FULLTEXT DEL 1 AV 1
Kvartalsrapport Q1 2023
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VOLVO CAR GROUP
INTERIM REPORT FIRST QUARTER 2023
For life. To give people
freedom to move in a personal,
sustainable and safe way.
===== SIDA 2 =====
VOLVO CAR GROUP
• Retail sales increased by 10% and reached 162.9
(148.3) thousand cars.
• Revenue increased by 29% to SEK 95.7 (74.3) bn,
driven by higher volume, strong mix and pricing, foreign
exchange and contract manufacturing.
• Operating income (EBIT) was SEK 5.1 (6.0) bn. Oper -
ating income excluding share of income in JVs and
associates was SEK 6.3 (5.9) bn, positively affected
by volume, foreign exchange, mix and price realisation.
• EBIT margin was 5.3 (8.1)%. EBIT margin, excluding
share of income in joint ventures and associates, was
6.6 (7.9)%.
• Basic earnings per share was SEK 1.21 (1.29).
• Operating and investing cash flow was SEK –17.5
(–12.2) bn, affected by structural cash transactions.
Volvo Cars started 2023 on a stable note and delivered improved earnings
JANUARY–MARCH 2023
• Volvo Cars raised SEK 1.5 bn through inaugural green
bonds in the Swedish market.
• Volvo Cars announced its plans to open new Tech Hub
in Krakow, Poland.
EVENTS AFTER THE PERIOD
• Annual General Meeting was held on 3 April, at which
meeting Thomas Johnstone decided to step down from
the board and Ruby Lu was elected as a new board
member.
3 Months 12 Months
SEKbn unless otherwise stated
Jan–Mar
2023
Jan–Mar
2022 ∆% LTM
Full year
2022
Retail sales, k units 1) 162.9 148.3 10 629.8 615.1
Revenue 95.7 74.3 29 351.6 330.1
Research and development expenses 2) –2.9 –3.2 –11 –11.2 –11.5
Operating income (EBIT) 3) 5.1 6.0 –16 21.4 22.3
EBIT excl. share of income in JVs and associates 3) 6.3 5.9 7 18.3 17.9
Net income2) 4.0 4.5 –12 16.5 17.0
Basic earnings per share, SEK 2) 1.21 1.29 –6 5.15 5.23
EBITDA 3) 9.2 10.0 –8 37.6 38.4
Cash flow from operating activities 2) –2.4 –4.2 –44 35.4 33.6
Cash flow from investing activities 2) –15.1 –8.0 88 –46.6 –39.7
Net cash3) 20.7 33.1 –37 20.7 38.1
Gross margin, % 3) 17.9 21.2 –16 17.6 18.3
EBIT margin, % 3) 5.3 8.1 –34 6.1 6.8
EBIT margin excl. share of income in JVs and associates, %3) 6.6 7.9 –17 5.2 5.4
EBITDA margin, % 3) 9.6 13.5 –29 10.7 11.6
Return on invested capital, ROIC, % 3) N/A N/A N/A 14.1 16.7
1) Non-financial operating metric.
2) IFRS measure.
3) Non-IFRS measure (alternative performance measure), see Alternative performance measures on page 27.
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
Dear shareholders and readers within Volvo Cars community,
We have started 2023 on a stable note, continuing to deliver
on our ongoing transformation with increased revenues and
core profits in the first quarter. While macroeconomic uncer -
tainties and pressures are gathering momentum and have
become the inescapable business realities of today, we
remain resolute on our journey towards becoming a fully
electric carmaker by the end of the decade. Our execution
engine is tuning up and we will continue to focus on our
transformation priorities.
Let me start with our performance in fully electric car sales
during the quarter. We once again demonstrated that we are
among the fastest transformers in the industry, while also
maintaining price discipline. In the first three months, nearly
one in every five cars we sold was fully electric, translating to
a 157 per cent growth in sales compared to the same period
last year. This was achieved with only two fully electric mod -
els – the XC40 and the C40. As we launch more fully electric
cars in coming years, at least one per year up until mid-dec -
ade, built on next-generation electrical architectures and core
computing technology, this will put us firmly on course
towards our ambitious transformation goals.
Performing and transforming
“We strive to be a leader
in next-generation
mobility”
The wider industry is also rapidly transforming towards
electrification, a trend we have seen in recent years. At the
start of 2023, electric car sales for the industry grew 25 per
cent, while sales of cars powered by internal combustion
engines declined 17 per cent, underlining the centre of auto -
motive gravity is fast shifting towards electric cars. As we are
committed to full electrification of all our cars and across all
regions around the world, we sit at the epicenter of this seis-
mic transformation.
Speaking of our ongoing transformation, last year we took
a decisive step into the future with the global launch of our
new born-electric flagship SUV, the Volvo EX90. And I feel
proud that the customer response to that car has surpassed
our boldest and most ambitious internal projections. As a
result, we have now had to close the order book for the time
being because the model year is sold out, but we will re-open
again soon. This tremendous reception to the Volvo EX90
gives us renewed confidence in our strategy and roadmap for
the future.
To deliver on our ambition to become a leader in new tech-
nology, we are also setting up Tech Hubs in strategically
important locations and recruiting the right people with the
right competencies. As part of that strategy, we recently
announced our fourth Tech Hub in Krakow, Poland, to com-
plement our existing ones in Stockholm and Lund in Sweden,
and Bangalore, India. Together with our larger engineering
centres in Gothenburg and Shanghai, we are creating a global
powerhouse of next generation technology, with in-house
software development capabilities as our next generation
cars become more hardware designed and software defined.
Q1 Operating and financial performance
During the quarter we also improved our earnings.
Our revenues for the first three months grew 29 per cent
compared to the same period last year to SEK 96 bn. The
increase came on the back of a double-digit growth in retail
sales for the quarter versus the corresponding period in
2022.
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
Our EBIT, excluding joint ventures and associates,
increased 7 per cent in the first quarter, compared to the cor-
responding period last year, to reach SEK 6.3 bn, translating
into an EBIT margin of 6.6 per cent. The increase in EBIT
was delivered despite raw material prices remaining at ele -
vated levels. This performance was the result of higher vol -
umes sold during the period, increased price realisation per
car, a favourable geographical mix and the effects of pricing
actions initiated last year especially in Europe. I am also
pleased that our company-wide resource optimisation and
efficiency initiative is gathering momentum through direct
savings which helped our underlying profitability. We will
continue to focus on this.
Our efforts to reduce our CO 2 footprint per car are also pro-
gressing according to plan. In the first quarter, CO2 emissions
were 20 per cent lower compared with our 2018 benchmark,
supporting our mid-decade ambitions of 40 per cent CO 2
reduction per car.
2023 – looking ahead to the rest of the year
2023 will be another crucial year in our transformation. In a
few months, we will reveal a new fully electric small SUV to
the world, which will take us into a new demographic and
with a competitive price point. This new car will build on the
strong customer response to the Volvo EX90. With these
two new state-of-the-art SUVs, we will cover both the top
end of the premium electric market and the entry level pre -
mium segment. Together, they will complement our existing
line-up of fully electric XC40 and C40. This sets us up for a
future with strong growth and improved profitability on our
fully electric cars.
We are also gearing up to transform the operations in the
United Kingdom, our third largest market by retail sales, from
a traditional wholesale business to a directly consumer model
by creating a truly omnichannel experience for our customers.
With volvocars.com as the base and main sales channel, we
will remove administrative burdens and increase overall effi -
ciency in the system, improving customer experience and at
lower cost for us over time. The lessons from the UK transfor -
mation will be crucial as we plan for more markets to become
direct consumer facing.
