VOLVOEXPORT FINANCING – AN EXCELLENT TOOL FOR A SWEDISH EXPORTER 8TH NORDIC REGION TRADE & EXPORT FINANCE FORUM

Tore Bäckström Senior Vice President & Executive Advisor November 25, 2015

Volvo Buses BUSES PART OF THE VOLVO

GROUPThe Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment, marine and industrial engines

The Volvo Group employs about 110,000 people, has production facilities in 18 countries and sales of products in more than 190 markets

Volvo Buses

2 November 2015 Volvo Group Organization

Group Trucks

Group Trucks Sales Group Trucks Operations Group Trucks Technology

Business Areas

Construction Governmental Volvo Financial Buses Equipment Sales Services

Volvo Buses

3 November 2015 THE VOLVO BRAND  High quality buses, coaches, chassis and services

BUSES COACHES CHASSIS SERVICE

• Green Efficiency • Low Lifecycle Cost • Preferred body • Fuel efficiency • Low Lifecycle Cost • Safety builders • Availability and • Strong after-market • Strong aftermarket • Low Lifecycle Cost Uptime support support • Strong after-market • Workshop integration support

Volvo Buses

4 November 2015 Volvo Corporation

VBC 2010 2011 2012 2013 2014 2015-YTD

No units sold 11 100 13 600 11 400 9 700 9 600 7 600

Net Sales BSEK 20,5 22,3 20,3 16,7 18,7 16,7

Op Income MSEK 780 1 036 50 -190 98 596

America 2010 2011 2012 2013 2014 2015-YTD

No units sold 3 500 5 700 4 500 4 300 4 700 3 000

Net Sales BSEK 8,9 10,3 9,5 7,9 9,5 10,7

Op income MSEK 401 613 129 -105 131 501

Volvo Buses

5 November 2015 Why do we have brt ?

Volvo Buses

6 November 2015 Global drivers

Population growth and urbanization 1/2 2/3

Climate change and alternative fuels 2008 2060 lives in cities Shortage of natural resources and raw material

Noise and local emissions

Safety and security

Volvo Buses

7 November 2015 BRT leadership based on complete offer

Expertise

Bogotá, Colombia Curitiba,

ITS4mobility

Mexico City, Aftermarket Cape Town, South Africa

Financing

New York City, USA ,

Volvo Buses

8 November 2015 BRT is a sound investment BRT vs. other public transport modes

With 1 bn Euros you can build approx. (only initial investment in infrastructure and equipment)

200 km of BRT 60 km of Trams 15 km of Metro Reference data from Mexico City Source: Carmen Hass-Klau, University of Reference data from Mexico City Wuppertal

Volvo Buses

9 November 2015 BRT and urban image

Downtown revitalization Indoor bus stops Metrobús, Mexico City ElectriCity project, Göteborg, Sweden

Attractive bus terminal BRT concept underpass Bahnhofplatz, Aarau, Switzerland Transmilenio, Bogotá, Colombia

Volvo Buses

10 November 2015 Typical case BRT is much more than just buses !

 BRT components - Traffic planning, even city planning - Technical planning, optimization of technical solution - Profitability simulation models - Infra structure in City - Operator - service facilities - service contracts - spare parts support - fleet management - manufacturer support for coming 15+ years

ALL THE ABOVE HAS TO BE FINANCED

Volvo Buses

11 November 2015 Typical case PRE REQUISITES

 Case becomes cashflow neutral/positive in 4-5 years

 Operators do not have the money to invest, also have to pay to "technical fund“

 Operator usually a "new" company without history

 Government support with strong contracts needed

 Political Gvt wants "latest technology" to be able to have showcase

Volvo Buses

12 November 2015 Typical case START UP PHASE

 Participate if possible in technical, city planning phase

 Check political stability, support

 Operator needs to be strong, manageable, previous experience

 Involve financiers AS EARLY AS POSSIBLE, usually a few lead ones

 Do a thorough fact finding, financial simulations

 Set realistic time tables

 Be mindful that Gvt decisions always late and You are supposed to make up up lost time !

 Something always goes wrong

Volvo Buses

13 November 2015 Combining ECA and Development Agency financing works for BRTs

Volvo Buses

14 November 2015 Typical case INITIATION PHASE

 Time table for financing decisions longer than needed manufacturing lead time RISK !

 Have a strong implementation team with authority to act and make decisions

 Regular contacts with all included parties, financiers, NEW INFO WILL BE NEEDED

 Regular strict, organised, often daily, follow up

Volvo Buses

15 November 2015 Must do/have  You need a strong head and stomach

 Ready to travel on very short notice

 Be open and honest, also secure OPEN LINE contacts with clients all the way to the top

 Avoid short-cuts

 See to it that You get FULL CONTROL of cashflow, IMPORTANT AS MAIN SECURITY

 Secure ownership and immediate possesion of equipment in case of failure

 Understand that You are in there for 15+ years

 Secure constant, reliable follow up info for whole period

Volvo Buses

16 November 2015 Volvo Buses

17 November 2015 Manaus BRT Brazil First ever ECA financing for a BRT in Brazil Transaction Highlights  The Government of Manaus decided to transform its public transport Manaus system by designing and implementing a Bus Rapid Transit (BRT) BRT System for the biggest city in northern Brazil, where buses are the USD only public transport system available. 73,790,106  Global GNZ, Integracao and Rondonia are 3 SPCs which were Mandated Lead Arranger, EKN Agent, awarded the concession to run the BRT system in Manaus, which Security Agent and Trust Bank serves approximately 1 million people daily;  The Manaus BRT system will be fully implemented by 2014 and it is Export Credit Support From: EKN, Sweden intended to provide high quality transportation services for the tourist attending the 2014 FIFA World Cup, moreover it will become a legacy February for the people in Manaus. 2012  HSBC advised on the financing structure, which included offshore SPVs and lease arrangements, allowing the bank to offer better terms (longer tenor and low fixed rate funding) for the clients;

Borrower Global, Integracao and Amount USD 73,790,106 Rondonia Summary ECAs Currency USD EKN Terms and Tenor Use of Proceeds Financing for 300 Volvo buses for the Manaus 1 + 9 years Conditions Signing Date Bus Rapid Transit (BRT) system in Manaus February 2012 Supplier City - Brazil. Volvo Bus Corporation

Volvo Buses

18 November 2015 Santiago

Volvo Buses

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22 November 2015 CONCLUSION • This is all very fun and wonderful business and You make a lot of long term friends !!!

Volvo Buses

23 November 2015 Volvo Buses