FINANCIAL UPDATE Full year 2020

Carla De Geyseleer, Per Ansgar, Therese Jandér 2021-02-04 Disclaimer

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Volvo Car Group Results Presentation January – December 2020 2 Highlights 2020 Financial Review Outlook

Volvo Car Group Results Presentation January – December 2020 3 Strong recovery Financial performance Accelerated transformation

• Record-sales in second half of • Record revenue and EBIT in • Recharge car sales more than the year H2, partly offsetting Covid-19 doubled over the year effects • 31% Recharge share of sales • In China and the US, sales in Europe growth for the full-year • Continued strong mix • The leading plug-in premium • In Europe, sales picked up in • Cost efficiencies intensified in Europe (share of total the second half-year • Strong cash flow and liquidity volume) • Increased market shares in • All-electric XC40 BEV and • First green bond issued most markets 2 rolled out to the markets • Accelerated online sales • Overperformance on EU CO2 emission targets

Volvo Car Group Results Presentation January – December 2020 4 Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 5 2020 FINANCIAL PERFORMANCE

Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK)

-6.2% -4.0% +8.0% +82.5% YoY YoY YoY YoY -40.6% 661 263 9,500 YoY 26,100 8,500 +14.7% +7.4% +4.9% YoY YoY YoY 13,300 -20.8% 392 -14.1% 6.3% 3.2% YoY YoY 151 -364.0% 269 112 YoY

-117.9% YoY

-0.9% -1,000 -12,800 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY

Volvo Car Group Results Presentation January – December 2020 6 ACCELERATED RECHARGE VOLUMES LED TO EXCESS CO2 CREDITS

Recharge sales volume (k units) Recharge % of total volume Volvo Cars fleet CO2e decrease (WLTP, g/km EU Fleet)

+151% 17.4% -17% 115 157 130

46

2019 2020 2019 2020

Polestar 2 XC40 Recharge “BEV only” (2021) XC90 BEV and more... 470km >400km 408hp 408hp

Volvo Car Group Results Presentation January – December 2020 7 FINANCIAL PERFORMANCE

2020 H2 FINANCIAL HIGHLIGHTS

(MSEK) 2020 H2 2019 H2 Change (%)

Revenue 151,074 144,022 4.9

Cost of sales -122,333 -116,597 4.9

Gross income 28,741 27,425 4.8

Gross margin 19.0% 19.0% -

Operating income (EBIT) 9,505 8,784 8.2

EBIT margin 6.3% 6.1% -

Net income 8,959 6,205 44.4

Volvo Car Group Results Presentation January – December 2020 8 REVENUE INCREASE FOLLOWING RECORD VOLUME DEVELOPMENT

2020 H2 REVENUE COMPOSITION (MSEK)

MSEK +7,052 +4.9%

4,087 151,074 -7,730 144,022 10,695

Revenue 2019 H2 Volume, sales Used cars, Foreign Revenue 2020 H2 mix and pricing P&A* and other exchange rates

* P&A: parts & accessories

Volvo Car Group Results Presentation January – December 2020 9 EBIT GROWTH FROM VOLUME AND EFFICIENCIES

2020 H2 EBIT (MSEK)

MSEK +721 +8.2%

2,946

1,425 9,505 8,784 -3,650

6.3% 6.1%

EBIT 2019 H2 Volume, sales Efficiencies Foreign exchange rates EBIT 2020 H2 mix and pricing* and other

*New car sales

Volvo Car Group Results Presentation January – December 2020 10 IMPROVED EBITDA AND WORKING CAPITAL DROVE STRONG CASH FLOW

2020 H2 CASH FLOW (MSEK)

8,676

13,844

-12,581 61,592 16,146 -7,781

43,288 MSEK +26,085

Cash EBITDA Net working Other** Investments Financing*** Cash June capital* December 2020 2020 * Change in inventories, accounts receivable and accounts payable ** Change in other current and non current assets and liabilities *** Including foreign exchange effects on cash (-2,760)

Volvo Car Group Results Presentation January – December 2020 11 Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 12 RETURN TO PRE-PANDEMIC VOLUME GROWTH