But while our direction of travel remains clear, we are also
navigating an increasingly turbulent external environment.
Demand for our cars is healthy at a global level with some
regional variances and fluctuations. Overall, however, order
book size is stable and at historically strong levels. But, the
external environment remains challenging and volatile, so we
are monitoring demand and pricing trends closely.
As we have been among the pioneers in the industry-wide
transformation towards electrification and core computing
technology, we have been hit more adversely as costs for lith-
ium have skyrocketed 800 per cent over the last two years.
But we are now beginning to see lithium prices declining,
which should benefit our underlying profitability on electric
cars. While the full effect of this price decline will not be fully
felt until a few months from now due to time lag and price
indexation, the trend is positive.
Our manufacturing has also continued to improve from the
fourth quarter onwards last year. In the first three months of
2023, we produced 9 per cent more cars, including Polestar
cars, than in the corresponding quarter last year. Though
some shortages continue and will still affect production dur -
ing the second quarter of this year, we are cautiously optimis-
tic about 2023. If there are no unexpected supply chain dis-
ruptions, we expect a solid double-digit growth in retail sales
for the year and a continued growth of fully electric car sales
taking their share even higher than last year’s share of 11 per
cent.
The macroeconomic backdrop remains challenging. But we
are confident that we can navigate these headwinds and
deliver on our transformation. Our efforts on cost efficiencies
and resource optimization have started to materialize in cer-
tain areas, including a greater focus on the competencies and
cost structures we will need for the future and our transfor -
mation. Given the long-term nature of the headwinds our
industry is likely to face, we are also evaluating the need for
further targeted cost actions that are sustainable over time
and that will contribute to our growth. We remain steadfast
on our efficiency and productivity initiative, aiming to rein -
force a cost-conscious mindset throughout the company and
our supplier base.
To sum up, our transformation engine is gathering speed as
we strive to be a leader in next-generation mobility. The Volvo
car of the future will be fully electric, safer than ever, increas-
ingly sold online, powered by cutting-edge core computers,
running on in-house developed software, and will improve
over time thanks to regular over-the-air updates. With our
first-quarter performance we’ve laid a strong foundation for
the rest of 2023, but we remain ever vigilant amidst the con-
tinued turbulence around the world. Our focus is on execu-
tion.
Thank you for your continued support.
Jim Rowan
Chief Executive, Volvo Cars
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
Fastest transformer strategy progress
Our industry is changing, and we strive to be a leader in that change. Our fastest transformer strategy outlines how we plan to
deliver on our mid-decade ambitions. The purpose of this section is to keep our stakeholders updated on this progress.
FAST GROWING PREMIUM BRAND
Market position
Battery electric cars increased to 18% total share from 8%
in the same quarter last year. In the meantime, Recharge
sales increase to 41% total share from 34%. Overall demand
for our cars remains healthy at a global level but we are see -
ing regional variances. On an aggregated level, the absolute
order intake in Europe has however been stable for the last
quarters.
Brazil, Uruguay, Thailand and Indonesia all had 100%
recharge sales in Q1, closely followed by Norway 99%,
Denmark 93%, Ireland 91%, France 87%, the Netherlands
86% and Finland 85%.
Spaltbredd 82mm
Q1 Q2 Q1 Q4Q3Q2Q4Q3
2021 2022
Q1
2023
Volvo Cars Recharge sales as share of total sales
%
PHEV BEV
0
5
15
10
20
25
45
40
35
30
Volvo Cars’ market share per
propulsion type 1) 2)
Jan-Feb
2023
Jan-Feb
2022
BEV 1.56% 0.83%
PHEV 5.91% 7. 87%
ICE (incl. mild hybrids) 0.75% 0.70%
Total 1.06% 0.93%
Total industry volume share and
growth by propulsion type 1) 2)
Jan–Feb
2023
Growth
YoY
BEV 11.0% 24.8%
PHEV 4.2% 24.4%
ICE (incl. mild hybrids) 84.8% –16.8%
Total 100% –12.3%
1) Volvo Cars is and will continue to be positioned in the premium seg -
ment of the automotive market. As the market is transforming with
electri fication 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
total market.
2) Source: Includes content supplied by IHS Markit Automotive; Copy -
right© MarketInsight, April 2023. All rights reserved.
Sustainability
Volvo Cars has an ambition to reduce the carbon footprint
per average vehicle by 40% by 2025, against 2018 levels,
and we continue to make progress further outlined in our
Annual and Sustainability report. For the full year of 2022,
we reached a reduction of 15%. In the first quarter of 2023,
we reached a reduction of 20%.
We are very proud that we have received top ESG-ratings
for our sustainability efforts. This is the second year we make
it into the CDP Climate Change A-List and the CSA assess -
ment places us among the top 5% in the industry.
Volvo Cars has successfully placed an inaugural green
bond transaction in the SEK market, raising a total of SEK
1.5 bn, earmarked to becoming fully electric car maker by
2030, climate neutral by 2040 and a circular business.
Volvo Cars has also joined forces with partners in the
Orcelle-project, helping to develop the world’s first
wind-powered oceanic car-carrier vessel. Commencing to
sail in late 2026 or early 2027, it will harness wind for sus -
tainable car shipping.
Finally, Volvo Cars’ CEO, Jim Rowan expressed concerns
after a few EU Member States attempting to derail the pro -
cess of banning sales of new fossil fuel vehicles. He called on
EU Governments to honor the historic EU agreement
reached last year, which was rightly heralded as the EU
showing global climate leadership at a critical time for our
planet and humanity.
MID-DECADE AMBITIONS
8–10%
EBI T
MARGIN
40%
CO2 REDUCTION
PER CAR
50%
FULLY
ELEC T RIC
SALES
1.2M
UNI T S
50%
ONLINE
SALES
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
CO2-reduction per car
Total CO2-emissions
per car (tonnes) Reduction (%)
2018 54.9 —
2023 Jan–Mar1) 43.7 –20.4
2025 ambition 32.9 –40
2040 ambition 0 Climate neutral
1) The Q1 2023 greenhouse gas emissions (GHG) results did not include
production and distribution of fuel and electricity.
FULL ELECTRIFICATION
BEV/Non-BEV profitability and share of investments
Compared to the first quarter of 2022 the fully electric new
car gross income per unit has been affected by higher raw
material costs, spot purchasing of semiconductors as well as
higher logistics costs.
As has been communicated earlier the high price for lithium
has substantially increased the production costs for BEVs and
although the price for lithum has started to come down it will
not affect costs until later this year. However a better market
mix and part flow through of 2022 European price increases
contributed to a higher gross margin, than was seen in Q4.
Jan–Mar 2023 Full year 2022
BEV
Non-
BEV BEV
Non-
BEV
Retail sales (k units) 30 133 67 548
Revenue per Car
(SEKk/unit) 1) 456 447 449 415
Gross Income per Car
(SEKk/unit) 1) 34 104 37 89
Gross Margin (%) 7 23 8 21
BEV
Non-
BEV
Com-
mon BEV
Non-
BEV
Com-
mon
Share of Investing
Cash Flow (%)2) 75 6 19 68 6 26
1) Revenue and gross income refer to new cars including emissions cred -
its, excluding after sales, subscription and foreign exchange hedge
effect. Labour and overhead are set to standard cost and fixed manu -
facturing costs are distributed by volume.
2) Investments refer to plant, property, equipment and capitalised prod -
uct development only. Common investments are not defined as either
BEV or non-BEV investments and consist of manufacturing efficiency,
replacements & maintenance and infotainment development.
A LEADER IN NEW TECHNOLOGY
Google HD Map
In our upcoming Volvo EX90, lidar, cameras, and radars
come together to understand your car’s surroundings and
help to keep you safe. In the Volvo EX90 we are introducing
Google HD maps to further improve our assisted driving
technologies and eventually introduce autonomous driving.
