging instruments |
|||||
| Derivatives for hedging of currency risk | 2 | 1,375 | 1,375 | 865 | 865 |
| Derivatives for hedging of commodity price risk | 2 | 368 | 368 | 261 | 261 |
| 1,743 | 1,743 | 1,126 | 1,126 | ||
| Financial liabilities carried at amortised cost | |||||
| Accounts payable | — | 61,461 | 61,461 | 62,304 | 62,304 |
| Non-current and current bonds and liabilities to credit institutions | — | 31,129 | 31,156 | 30,246 | 30,224 |
| Other non-current and current interest-bearing liabilities5)6) | — | 15,932 | 15,932 | 8,727 | 8,727 |
| 108,522 | 108,549 | 101,277 | 101,255 |
1) The value of the conversion option is nil connected to the convertible loan receivables to the Polestar Group.
2) Equity instruments at level 3 includes earn-out rights in Polestar Group amounted to SEK — (577) m and unlisted warrants and earn-out rights in the listed company Luminar Technologies Inc (Luminar) amounted to SEK 12 (42) m. Changes in the unlisted share warrants and earn-out share rights in Luminar is recognised as other financial expenses in the income statement amounted to SEK –37 (57) m.
3) Whereof SEK — (50) m are reported as cash and cash equivalents.
4) Whereof SEK 10,009 (9,918) m are reported as marketable securities in the balance sheet and SEK 1,162 (6,615) m are reported as cash and cash equivalents.
5) Includes the repurchase value obligation on cars sold with repurchase commitment which are presented as other non-current and current liabilities in the balance sheet amounted to SEK 15,538 (8,258) m.
6) The 2023 figures have been adjusted to reflect the reclassification of certain items in the balance sheet.
NOTE 4 – Related party transactions
Volvo Car Group has a close collaboration with its Related parties. The main part of the transactions is related to sales and purchases of cars, licences of technology, contract manufacturing and purchases of components. Related parties include companies outside the Volvo Car Group, but within the Geely sphere of companies as well as other companies, such as associates and joint ventures. All transactions with related parties are performed at arm's length.
Significant events and agreements with Related parties during the first quarter
No significant events have occurred during the period.
Transactions with Related parties
Related party transactions are specified in below tables. The nature of significant transactions with related parties are provided in the 2023 annual report, with no significant changes applicable during the quarter.
Related party transactions specified below but not previously described in the annual report are sales to Volvo Car Financial Services UK Ltd, consisting mainly of sales of cars and purchases from Geely Changxing Automatic Transmission Co., Ltd, mainly related to gearboxes.
Sales of goods, services and other
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Related companies1)2) | 2,937 | 7,221 | 27,253 |
| of which The Polestar Group | 2,643 | 6,597 | 24,939 |
| of which Ningbo Fuhong Auto Sales Co., Ltd | 121 | 399 | 1,467 |
| Associated companies and joint ventures | 1,488 | 385 | 2,705 |
| of which Volvo Car Financial Services UK Ltd | 1,151 | 40 | 1,337 |
Purchases of goods, services and other
| Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|
| –17,204 | –7,982 | –33,519 |
| –10,329 | –18 | –3,169 |
| –4,062 | –2,988 | –13,517 |
| –867 | –2,485 | –7,304 |
| –379 | –421 | –2,079 |
| –379 | –318 | –1,420 |
| –173 | –456 | –1,592 |
| –682 | –818 | –2,958 |
| Receivables3) | Payables3) | |||
|---|---|---|---|---|
| SEKm | 31 Mar 2024 |
31 Dec 2023 |
31 Mar 2024 |
31 Dec 2023 |
| Related companies1)2) | 18,024 | 21,534 | 13,304 | 14,941 |
| Associated companies and joint ventures | 2,234 | 2,545 | 596 | 627 |
1) Related companies are companies within the Geely sphere of companies. Joint ventures and associated companies within the Geely sphere are presented as Related companies.
2) Including contract manufacturing.
3) Non-current part of assets amounts to SEK 12,495 (11,543) m. Non-current part of liabilities amounts to SEK 3 (4) m.
