VOLVOEXPORT BUSES 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 VOLVO 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 Volvo Penta 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 Bus 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, Brazil
ITS4mobility
Mexico City, Mexico Aftermarket Cape Town, South Africa
Financing
New York City, USA Gothenburg, Sweden
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
19 November 2015 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