This road information combined with the data from the Volvo
EX90’s lidar and other sensors will be processed through the
car’s core computer system powered by NVIDIA DRIVE AI
Platforms Xavier and Orin. By combining data from Google’s
HD map with information collected from our exterior sen -
sors, including a lidar and software developed by our safety
software subsidiary Zenseact, we aim to create a more pre -
dictable, safe, and comfortable drive.
Krakow Tech Hub
On 24 March we announced our new Tech hub in Krakow that
we intend to have operational by the end of this year, with
around 120 bright engineering minds in place. By mid-decade,
we aim to employ between 500 and 600 people. The hub will
carry full responsibility for developing complete key features
on our new cars. The engineers in Krakow will help boost our
innovation speed by developing software for several key areas
– from core safety technology based on our deep understand-
ing of what causes accidents, to our perception and driver
assistance algorithms and software for autonomous driving.
DIRECT CONSUMER RELATIONS
Our strategy is to establish direct relationships with our cus-
tomers, something we do by using an omni channel approach
with online being an important route. The online/direct busi-
ness model is available in 10 markets* and is defined as a car
ordered online with transparent online price and direct invoice
where available. For US and Canada, the transaction is exe-
cuted by our retail partners as per our agreement with retailers
and in line with franchise laws. For Q1 2023, the share of
online/direct business in the markets where the offer is availa-
ble amounted to 8 (10)% of total sales in those markets and
expressed as share of total global sales, it was 5 (6)%. Going
forward share of total global sales will be the reported metrics.
Demand in general remains robust and the lower share of
online/direct business was as for previous quarters a conse-
quence of low inventory that does not support the part of
online/direct business related to the subscription business
model, therefore other sales channels were prioritised.
FASTEST TRANSFORMER WAY OF WORKING
New Head of Design
On 31 January, it was announced that Jeremy Offer will take
on the role as Head of Design. Jeremy Offer most recently
led Arrival’s design team as Senior Vice President and Chief
Design Officer working across vehicle programs, compo-
nents, brand and user experience.
China Continuous Integration (CI) Centre
Volvo Cars recently launched China Continuous Integration
(CI) Centre at the Asia Pacific Headquarters which is our
latest strategic investment to further improve our software
development capabilities, as cars become smarter and more
connected to the driver than ever before. CI is a software
development practice where each code change or new fea -
ture is tested on all relevant integration levels automatically
to detect and fix errors as quickly as possible. CI is at the
core of agile software development and allows us to achieve
rapid development, integration, verification and feedback of
our software while maintaining high quality.
* Online/Direct business is available in UK, Sweden, Netherlands,
Norway, Germany, USA, Canada, China, Malaysia, and India.
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
SALES AND MARKET DEVELOPMENT
The global passenger car market improved year over year.
The growth was underpinned by a low base of comparison
for the same period last year, due to shortages of semicon -
ductors and an early effect from the Ukraine war.
Volvo Cars retail sales increased by 10% compared with
the first quarter of 2022, while BEV increased by 157%
accounting for 18% of the total cars sold. Wholesales
increased by 17% and the production increased by 7%. The
strong retail sales were enabled by improved production rate
during the quarter, despite some disturbances related to
semiconductors.
Overall demand for our cars remained healthy at a global
level with regional variances, while also maintaining price
discipline. Volvo Cars’ Recharge line-up continued to be pop -
ular, with 30.1 thousand units of BEV and accounting for
18% of the total cars sold and Recharge car sales account -
ing for 41% of the total cars sold.
Europe
The total European car market increased by 17% and the tra -
ditional premium segment increased by 17% compared to
last year. The region continued to have a backlog of orders
waiting to be delivered.
Volvo Cars retail sales increased by 12%. The orderbook
remained stable despite geographical differences on new
order intake. Recharge sales accounted for 62 (52)% of cars
sold, whereof BEV sales accounted for 29 (12)% of retail
sales.
First quarter financial summary
3 Months 12 Months
Retail sales (k units)
Jan–Mar
2023
Jan–Mar
2022 ∆% LTM 2022 ∆%
Europe 72.6 65.1 12 254.8 247.4 3
China 36.5 35.7 2 163.1 162.3 0
US 26.5 22.8 16 105.8 102.0 4
Other 27.3 24.7 11 106.0 103.3 3
Retail sales total 162.9 148.3 10 629.8 615.1 2
Recharge line-up vehicles 67.4 49.8 35 223.0 205.4 9
whereof BEV vehicles 30.1 11.7 157 85.1 66.7 27
Recharge line-up share of sales 41% 34% — 35% 33% —
whereof BEV share of sales 18% 8% — 14% 11% —
Wholesales 174.1 156.7 11 649.1 631.7 3
Production volume 181.1 169.0 7 661.0 648.9 2
China
The total Chinese passenger car market decreased by 14%,
while the traditional premium segment decreased by 3%.
Sales were mainly impacted by the phasing-out of incentives
for all cars at the end of 2022.
Volvo Cars retail sales increased by 2%. Recharge share of
total Chinese retail sales accounted for 11 (9)%, whereof
BEV sales contributed to 3 (1)% of retail sales.
US
The total US car market increased by 8%. The traditional
premium segment increased by 12%. Despite high interest
rate, the demand continued to be strong and discounts
remained low.
Volvo Cars’ retail sales increased by 16%. Recharge share
accounted for 29 (26)% in the quarter. BEV share of sales
contributed to 11 (7)% of retail sales.
Other
Retail sales in other markets increased by 11%. The largest
markets were Japan, Korea and Australia, which reported
increase of 9%, 19% and 4% respectively. Recharge share
of total sales in other markets was 40 (26)%, whereof BEV
sales contributed to 19 (8)%.
Sales development per carline
Volvo Cars continued to steer its production towards electri -
fied models. The SUVs, including Volvo Cars’ XC and C mod -
els, increased their share to 82 (76)% of total sales, mainly
driven by the two BEV models, the C40 and the XC40. The
Sedan and Wagons’ share of total sales decreased to 11
(15)% and 7 (9)% respectively. The XC60 remained the
best-selling model closely followed by XC40.
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
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VOLVO CAR GROUP
3 Months 12 Months
Top 10
Retail sales by market (k units)
Jan–Mar
2023
Jan–Mar
2022 ∆% LTM 2022 ∆%
China 36.5 35.7 2 163.1 162.3 0
US 26.5 22.8 16 105.8 102.0 4
UK 11.8 11.1 6 37. 2 36.5 2
Germany 10.3 8.9 16 37. 2 35.8 4
Sweden 9.3 12.3 –24 42.7 45.7 –7
Belgium 5.9 4.3 36 16.2 14.6 11
Italy 4.8 3.5 38 17.3 16.0 8
Netherlands 4.8 3.9 22 13.8 13.0 7
Japan 4.1 3.8 9 16.5 16.2 2
Norway 4.0 1.8 131 13.4 11.1 21
3 Months 12 Months
Retail sales by model (k units)
Jan–Mar
2023
Jan–Mar
2022 ∆% LTM 2022 ∆%
XC40 BEV 21.1 8.1 161 55.6 42.5 31
C40 9.0 3.6 146 29.5 24.2 22
XC60 50.1 44.8 12 200.6 195.3 3
XC40 PHEV/ICE 28.9 34.4 –16 121.2 126.7 –4
XC90 24.4 22.0 11 99.6 97.1 2
S90 10.4 9.5 9 43.8 42.9 2
S60 8.1 12.2 –33 35.5 39.5 –10
V60 7.7 9.2 –16 30.6 32.1 –5
V90 3.2 4.5 –29 13.4 14.7 –9
Total 162.9 148.3 10 629.8 615.1 2
V60 and V90 include the cross-country versions.