NOTE 5 – Earnings per share
| Basic earnings per share, SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Net income attributable to owners of the parent company |
3,342 | 3,611 | 13,053 |
| Net income attributable to owners of ordinary shares in the parent company |
3,342 | 3,611 | 13,053 |
| Weighted average number of ordinary shares outstanding, basic |
2,979,524,179 | 2,979,524,179 | 2,979,524,179 |
| Basic earnings per share, SEK | 1.12 | 1.21 | 4.38 |
| Diluted earnings per share, SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Net income in basic earnings per share | 3,342 | 3,611 | 13,053 |
| Net income in diluted earnings per share | 3,342 | 3,611 | 13,053 |
| Weighted average number of ordinary shares outstanding, basic |
2,979,524,179 | 2,979,524,179 | 2,979,524,179 |
| Dilutive effect for share-based payment programmes |
1,444,869 | 382,877 | 778,275 |
| Weighted average number of ordinary shares outstanding, diluted |
2,980,969,048 | 2,979,907,056 | 2,980,302,454 |
| Diluted earnings per share, SEK | 1.12 | 1.21 | 4.38 |
NOTE 6 – Significant events after the period
In the Annual Report 2023, Volvo Car Group informed about a potential adjustment to our shareholding in Polestar through a distribution of shares to Volvo Cars' shareholders. On March 26, the AGM resolved, in accordance with the Board of Directors' proposal, to distribute 62.7% of Volvo Cars' shareholding in Polestar to Volvo Cars' shareholders by way of a share split (2:1), a reduction of the share capital through redemption of shares, and an increase of the share capital through a bonus issue without issuance of new shares.
The AGM decision was pending a final formal approval from UK regulators regarding the distribution of Polestar shares to Volvo Cars' shareholders. Since the relevant approvals were received, the Board of Volvo Cars decided on April 5 on the final terms and timetable for the distribution of 62.7 per cent of its Polestar shareholding to its shareholders. The distribution and related transactions will take place during the second quarter of 2024 according to the estimated timeline. Volvo Cars will continue to account for Polestar using the equity method and change the shareholding from 48.3 to 18.0% around May 8th.
Additional information relating to financial effects and the estimated timeline can be found on the investor relations page on the Volvo Cars website.
The section Risks and uncertainty factors on page 12 contains information on Volvo Cars' assessments of the global environment on the Group.
Condensed Parent Company Income Statements
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Administrative expenses | –12 | –6 | –30 |
| Operating loss | –12 | –6 | –30 |
| Interest income and similar credits | 442 | 332 | 1,452 |
| Interest expenses and similar charges | –233 | –195 | –825 |
| Other financial income and expenses1) | –6 | –6 | 2,979 |
| Income before tax | 191 | 125 | 3,576 |
| Income tax | –39 | –26 | –95 |
| Net income | 152 | 99 | 3,481 |
1) In December 2023, a dividend of SEK 3,000 m was received from subsidiary.
Other comprehensive income and net income are consistent since there are no items in other comprehensive income.
Condensed Parent Company Balance Sheets
| SEKm | 31 Mar 2024 |
31 Dec 2023 |
|---|---|---|
| ASSETS | ||
| Non-current assets | 37,284 | 42,367 |
| Current assets | 32,351 | 25,999 |
| TOTAL ASSETS | 69,635 | 68,366 |
| EQUITY & LIABILITIES | ||
| Equity | ||
| Restricted equity | 61 | 61 |
| Non-restricted equity | 40,028 | 39,844 |
| Total equity | 40,089 | 39,905 |
| Non-current liabilities | 16,263 | 21,338 |
| Current liabilities | 13,283 | 7,123 |
| Total liabilities | 29,546 | 28,461 |
| TOTAL EQUITY & LIABILITIES | 69,635 | 68,366 |
GENERAL DEFINITIONS
Volvo Cars and Volvo Car Group
Volvo Car AB (publ.) together with its wholly-owned subsidiary Volvo Car Corporation and its subsidiaries are jointly referred to as "Volvo Car Group" or "Volvo Cars".
Volvo Car AB (publ.), with its registered office in Gothenburg, Sweden, is a publicly listed company on the Nasdaq Stockholm Stock Exchange. The largest owner, holding 78.65% of shares and capital, is Geely Sweden Holdings AB, owned by Shanghai Geely Zhaoyuan International Investment Co., Ltd., registered in Shanghai, China, and ultimately owned by Zhejiang Geely Holding Group Ltd., registered in Hangzhou, China.
Volvo Car AB (publ.) holds shares in its subsidiary Volvo Car Corporation and provides the Group with certain financing solutions. Volvo Car AB (publ.), indirectly through Volvo Car Corporation and its subsidiaries, operates in the automotive industry with business relating to design, development, manufacturing, marketing and sale of cars and thereto related services.
Associated companies
Associated companies are companies in which Volvo Car Group has a significant but not controlling influence, which generally is when Volvo Car Group holds between 20% and 50% of the shares.
