Capital Market Day Tony Helsham President Volvo

Capital Market Day Tony Helsham President Volvo

Capital Market Day
16 September, 2004
Tony Helsham
President Volvo Construction Equipment
Capital Market Day 2004
1
Volvo Group, 2003
1
Sales per Business Area
Others
4%
Volvo Aero
5%
Volvo Penta
4%
Construction
Equipment
13%
Trucks
67%
Buses
7%
Total: SEK 175 bln
Volvo CE – Tony Helsham
CMD 040916
Capital Market Day 2004
2
Volvo Group – Strong Relative Position
Heavy Duty Diesel Engines 2003*
127,000
Volvo
DCX
117,000
CAT
106,000
Cummins
70,000
Scania
54,000
MAN
51,000
Hyundai
Yaroslavl
43,000
40,000
* Engine Production 2003, 9 - 18 liter (excluding licensees / JV’s)
Source, Competitors: Power Systems Research (PSR) April 2003 update. Volvo Powertrain: Actual
production figures.
Volvo CE – Tony Helsham
CMD 040916
2
Capital Market Day 2004
3
Off-road Emission Regulations
3
(130-560 kW Engine)
Tier-1
•
Tier- 0
0.4
•
•
0.3
0.2
Tier- 3
Tier-2
«
•
Particulates g/kWh
•
0.5
0.1
Tier- 0:
Tier-1:
Tier-2:
1995
1996
2001
Tier-3*:
Tier-3:
2005/6 in NA
2006 in EU
Tier-4A:
Tier-4B:
2011
2014
Tier- 4A
Tier- 4B
•2
•
•
4
6
NO X + NMHC g/kWh
•
8
•
10
*2005,Tier-3 applies to 225-450 kW
Volvo CE – Tony Helsham
CMD 040916
Capital Market Day 2004
4
Volvo is ready for Tier-3 with V-ACT
Wheel
Loaders
Articulated
Haulers
Crawler
Excavators
Production start 12 liter engine - Jan. 2005
Volvo CE – Tony Helsham
CMD 040916
4
Capital Market Day 2004
5
Construction Equipment Industry
5
48 BUSD
Terex
5%
Deere
5%
Liebherr
IR Hitachi JCB
3%
4% 4% 3%
Kobelco
2%
• Few global players
Others
16%
CNH Global
6%
Volvo CE
6%
• Several international
specialist companies
• Smaller companies –
often single product,
Komatsu
15%
regionally focused
Caterpillar
31%
Market shares 2003
Volvo CE – Tony Helsham
CMD 040916
Capital Market Day 2004
6
Growth in Retailed Equipment
6
35,000
30,000
Skat Trak (2003)
25,000
Backhoe Loaders
(2002)
Samsung (1998)
20,000
Champion (1997)
Pel Job (1996)
15,000
Akerman (1991)
10,000
Zettelmeyer (1990)
5,000
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
F
-
Volvo CE – Tony Helsham
CMD 040916
Volvo (historical
base)
Capital Market Day 2004
Company Evolution
7
Volvo CE – Tony Helsham
CMD 040916
7
Capital Market Day 2004
Extensive Product Renewal
8
Volvo CE – Tony Helsham
CMD 040916
8
Source: Off Highway Research, London/own estimates
Capital Market Day 2004
World Market Share Development
9
12%
10.9%
Heavy Equipment
11%
10%
9%
8%
7.1%
7%
6%
4.8%
5%
4%
3%
Compact Equipment
2%
1%
0.9%
0%
1995
1996
Volvo CE – Tony Helsham
CMD 040916
1997
1998
1999
2000
2001
2002
2003
YtD 2004
9
Source: Off Highway Research, London/own estimates
Capital Market Day 2004
10
Growth Potential
10
Total market and Volvo CE market shares
Total Market ($ bln)
Articulated Haulers
38.8%
1.2
15.1%
1.1
14.3
Excavators
Rigid Haulers
1.8
Compaction
2.0
0.7
15.1%
Compact Excavators
3.6
Backhoe Loaders
3.4
Skidsteer Loaders
Telescopic Handler
Volvo CE – Tony Helsham
CMD 040916
6.1%
4.1
Crawler Dozers/Loaders
Compact Wheel Loaders
20.5%
9.9
Wheel Loaders
Motor Graders
Volvo CE market share (units)
2.0
1.3
7.0%
2.4%
0.6%
Capital Market Day 2004
11
Organic Growth
11
Sales development quarter/quarter
35%
30%
30%
25%
20%
15%
10%
5%
0%
Q1-03
Q2-03
Q3-03
Volvo CE – Tony Helsham
CMD 040916
Q4-03
Q1-04
Q2-04
Capital Market Day 2004
Strong Global Market Development
12
12
Volvo CE markets in upturn
Global Market –Heavy Equipment (units)
200,000
• Focus on capacity
ü Channels to market
ü Select industrial investments
150,000
ü Supplier management
ü Renewal of global industrial “master
plan”
ü Protect from “over-invest” by strict
100,000
monitoring of break-even levels
• Control SG&A and R&D levels
• Price Management
50,000
• Continue to drive Cash Conversion Cycle
Improvement
0
1990
1992
1994
1996
Volvo CE – Tony Helsham
CMD 040916
1998
2000
2002
2004F
Capital Market Day 2004
13
13
Industrial Capacity Management
Volvo CE – Tony Helsham
CMD 040916
Capital Market Day 2004
Konz, Germany
14
Volvo CE Europe GmbH
Assembly line
Volvo CE – Tony Helsham
CMD 040916
Manufacturing, R&D and Customer Support
14
Capital Market Day 2004
Going Forward
15
Product offering
Sales and Marketing
• Capitalize on new product portfolio
• Grow the after market and other services
• Extend the product range:
- Telescopic Handler
- Compactors
- Internal development/acquisition
of new products
• Continue North American
channel development
• Introduce short swing compact excavators
and other compact products
• Grow Excavator, Backhoe
Loader and Skid Steer businesses
• Tier-3 engines
Volvo CE – Tony Helsham
CMD 040916
• Maintain leading position in Europe
• Build stronger positions in China, Russia,
Eastern Europe and certain
International markets
• More segmentation and key account focus
15
Source: Off Highway Research, London/own estimates
Capital Market Day 2004
16
Wheel Loaders > 100hp
16
(summary 2003)
Unit sales:
Market
Volvo
31%
38%
31%
52%
23%
25%
Europe
North America
International
Product line:
D-generation 2000
E-generation 2003
Global market positions:
Cat
Volvo
Komatsu
CNH
Deere
1
2
3
4
5
In focus going forward:
Volvo market position:
Europe
North America
International
L50E
L60E
L70E
Volvo CE – Tony Helsham
CMD 040916
• Capitalize on success with E-series
• Quality and low fuel consumption
• Growth in North America
• Production ramp-up vs. shortage of steel & tires
1
3
3
L90E
L110E
L120E
L150E
L180E
L180E High-lift
L220E
L330E
Capital Market Day 2004
Summary
17
• Steady growth in market shares over the last decade
• Competitive advantage due to the Volvo Group’s diesel engine technology
• Production start of Tier-3 engines, V-ACT, for US in January 2005
• Youngest product portfolio in the industry
• Growth potential in several product and geographical areas
Volvo CE – Tony Helsham
CMD 040916
17