VOLVO CAR GROUP
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VOLVO CAR GROUP
INCOME AND RESULT
The comparative figures refer to the consolidated income
statement of the first quarter 2022 if not otherwise stated.
Volvo Cars’ revenue amounted to SEK 95.7 (74.3) bn with an
increase of 29%. Wholesale volumes increased by 11% to
174.1 (156.7) thousand cars. The increased volume contrib -
uted with SEK 9.0 bn. The mix and price effects contributed
with SEK 4.2 bn, as well as foreign exchange rate effect,
including hedges, had a positive effect on revenue of SEK
5.3 bn. Revenue from contract manufacturing also increased
by SEK 2.7 bn.
Gross income increased by 9% to SEK 17.1 (15.7) bn,
resulting in a gross margin of 17.9 (21.2)%. The decrease in
gross margin was mainly due to higher costs for raw materi -
als, and third party contract manufacturing with somewhat
lower margin than wholesale, as well as a higher share of
fully electric car mix. This was partially mitigated by
increased sold volume and pricing and carline mix. Foreign
exchange rate effects, including hedges, in cost of sales
were negative amounting to SEK –3.6 bn. The net effect of
foreign exchange rates including hedges in gross income
was positive and amounted to SEK 1.7 bn.
Research and development expenses decreased by 11% to
SEK –2.9 (–3.2) bn due to increased capitalisation as more
projects have reached the capitalisation phase. For details
regarding research and development expenses, see the
Research and development table on page 10.
Administrative expenses were relatively flat and amounted
to SEK –2.8 (–2.6) bn. Selling expenses increased by 26%
to SEK –5.8 (–4.6) bn, mainly as an effect of increased
spending related to marketing activities and the launch of
Volvo EX90.
Other operating income and expenses amounted to SEK
0.6 (0.6) bn. Share of income in joint ventures and associ -
ates decreased to SEK –1.2 (0.2) bn, due to negative results
from strategic affiliates driven by costs incurred in their early
build up phase.
Operating income (EBIT) decreased to SEK 5.1 (6.0) bn,
resulting in an EBIT margin of 5.3 (8.1)%. Excluding share of
income in joint ventures and associates, EBIT increased to
SEK 6.3 (5.9) bn, corresponding to a margin of 6.6 (7.9)%.
The exchange rate effects including hedges had a positive
effect on EBIT of SEK 1.2 bn, see the table below.
Net financial items increased to SEK 0.3 (–0.3) bn, mainly
driven by higher interest income and the market revaluation
of the investment in Luminar based on the current share
price.
The effective tax rate increased to 26.2 (22.1)%, mainly
due to high non-tax deductible losses linked to share of
income in joint venture and associates. Net income was SEK
4.0 (4.5) bn and 4.2 (6.1)% in relation to revenue.
Basic earnings per share amounted to SEK 1.21 (1.29).
Changes to Revenue, SEK bn Jan–Mar
Revenue Q1 2022 74.3
Volume 9.0
Sales mix and pricing 4.2
Sale of licences –0.4
Foreign exchange rates 5.3
Contract manufacturing 2.7
Other 1) 0.6
Revenue Q1 2023 95.7
Change % 29
1) Including used cars, earned emissions credits, parts and accessories.
Changes to Operating income, SEK bn Jan–Mar
EBIT Q1 2022 6.0
Volume 2.9
Sales mix and pricing 0.9
Sale of licences –0.4
Government grants –0.1
Foreign exchange rates 1.2
Share of income in JVs and associates –1.4
Other 2) –4.0
EBIT Q1 2023 5.1
Change % –16
2) Mainly including raw material increases, fixed costs, used cars, emis -
sions credits, parts and accessories, cost efficiencies and import
duties.
VOLVO CAR GROUP
9 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 10 =====
VOLVO CAR GROUP
0
60
50
40
20
30
10
70
80
120
110
100
90
60%
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Q2 Q3
2020 2021 2022 2023
Q4 Q1 Q2 Q1 Q4 Q1Q3Q2Q4Q3
Revenue, SEKbn Gross margin, %
Revenue & Gross Margin
–4
6
4
0
2
–2
8
14
12
10
–4%
6%
4%
0%
2%
–2%
8%
14%
12%
10%
Q2 Q3
2020 2021 2022 2023
Q4 Q1 Q2 Q1 Q4 Q1Q3Q2Q4Q3
Operating income (EBIT), SEKbn
EBIT margin excl. share of
income in JV & associates, %
Operating Income & EBIT Margin
Operating income (EBIT) excl. share of
income in JV & associates, SEKBn
EBIT margin, %
3 Months Full year
Research and development, SEKm
Jan–Mar
2023
Jan–Mar
2022 ∆% 2022
Research and development spending –6,504 –4,788 35.8 –22,123
Capitalised development costs 4,786 2,742 74.5 15,188
Amortisation of research and development – 1,160 –1,184 –2.0 –4,579
Research and development expenses –2,878 –3,230 –10.9 –11,514
VOLVO CAR GROUP
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===== SIDA 11 =====
VOLVO CAR GROUP
CASH FLOW
The comparative figures for the cash flow items refer to the
consolidated cash flow statement for the first quarter 2022
unless otherwise stated. The comparative figures for the bal-
ance sheet items refer to the consolidated balance sheets of
December 31, 2022 unless otherwise stated.
Total cash and cash equivalents, including marketable securi -
ties, decreased to SEK 50.3 (67.2) bn. Net cash decreased
to SEK 20.7 (38.1) bn. Liquidity amounted to SEK 67.2
(83.8) bn, including undrawn credit facilities of SEK 16.9
(16.7) bn.
Cash flow from operating activities
Cash flow from operating activities amounted to SEK –2.4
(–4.2) bn. The amount consists of operating income of SEK
5.1 (6.0) bn, adjusted for depreciation and amortisation of
SEK 4.1 (4.0) bn, together with paid income tax of SEK –1.2
(–1.4) bn.
The change in working capital had a negative effect of
SEK –11.1 (–11.8) bn, mainly related to the normal seasonal -
ity. The increase of finnished vehicles in transit also nega -
tively impacted the cash flow from inventory which
decreased with SEK –3.9 (–4.0) bn. Accounts payable
decreased by SEK –8.9 (–4.8) bn partly offset by accounts
receivable increase by SEK 4.2 (–) bn.
Cash flow from investing activities
Cash flow from investing activities amounted to SEK
–15.0 (–8.0) bn. Cashflow from investments in tangible
assets amounted to SEK –6.0 (–3.8) bn, mainly driven by
the acquisition of the Taizhou land and building and the
industrial structure to prepare for future products. Invest -
ments in intangible assets amounted to SEK –5.5 (–3.1) bn
as a result of continuous investments in new and upcoming
car models and new technology, such as electrification tech -
nology and autonomous driving. The cashflow from loans to
affiliated companies amounted to SEK –3.1 (–) bn, mainly
related to the loan to Polestar announced in November
2022.
Cash flow from financing activities
Cash flow from financing activities amounted to SEK 3.9
(0.5) bn and was mainly related to change in marketable
securities that amounted to SEK 3.4 (0.8) bn. The issue of
new green bonds of SEK 1.5 (–) bn was offset by a sched -
uled bond repayment of SEK –2.0 (–) bn. Change in repay -
ments of interest-bearing liabilities amounted to SEK –0.4
(–0.4) bn.