Joint venture companies (JVs)
Joint ventures refer to companies in which Volvo Car Group, through contractual cooperation together with one or more parties, has joint control over the operational and financial management and has rights to the net assets of the arrangement.
Retail sales
Retail sales refer to sales to end customers (including a portion of cars used as customer loaner and demo cars) and is a relevant measure of the demand for Volvo Cars from an end customer point of view.
Wholesales
Wholesales refer to new car sales to dealers and other customers including rentals.
Europe
Europe is defined as EU (European Union) +EFTA (European Free Trade Association) + UK (United Kingdom).
Passenger cars
Passenger cars are vehicles with at least four wheels, used for the transport of passengers, and comprising no more than eight seats in addition to the driver's seat.
Battery Electric Vehicles (BEV)
BEV cars include all vehicles which are 100% fully electrified cars.
Non Battery Electric Vehicles (Non-BEV)
Non-BEV cars include all vehicles which are not 100% fully electrified cars (BEV). For Volvo Cars, it includes plug-in hybrid (PHEV), mild hybrid (MHEV) and internal combustion engine cars (ICE).
Electrified cars
Electrified cars include 100% fully electric cars, the same as the Battery Electric Vehicles (BEV), and Plug-in hybrids (PHEV), in both petrol and diesel with cord for charging.
Recharge cars
"Recharge" is the overarching name for all Volvo chargeable car models including plug-in hybrids (PHEV) and fully electric vehicles (BEV).
ICE
Internal combustion engine, including all powertrain types except plug-in hybrids (PHEV) and fully electric vehicles (BEV).
MHEV
Mild hybrid electric vehicle utilizes both a gas engine and an electric motor. The MHEV is used to start the engine and brake or slow the car, thereby recovering brake energy that is stored in the 48V battery.
Agency personnel
Agency personnel is referred to as specific competence that is sourced externally and assigned to meet fluctuating business resource needs.
Contract manufacturing
A business model in which a third-party company is contracted for the production of goods or components over a specified contract period.
Online
Our online business model is available in 10 markets (UK, Sweden, Netherlands, Norway, Germany, USA, Canada, China, Malaysia, and India) and defines as a car ordered online with national online price and direct invoice where available. For US and Canada, the transaction is executed by our retail partners as per agreement with retailers and in line with franchise laws.
Alternative performance measures presented by Volvo Car Group
The alternative performance measures presented and disclosed in this interim report are used internally by management in conjunction with IFRS measures to measure performance and make decisions regarding the future direction of the business. The Group believes that these alternative performance measures, when provided in combination with reported IFRS measures, provide helpful supplementary information for investors. These alternative performance measures are not a substitute for or superior to IFRS measures and should be used in conjunction with reported IFRS measures. Further, these alternative performance measures, as defined by the Group, may not be comparable to other similarly titled measures used by other groups.
Volvo Cars has applied the guidelines from ESMA (European Securities and Markets Authority) regarding alternative key figures (APMs, Alternative performance measures). Although these key figures are not defined or specified according to IFRS they provide the valuable supplementary information to investors and the company's management regarding the company's performance.
Gross margin
Gross margin is defined as Gross income as a percentage of revenue. Gross margin presents the per cent of revenue that Volvo Cars retains after incurring the direct costs associated with producing the goods and services sold.
EBIT
EBIT is defined as Net income excluding financial income, financial expenses and Income taxes, that is operating income presented in the income statement. EBIT presents the operating income of Volvo Car Group.
EBIT margin
EBIT margin is defined as EBIT as a percentage of revenue. The EBIT margin presents the profitability of the operation in relation to the recognised revenue earned by Volvo Car Group during the accounting period.
EBIT excl. share of income in JVs & associates
EBIT excl. share of income in JVs & associates is defined as EBIT less the result from share of income in JVs & associates. This presents the profitability of the operation excluding share of income in JVs & associates during the accounting period.
EBIT margin excl. share of income in JVs & associates
EBIT margin excl. share of income in JVs & associates presents the profitability of the operation excluding share of income in JVs & associates in relation to the recognised revenue earned by Volvo Car Group during the accounting period.
EBITDA
EBITDA is defined as EBIT excluding depreciation and amortisation of non-current assets. EBITDA presents an overview of the profitability of Volvo Car Group operations.
EBITDA margin
EBITDA margin is EBITDA as a percentage of revenue. The EBITDA margin presents the profitability of the operation in relation to the recognised revenue earned by the Group during the accounting period.