Q2 Q3
2020 2021 2022 2023
Q4 Q1 Q2 Q1 Q4 Q1Q3Q2Q4Q3
–20
–4
–12
–8
–16
20
16
12
–20
–4
–12
–8
–16
20
16
12
0
8
4
0
8
4
Total, SEKbn LTM, SEKbn
Cash flow from Operating and investing activities
*Rolling twelve months
3 Months Full year
Cash flow statement, SEK bn Jan–Mar 2023 Jan–Mar 2022 2022
Cash flow from operating activities –2.4 –4.2 33.6
Cash flow from investing activities –15.0 –8.1 –39.7
Cash flow from operating and investing activities –17.4 –12.3 –6.1
Cash flow from financing activities 3.9 0.5 5.0
Cash flow for the period –13.5 –11.8 –1.1
EQUITY
Total equity increased to SEK 121.3 (117.3) bn, resulting in an
equity ratio of 37.2 (35.4)%. The change is mainly attributa -
ble to the positive net income of SEK 4.0 bn and a minor
positive effect in share-based payments and other compre -
hensive income.
VOLVO CAR GROUP
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===== SIDA 12 =====
VOLVO CAR GROUP
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 19.
RISKS AND UNCERTAINTY FACTORS
To ensure that Volvo Cars is able to achieve short- and long-
term 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 2022 page 54. We consider the risk and uncertainty
factors to remain the same as described in the annual report
except for the following updates:
Global shortage of semiconductors
Semiconductor constraints continued to gradually improve.
However, the underlying global shortage of semiconductors
continued, which resulted in higher production costs and
carried risks of further production disruptions.
Volvo Cars continues to follow the development closely
and work with suppliers and partners to resolve any distur -
bances to production and delivering vehicles to customers as
soon as possible. To what extent Volvo Cars’ sales, revenue
and profit ability will be affected in coming periods remains
uncertain. Visibility has improved, however, the risk of further
disturbances in production remains.
Macro uncertainty
The uncertain macro environment continues, including high
inflation, rising interest rates, raw material price volatility and
ongoing geopolitical crisis. The uncertainties in the financial
markets are still high. The risks of potential impact on
demand from higher interest rate level and lower consumer
confidence have increased.
The war in Ukraine
The war in Ukraine continues to have a negative impact on
Europe. The war has led to accelerating increases in the cost
of raw materials, energy, freights and inflationary pressures
in the global economy. An escalation of the war in duration
and scope could pose even more risks.
Volvo Cars has suspended its operations in Russia during
2022, without significant financial effects.
EMPLOYEES
During the first three months 2023, Volvo Car Group
employed 43.4 (41.9) thousand full-time employees (FTEs)
and 4.0 (4.2) thousand agency personnel. The increase was
due to blue collars increase and new recruitment to support
the transformation.
VOLVO CAR GROUP
12 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 13 =====
VOLVO CAR GROUP
VOLVO CAR GROUP
13 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 14 =====
Consolidated Income Statements
SEKm Note
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Revenue 2 95,705 74,269 330,145
Cost of sales –78,606 –58,555 –269,813
Gross income 17,099 15,714 60,332
Research and development expenses –2,878 –3,230 –11,514
Selling expenses –5,789 –4,586 –21,000
Administrative expenses –2,765 –2,600 –11,485
Other operating income and expenses 1) 648 579 1,556
Share of income in joint ventures and associates –1,215 161 4,443
Operating income 5,100 6,038 22,332
Interest income and similar credits 1) 499 165 852
Interest expenses and similar charges 1) –200 –205 –837
Other financial income and expenses 1) 3 –15 –215 –1,532
Income before tax 5,384 5,783 20,815
Income tax –1,409 –1,280 –3,812
Net income 3,975 4,503 17,003
Net income attributable to
Owners of the parent company 3,611 3,853 15,577
Non-controlling interests 364 650 1,426
Basic earnings per share (SEK) 5 1.21 1.29 5.23
Diluted earnings per share (SEK) 5 1.21 1.29 5.23
1) In fourth quarter 2022, Volvo Cars changed the presentation of Other operating income and Other operating expenses as well as Financial income
and Financial expenses. Presentation of the figures for Q1 2022 have been adjusted accordingly. The change has no impact on EBIT. For more infor -
mation see the annual report 2022.
VOLVO CAR GROUP
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===== SIDA 15 =====
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Net income for the period 3,975 4,503 17,003
Other comprehensive income
Items that will not be reclassified subsequently to income statement:
Remeasurements of provisions for post-employment benefits –324 1,814 4,560
Tax on items that will not be reclassified to income statement 115 –387 –998
Items that have been or may be reclassified subsequently to income statement:
Translation difference on foreign operations 248 764 3,872
Translation difference of hedge instruments of net investments in foreign operations –118 –71 –710
Change in fair value of cash flow hedge related to currency and commodity price risks 81 –38 2,289
Tax on items that have been or may be reclassified to income statement 7 20 –319
Other comprehensive income, net of income tax 9 2,102 8,694
Total comprehensive income for the period 3,984 6,605 25,697
Total comprehensive income attributable to
Owners of the parent company 3,627 5,833 24,150
Non-controlling interests 357 772 1,547
3,984 6,605 25,697
Consolidated Comprehensive Income
VOLVO CAR GROUP
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INTERIM REPORT FIRST QUARTER 2023
===== SIDA 16 =====
Consolidated Balance Sheets
SEKm Note
31 Mar
2023
31 Dec
2022
ASSETS
Non-current assets
Intangible assets 61,150 56,994
Tangible assets1) 81,382 77, 252
Investments in joint ventures and associates 4 16,408 15,599
Other long-term securities holdings 3 6,408 4,353
Deferred tax assets 9,457 9,131
Other non-current interest-bearing receivables 4,259 3,354
Non-current derivative assets 3 1,028 1,128
Other non-current assets 3,593 3,994
Total non-current assets 183,685 171,805
Current assets
Inventories 50,819 46,951
Accounts receivable 4 21,067 25,239
Current tax assets 1,994 1,763
Current derivative assets 3 1,544 1,769
Other current assets 1) 16,983 16,239
Marketable securities 3 — 3,415
Cash and cash equivalents 3 50,323 63,743
Total current assets 142,730 159,119
TOTAL ASSETS 326,415 330,924
EQUITY & LIABILITIES
Equity
Equity attributable to owners of the parent company 1) 117,592 113,947
Non-controlling interests 1) 3,689 3,331
Total equity 121,281 117, 278
Non-current liabilities
Provisions for post-employment benefits 6,100 6,883
Deferred tax liabilities 6,203 5,392
Other non-current provisions 8,104 8,398
Non-current liabilities to credit institutions 3 3,277 3,096
Non-current bonds 3 24,828 22,959
Non-current contract liabilities to customers 7,8 33 7,14 4
Other non-current interest-bearing liabilities 4,783 4,845
Non-current derivative liabilities 3 791 825
Other non-current liabilities 4,819 4,726
Total non-current liabilities 66,738 64,268
Current liabilities
Current provisions 11,340 9,051
Current liabilities to credit institutions 3 1,298 755
Current bonds 3 — 2,000
Current contract liabilities to customers 24,464 26,094
Accounts payable 4 59,644 68,913
Current tax liabilities 1,405 1,566
Other current interest-bearing liabilities 1,411 1,500
Current derivative liabilities 3 1,576 1,809
Other current liabilities 4 37, 258 37,690
Total current liabilities 138,396 149,378
TOTAL EQUITY & LIABILITIES 326,415 330,924
1) Adjustments have been made to the prior period presented. For more information see Note 10 - Government grants in the annual report 2022.