Items affecting comparability
Transactions that are not related to recurring business operations, but affecting the financial outcome in a material way, and where the probability of reoccurrence over the coming years is limited.
Share of investing cash flow
Share of investing cash flow is defined as the share of investing cash flow allocated to certain types of development as a percentage of the total investing cash flow. Share of investing cash flow presents the allocation the Group's cash resources to certain investments during the reporting period.
Net cash
Net cash is defined as cash, cash equivalents and marketable securities less liabilities to credit institutions, bonds and other interest-bearing non-current liabilities (excluding non-current lease liabilities). Net cash represents Volvo Car Group's ability to meet its financial obligations.
Liquidity
Liquidity is defined as cash, cash equivalents, undrawn credit facilities and marketable securities.
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are presented in SEKm unless otherwise stated.
The reconciliations of the respective key figures against the most directly reconcilable item in the financial statements can be found at: investors.volvocars.com/en/results-and-reports/results-centre
| SEKm | Jan–Mar 2024 |
Jan–Mar 2023 |
Full year 2023 |
|---|---|---|---|
| Revenue | 93,878 | 95,705 | 399,343 |
| Revenue per new car, BEV (SEKk)1) | 416.0 | 456.3 | 465.4 |
| Revenue per new car, non-BEV (SEKk)1) | 428.1 | 446.9 | 440.4 |
| Cost of sales | –75,806 | –78,606 | –321,916 |
| Research and development expenses | –3,827 | –2,878 | –12,884 |
| Operating income, EBIT | 4,706 | 5,100 | 19,939 |
| EBIT excl. share of income in JVs & associates | 6,795 | 6,315 | 25,567 |
| Net income | 3,587 | 3,975 | 14,066 |
| EBITDA | 10,124 | 9,229 | 37,388 |
| Gross income per new car, BEV (SEKk)1) | 67.1 | 33.9 | 40.3 |
| Gross income per new car, non-BEV (SEKk)1) | 107.0 | 104.2 | 102.9 |
| Gross margin, % | 19.3 | 17.9 | 19.4 |
| Gross margin BEV, %1) | 15.7 | 7.4 | 8.7 |
| Gross margin non-BEV, %1) | 25.0 | 23.3 | 23.4 |
| EBIT margin, % | 5.0 | 5.3 | 5.0 |
| EBIT margin excl. share of income in JVs & associates, % | 7.2 | 6.6 | 6.4 |
| EBITDA margin, % | 10.8 | 9.6 | 9.4 |
| Share of investing cash flow BEV, % | 68.1 | 74.8 | 68.4 |
| Share of investing cash flow non-BEV, % | 8.2 | 6.4 | 5.9 |
1) Including amounts relating to emissions credits earned relating to BEV and Non-BEV, respectively. For the first quarter of the year the amount was SEK 56 (136) m relating to BEV, and SEK 129 (50) m relating to Non-BEV. For more information see Note 2 – Revenue in the annual report 2023. VOLVO CAR GROUP
Gothenburg, 23 April 2024
Jim Rowan President and CEO
This report has not been subject to review by Volvo Car AB's auditors.
CONTACT
Analysts and investors John Hernander Head of Investor Relations +46 31-793 94 00 [email protected]
Journalists and media Volvo Cars Media Relations +46 31-59 65 25 [email protected]
FINANCIAL CALENDAR & CONFERENCE CALL
Webcast and conference call
At 09:30 CET on 24 April, President & CEO Jim Rowan, CFO Johan Ekdahl and Deputy CEO and Chief Commercial Officer Björn Annwall will host a livestream for media, investors and analysts.
Link: live.volvocars.com For those tuning in from China, please use this link: live.volvocars.com.cn
To call in, participants need to register and will then receive the dial-in details and individual PIN. Link to register
Upcoming investor Events
| 18 July 2024: | Q2 2024 report |
|---|---|
| 23 October 2024: Q3 2024 report | |
| 6 February 2025: | Q4 and full year 2024 report |
| 3 April 2025: | Annual General Meeting |
| 29 April 2025: | Q1 2025 report |
ABOUT THIS REPORT
FORWARD LOOKING STATEMENTS
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 industry 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.
Language
In the event of inconsistency or discrepancy between the English and the Swedish version of this publication, the Swedish version shall prevail.
Totals and roundings
Totals quoted in tables and statements may not always be the exact sum of the individual items because of rounding differences. The aim is that each line item should correspond to its source, and rounding differences may therefore arise.