VOLVO CAR GROUP
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===== SIDA 17 =====
Consolidated Statement of Changes in Equity
SEKm
31 Mar
2023
31 Dec
2022
Opening balance (as previously reported) 117, 278 94,978
Correction of prior period error 1) — –466
Effect of hyperinflation 2) — 49
Opening balance (restated) 117, 278 94,561
Net income for the period 3,975 17,003
Other comprehensive income, net of income tax 9 8,694
Total comprehensive income 3,984 25,697
Transactions with owners
Capital contribution from non-controlling interests 3) — 17
Divestment of non-controlling interests 4) — –1,196
Divestment under common control 5) — –978
New issue — –1
Share-based payments 19 24
Dividend to shareholders 6) — –846
Transactions with owners 19 –2,980
Closing balance 121,281 117, 278
Attributable to
Owners of the parent company 117,592 113,947
Non-controlling interests 3,689 3,331
Closing balance 121,281 117, 278
1) For more information see Note 10 - Government grants in the annual report 2022.
2) For more information see Note 1 - General information for financial reporting in Volvo Car Group in the annual report 2022.
3) Refers to the capital contribution from ECARX Technology Ltd to Haleytek AB SEK — (17) m.
4) Refers to the divestment of non-controlling interest in Zenseact AB.
5) Refers to the divestment of Zhangjiakou Volvo Engine Manufacturing Co., Ltd to Zhejiang Aurobay Powertrain Co., Ltd.
6) Dividend to shareholders with non-controlling interest of SEK — (–846) m.
VOLVO CAR GROUP
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===== SIDA 18 =====
Consolidated Statement of Cash Flows
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
OPERATING ACTIVITIES
Operating income 5,100 6,038 22,332
Depreciation and amortisation of non-current assets 4,129 3,985 16,091
Dividends received from joint ventures and associates 4 — 72
Interest and similar items received 499 165 1,065
Interest and similar items paid –276 –239 –1,351
Other financial items 154 101 206
Income tax paid –1,243 –1,360 –4,223
Adjustments for other non-cash items 332 –1,096 –7,135
8,699 7,594 27,057
Movements in working capital
Change in inventories –3,932 –3,981 –7 ,348
Change in accounts receivable 4,178 –5 –776
Change in accounts payable –8,948 –4,773 18,533
Change in provisions 711 –1,764 –4,640
Change in contract liabilities to customers –172 –1,487 5,941
Change in other working capital assets/liabilities –2,916 177 –5,168
Cash flow from movements in working capital –11,079 –11,833 6,542
Cash flow from operating activities –2,380 –4,239 33,599
INVESTING ACTIVITIES
Investments in shares and participations –533 –1,760 –9,597
Divestment in shares and participations — 600 2,290
Loans to affiliated companies –3,114 — —
Investments in intangible assets –5,545 –3,136 –18,328
Investments in tangible assets –5,962 –3,758 –13,784
Disposal of tangible assets 85 21 161
Other — — –400
Cash flow from investing activities –15,069 –8,033 –39,658
Cash flow from operating and investing activities –17,4 49 –12,272 –6,059
FINANCING ACTIVITIES
Proceeds from credit institutions 776 65 1,040
Proceeds from bond issuance 1,500 — 5,260
Repayment of bond –2,000 — —
Repayment of liabilities to credit institutions — –4 –4,530
Repayment of interest bearing liabilities –429 –407 –1,711
Dividends paid to shareholders and/or
Non-controlling interest — — –846
Investments in marketable securities –360 –9,256 –21,127
Matured marketable securities 3,781 10,074 26,157
Other1) 638 28 726
Cash flow from financing activities 3,906 500 4,969
Cash flow for the period –13,543 –11,772 –1,090
Cash and cash equivalents at beginning of period 63,743 62,265 62,265
Exchange difference on cash and cash equivalents 123 925 2,568
Cash and cash equivalents at end of period 50,323 51,418 63,743
1) For Jan–Mar Other is attributable to realised result from financial instruments of SEK 401 (29) m and change in Other non-current liabilitities of
SEK 237 (–1) m.
VOLVO CAR GROUP
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===== SIDA 19 =====
Condensed Parent Company
Income Statements
Condensed Parent Company
Balance Sheets
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Administrative expenses –6 –5 –27
Operating income/loss –6 –5 –27
Interest income and similar credits 1) 332 176 942
Interest expenses and similar charges 1) –195 –126 –640
Other financial income and expenses 1)2) –6 –7 1,472
Income before tax 125 38 1,747
Income tax –26 –8 889
Net income 99 30 2,636
1) In fourth quarter 2022, Volvo Cars changed the presentation of Other operating income and Other operating expenses as well as Financial income
and Financial expenses. Presentation of the figures for Q1 2022 have been adjusted accordingly. The change has no impact on EBIT. For more infor -
mation see the annual report 2022.
2) In December 2022, a dividend of SEK 1,500 m was received from subsidiary.
Other comprehensive income and net income are consistent since there are no items in other comprehensive income.
SEKm
31 Mar
2023
31 Dec
2022
ASSETS
Non-current assets 47,08 4 45,263
Current assets 15,879 22,234
TOTAL ASSETS 62,963 67,497
EQUITY & LIABILITIES
Equity
Restricted equity 61 61
Non-restricted equity 36,372 36,254
Total equity 36,433 36,315
Non-current liabilities 26,072 24,242
Current liabilities 458 6,940
Total liabilities 26,530 31,182
TOTAL EQUITY & LIABILITIES 62,963 67,497
In December 2022, the parent company made a group contribution of SEK 4,530 m to Volvo Car Corporation.
VOLVO CAR GROUP
19 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 20 =====
NOTE 1 – Accounting policies
The interim report has been prepared in accordance with IAS 34 – Interim Financial Reporting and the Swedish Annual Accounts
Act. 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 2022 (available at
www.volvocars.com).
The IASB has published amendments to standards effective on or after 1 January 2023. These additions have not had any
significant impact on the financial statements.
NOTE 2 – Revenue
Revenue allocated to geographical regions:
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
China 16,585 17,409 70,924
US 19,490 11,321 62,070
Europe 44,102 34,139 144,150
of which Sweden1) 11, 574 10,401 44,923
of which Germany 5,434 4,127 19,015
of which United Kingdom 4,575 3,494 16,159
Other markets 15,528 11,400 53,001
of which Japan 2,286 1,860 8,339
of which South Korea 2,176 1,463 6,024
Total 95,705 74,269 330,145
Revenue allocated to category:
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Sales of new cars 73,875 56,913 252,747
Sales of used cars 3,774 4,258 16,405
Sales of parts and accessories 8,671 7, 233 30,778
Revenue from subscription, leasing and rental business 1,207 971 4,473
Sales of licences and royalties — 399 887
Contract manufacturing 6,482 3,530 20,288
Emissions credits 186 — 505
Other revenue 1,510 965 4,062
Total 95,705 74,269 330,145
1) Includes the Contract manufacturing sales channel.
VOLVO CAR GROUP
20 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 21 =====
NOTE 3 – Financial instruments
Valuation principles and classification of financial instruments, as described in the Volvo Car Group’s Annual Report 2022,
Note 20 – Group financial instruments and financial risks, have been applied consistently throughout the reporting period.
The fair value of the financial instruments valued at amortised cost shorter than twelve months are equivalent to their carry -
ing amounts. The carrying amount of the non-current and current issued bond loans and liabilities to credit institutions
amounted to SEK 29,403 (28,810) m and the fair value of these financial instruments amounted to SEK 28,220 (27,390) m.
Financial instruments at level 2 in Volvo Cars reported at fair value through profit and loss and designated hedging instru -
ment consist of derivatives, commercial paper and convertible bonds, where the positive fair value amounted to SEK 6,546
(4,658) m (including convertible bond to Polestar) and the negative fair value amounted to SEK 2,368 (2,634) m.
Investments in other long-term securities are holdings categorised as level 1 and level 3 financial instruments consisting of
equity investments, warrants and earn-outs rights. Investments in equity instruments amounted to SEK 3,369 (4,353) m,
whereof SEK 329 (252) m are holdings categorised as level 1 financial instruments and SEK 3,040 (4,101) m are categorised
as level 3 financial instruments.
The earn-outs rights in the Polestar Group will accrue to the Group if a number of criteria have been met during a specific
time period in the future. These earn-out rights are categorised as level 3 financial instruments and are measured by using a
Monte Carlo simulation. The simulation is based on a volatility of 75% and a risk-free interest rate of 3.6%. A change in volatil -
ity of +/–10 percentage points results in a value range of SEK 1,572–2,154 m. Furthermore, if the risk-free interest rate
changes +/–2 percentage points, it would result in a value range of SEK 1,837–1,963 m. Remaining level 3 investments con -
sist of unlisted share warrants and earn-outs rights in the listed company Luminar Technologies Inc (Luminar). These instru -
ments are measured using the Black-Scholes model based on:
• The probability that Volvo Car Group will fulfil contractual terms and when in time this will occur.
• The assessed risk-free interest rate which have been determined at 4.7% and 3.6% for the different maturity.
• Volatility of the underlying share price which has been determined at 9%.
Sensitivity analysis for warrants in Luminar (SEKm)
Likelihood of triggering event
Volatility –10% –5% 0% 5% 10%
–10% 129 139 151 157 167
–5% 132 141 153 160 170
96% 134 144 156 163 173
5% 136 146 159 166 176
10% 138 148 161 168 178
Hedge accounting
Hedge accounting is applied when derivative instruments are included in a documented hedge relationship. For hedge
accounting to be applied, a direct connection between the hedging instrument and the hedged item is required. Volvo Cars
applies fair value hedge, net investment hedge and cash flow hedge. For further information see Note 20 – Financial instru -
ments and financial risks in the Volvo Car Group’s Annual Report 2022.
In the table below the outstanding derivatives within hedge accounting are presented.
31 Mar 2023 Assets Liabilities Net Tax
Hedge reserve
after tax
Recycled from other
comprehensive
income
Ineffectiveness
reflected in income
statement
Cash flow hedge
– Currency risk 2,107 –1,492 615 –126 489 176 —
– Energy price risk 158 –42 116 –24 92 68 —
– Raw material price risk 80 –165 –85 18 –67 18 —
Subtotal 2,345 –1,699 646 –132 514 262 —
Net investments hedge
– Currency risk — –1,342 –1,342 276 –1,066 — —
Total 2,345 –3,041 –696 144 –552 262 —
Fair value hedge through
the income statement
– Interest rate risk 13 –267 –254 — — — –7
VOLVO CAR GROUP
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===== SIDA 22 =====
NOTE 3 – Financial instruments – continued
31 Dec 2022 Assets Liabilities Net Tax
Hedge reserve
after tax
Recycled from other
comprehensive
income
Ineffectiveness
reflected in income
statement
Cash flow hedge
– Currency risk 2,149 –1,816 333 –67 266 1,682 —
– Energy price risk 373 –38 335 –69 266 –102 —
– Raw material price risk 61 –164 –103 21 –82 –23 —
Subtotal 2,583 –2,018 565 –115 450 1,557 —
Net investments hedge
– Currency risk — –1,224 –1,224 252 –972 11 —
Total 2,583 –3,242 –659 137 –522 1,568 —
Fair value hedge through
the income statement
– Interest rate risk — –298 –298 — — — –11
VOLVO CAR GROUP
22 OF 30
INTERIM REPORT FIRST QUARTER 2023
===== SIDA 23 =====
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 pur -
chases 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
• On 6 January 2023, Volvo Cars, through one of its wholly-owned subsidiaries, Asia Euro Automobile Manufacturing
(Taizhou) Co., Ltd. acquired 100% of the shares in Taizhou Luqiao Jijin Automobile Manufacturing Co., Ltd. The acquired
company owns land and building related to the manufacturing plant in Luqiao, Taizhou, China. The purchase consideration
amounted to SEK 2,865 m.
• In November, Volvo Cars signed a facility agreement with Polestar with the intention of providing them with a credit
facility of USD 800 m. Polestar will be able to draw funds from this credit facility during a 18-month period. Any drawn
funds (total loan) will be repaid by May 2024. The loan also includes an option for Volvo Cars to convert the loan to equity, if
Polestar during the period chooses to finance the operations by issuing new shares. The potential conversion is also limited
due to Volvo Cars’ ownership in Polestar not being able to equal or exceed 50%. The convertible bond is measured at fair
value through profit or loss taking into consideration the conversion mechanism of the instrument. During the first quarter
2023, Polestar has withdrawn a total amount of USD 300 m of this facility which is classified as a long-term security
holding.
Tables of transactions with related parties
The information presented below includes all assets and liabilities regarding related parties. All assets and liabilities are current
except SEK 4,086 (966) m which is non-current. For further details refer to section Specification of transactions with related
parties, on next page.
Sales of goods, services and other
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Related companies 1) 7, 221 4,617 24,962
Associated companies and joint ventures 385 423 1,627
Purchases of goods, services and other
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Related companies 1) –7,982 –6,911 –26,202
Associated companies and joint ventures –818 –449 –2,701
1) Related companies are companies within the Geely sphere of companies. Joint ventures within the Geely sphere are presented as Related companies.
VOLVO CAR GROUP
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===== SIDA 24 =====
NOTE 4 – Related party transactions – continued
Receivables Payables
SEKm
31 Mar
2023
31 Dec
2022
31 Mar
2023
31 Dec
2022
Related companies 1) 19,319 21,043 8,260 13,414
Associated companies and joint ventures 906 1,377 309 466
1) Related companies are companies within the Geely sphere of companies. Joint ventures within the Geely sphere are presented as Related companies.
Specification of significant transactions with related parties
The Polestar Group
Volvo Car Group recognised revenue from the Polestar Group of SEK 6,597 (4,025) m in the first quarter. The revenue was
mainly related to sale of Polestar cars from the Taizhou plant, technology licences and development of technology as well as
revenue related to sale of other services.
Powertrain Engineering Sweden AB (PES)
The total purchases from Powertrain Engineering Sweden AB amounted to SEK –2,988 (–2,794) m in the first quarter, mainly
related to combustion engines and product development and has mainly been recognised as cost of sales.
Zhangjiakou Aurobay Powertrain Manufacturing Co., Ltd
The Zhangjiakou plant is since 31 January 2022 a related party to Volvo Car Group. The purchase of combustion engines for
the first quarter amounted to SEK –2,485 (–1,380) m and has mainly been recognised as cost of sales.
Zhejiang Liankong Technology Co., Ltd and Zhejiang Ji Run Auto Co., Ltd
The purchase of research and development services from Zhejiang Liankong Technology Co., Ltd and Zhejiang Ji Run Auto Co.,
Ltd amounted to SEK –343 (– 1,885) m for the first quarter. The whole amount has been capitalised as intangible assets.
Ningbo Fuhong Auto Sales Co., Ltd
Total revenue from sales of cars to Ningbo Fuhong Auto Sales Co., Ltd amounted to SEK 399 (218) m in the first quarter.
Ningbo Geely Automobile Research & Develepment Co., Ltd
The purchase of research and development services from Ningbo Geely Automobile Research&Develepment Co., Ltd
amounted to SEK –456 (–273) m in the first quarter, which mainly has been capitalised as intangible assets.
Viridi E-Mobility Technology (Ningbo) Co., Ltd
The total purchases from Viridi E-Mobility Technology (Ningbo) Co., Ltd. amounted to SEK –421 (–242) m in the first quarter,
mainly related to batteries and has been recognised as cost of sales.
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NOTE 5 – Earnings per share
Basic earnings per share, SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Net income attributable to owners of the parent company 3,611 3,853 15,577
Net income attributable to owners of
ordinary shares in the parent company 3,611 3,853 15,577
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 1.21 1.29 5.23
Diluted earnings per share , SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Net income in basic earnings per share 3,611 3,853 15,577
Net income in diluted earnings per share 3,611 3,853 15,577
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 382,877 — 47,186
Weighted average number of ordinary shares
outstanding, diluted 2,979,907,056 2,979,524,179 2,979,571,365
Diluted earnings per share, SEK 1.21 1.29 5.23
NOTE 6 – Significant events after the period
No significant events have occurred after the period.
The section Risks and Uncertainty Factors on page 12 contains information on Volvo Cars’ assessments of the global impact
on the Group.
VOLVO CAR GROUP
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GENERAL DEFINITIONS
Volvo Cars and Volvo Car Group
Volvo Car AB (publ.) together with its wholly-owned subsidi -
ary 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 Gothen -
burg, Sweden, is a publicly listed company on the Nasdaq
Stockholm Stock Exchange. The largest owner, holding 82
per cent of shares and capital, is Geely Sweden Holdings AB,
owned by Shanghai Geely Zhaoyuan International Invest -
ment 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 financ -
ing solutions. Volvo Car AB (publ.), indirectly through Volvo
Car Corporation and its subsidiaries, operates in the automo -
tive 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 per
cent and 50 per cent 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 arrange -
ment.
Retail sales
Retail sales refer to sales to end customers (including a por -
tion 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+EFTA+UK.
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.
Traditional premium segment
Traditional premium segment is the premium market brands
such as Volvo Cars, Audi, BMW, Lexus, Mercedes, Tesla and
so on.
Battery Electric Vehicles (BEV)
BEV cars include all vehicles which are 100 per cent fully
electrified cars.
Non Battery Electric Vehicles (Non-BEV)
Non-BEV cars include all vehicles which are not 100 per
cent 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 per cent fully electric cars, the
same as the Battery Electric Vehicles (BEV), and Plug-in
hybrids (PHEV), in both petrol and diesel with cord for charg -
ing.
Recharge cars / Recharge line-up
“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).
Agency personnel
Agency personnel is referred to as specific competence that
is sourced externally and assigned to meet fluctuating busi -
ness resource needs.
Contract manufacturing
A business model in which a third-party company is con -
tracted for the production of goods or components over a
specified contract period.
Online/direct
Online/direct business model is defined as a car ordered
online with transparent online price and direct invoice where
available. For US and Canada, the transaction is executed by
our retail partners as per our agreement with retailers and in
line with franchise laws.
VOLVO CAR GROUP
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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 perfor -
mance 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 margin excl. share of income in JVs & associates
EBIT margin 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 is
also presented as a percentage of revenue. The margin pre -
sents 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 amor -
tisation 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.
Alternative performance measures
presented by Volvo Car Group
Return on invested capital, ROIC
ROIC is defined as EBIT divided by invested capital. Return
on invested capital ratio gives an overview of how efficient
Volvo Car Group is at allocating capital to profitable invest -
ments. Invested capital is the amount of net assets needed
in day to day operations (total assets less receivables on par -
ent company less other long-term securities holding less
cash and cash equivalents less marketable securities plus
operating cash (average two-year revenue * 10 per cent))
less total current liabilities less current liabilities to parent
company plus total current interest-bearing liabilities (includ -
ing liabilities to credit institutions, bonds current, other cur -
rent interest-bearing liabilities) calculated on two-year aver -
age figures.
Equity ratio
The equity ratio is defined as total equity divided by total
assets in the balance sheet. It measures Volvo Car Group’s
long-term solvency and financial leverage level.
Net cash
Net cash is defined as cash, cash equivalents and marketable
securities less liabilities to credit institutions, bonds and
other non-current interest-bearing liabilities (excluding
non-current lease liabilities). Net cash represents Volvo Car
Group’s ability to meet its financial obligations.
Items affecting comparability
Transactions that are not related to recurring business opera -
tions, but affecting the financial outcome in a material way,
and where the probability of reoccurrence over the coming
years is limited.
Shares of investing cash flow
Share of investing Cash Flow is defined as the share of
investing cash flow allocated to certain types of develop -
ment 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.
VOLVO CAR GROUP
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Alternative performance measures are presented in SEKm unless otherwise stated.
SEKm
Jan–Mar
2023
Jan–Mar
2022
Full year
2022
Revenue 95,705 74,269 330,145
Revenue per new car, BEV (SEKk) 1) 456.3 435.9 448.8
Revenue per new car, non-BEV (SEKk) 1) 446.9 385.7 415.2
Cost of sales –78,606 –58,555 –269,813
Research and development expenses –2,878 –3,230 –11,514
Operating income, EBIT 5,100 6,038 22,332
EBIT margin, excl. share of income in JVs & associates 6,315 5,877 17,8 89
Net income 3,975 4,503 17,003
EBITDA 9,229 7,425 38,423
Gross income per new car, BEV (SEKk) 1) 33.9 59.0 36.8
Gross income per new car, non-BEV (SEKk) 1) 104.2 81.5 88.9
Gross margin, % 17.9 21.2 18.3
Gross margin BEV, % 1) 7.4 13.5 8.2
Gross margin non-BEV, % 1) 23.3 21.1 21.4
EBIT margin, % 5.3 8.1 6.8
EBIT margin excl. share of income in JVs & associates, % 6.6 7.9 5.4
EBITDA margin, % 9.6 10.0 11.6
Equity ratio, % 3) N/A N/A 35.4
Net cash 20,672 33,072 38,061
Share of investing cash flow BEV, % 74.8 57.3 68.5
Share of investing cash flow non-BEV, % 6.4 9.3 6.2
Return on invested capital, ROIC % 2) N/A N/A 16.7
1) Includes amounts relating to emissions credits earned relating to BEV and Non-BEV, respectively. For the first quarter of year the amounts were SEK
136 (—) and 50 (—) m relating to BEV and Non-BEV, respectively. For more information see Note 2 – Revenue in the annual report 2022.
2) Adjustments have been made to the calculated alternative performance measures presented for prior period. For more information see Note 10 –
Government grants in the annual report 2022.
The reconciliations of the respective key figures against the most directly reconcilable item in the financial statements can be found at;
https://investors.volvocars.com/en/financial-information/results-centre
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
VOLVO CAR GROUP
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CONTACT
Analysts and investors
John Hernander
Head of Investor Relations
+46 31-793 94 00
investors@volvocars.com
FINANCIAL CALENDAR & CONFERENCE CALL
Webcast and conference call
At 9:30 CET on 27 April, President & CEO Jim Rowan and
CFO Johan Ekdahl will host a livestream for media, inves -
tors and analysts.
Link: https://live.volvocars.com
For those tuning in from China, please use this link:
https://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
20 July 2023: Q2 2023 report
26 October 2023: Q3 2023 report
2 February 2024: Q4 2023 report
25 April 2024: Q1 2024 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 state -
ments 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 uncer-
tainties, 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.
Journalists and media
Volvo Cars Media Relations
+46 31-59 65 25
media@volvocars.com
Gothenburg, 26 April 2023
Jim Rowan
President and CEO
This report has not been subject to review by Volvo Car AB’s auditors.
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