2020 VOLUMES BY MARKET, CARLINE AND POWERTRAIN

Model range distribution 15% CAGR XC +5.6% -6.1% V 14% 705 S 71% 642 662 H2 Sales 572 54 535 504 341 288 +7.4% RECHARGE sales (k units) 318 47 UK 299 392 151% 291 365 282 47 115 Europe 165 155 167 BeLux* 167 131 18 China 114 18 US 82 91 101 98 108 110 87 46 Other 70 83 82 58 67 95 101 97 70 70 77 53 59 2015 2016 2017 2018 2019 2020 H2 2019 H2 2020 FY 2019 FY 2020 Europe China US Other

* BeLux: &

Volvo Car Group Results Presentation January – December 2020 13 FINANCIAL PERFORMANCE

2020 FINANCIAL HIGHLIGHTS

(MSEK) 2020 2019 Change (%)

Revenue 262,833 274,117 -4.1

Cost of sales -216,813 -222,047 -2.4

Gross income 46,020 52,070 -11.6

Gross margin 17.5% 19.0% -

Operating income (EBIT) 8,516 14,303 -40.5

EBIT margin 3.2% 5.2% -

Net income 7,788 9,603 -18.9

Volvo Car Group Results Presentation January – December 2020 14 REVENUE DECLINE LESS THAN VOLUME

2020 REVENUE COMPOSITION (MSEK) REVENUE DISTRIBUTION BY MAIN MARKETS

MSEK -11,284 -4.1% 274,117 -6,165 15% 1,541 -6,660

262,833 46% 23%

15%

Revenue 2019 Volume, sales Used cars, Foreign Revenue 2020 Europe US China Other mix and pricing P&A* and other exchange rates

* P&A: parts & accessories

Volvo Car Group Results Presentation January – December 2020 15 DISCIPLINED COST EFFICIENCIES THROUGHOUT THE YEAR

COST REDUCTION 2020 vs 2019 (BNSEK)

3.0 6.2

• Direct cost efficiencies intensified during H2

• Indirect cost reduction continued in all areas throughout the year 3.2

• Continuous implementation of headcount efficiencies and competence shift

• Efficiency flow through paving the way for a more balanced cost structure H1 H2 Total

Indirect Direct

Volvo Car Group Results Presentation January – December 2020 16 CONTINUOUSLY IMPROVED HEADCOUNT EFFICIENCY

2020 FTE* END OF PERIOD DISTRIBUTION BY REGION

-2,952 46,414 Other 2% -1,181 45,233 China 20% -1,771 43,462

US 4% 43,462

74% Europe

Dec-18 Dec-19 Dec-20

*FTE: number of full time equivalents, includes both employees and agency personnel No impact of technical unemployment included

Volvo Car Group Results Presentation January – December 2020 17 EBIT IMPACTED BY VOLUME DECREASE AND FOREX

2020 EBIT (MSEK)

MSEK -5,787 -40.5% 14,303 2,750

1,013

-4,580 8,516 -4,970

5.2% 3.2%

EBIT 2019 Volume, sales Governmental Efficiencies Foreign EBIT 2020 mix and pricing* support related and other exchange rates to Covid-19

*New car sales

Volvo Car Group Results Presentation January – December 2020 18 Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 19 BALANCE SHEET REMAINS STRONG

ASSETS DECEMBER DECEMBER EQUITY AND LIABILITIES DECEMBER DECEMBER (MSEK) 2020 2019 (MSEK) 2020 2019

Intangible assets 37,168 32,786 Total equity 70,418 63,648 Property, plant and equipment 57,453 69,738 Provisions for post-employment benefits 14,187 12,583 Operating leases 4,490 3,243 Bonds and Liabilities to credit institutions 26,832 26,132 Investments in JVs and associates 9,997 9,211 Other interest bearing liabilities 4,815 5,076 Deferred taxes and other non-current assets 14,371 10,878 Other non-current liabilities and provisions 19,706 19,947 Total non-current assets 123,479 125,856 Inventories 35,513 38,911 Total non-current liabilities 65,540 63,738 Accounts receivable 14,776 13,243 Accounts payable 46,635 44,876

Current tax assets and other current assets 11,016 9,842 Bonds and liabilities to credit institutions 7,529 4,105 Marketable securities, Cash and cash equivalents 69,679 55,515 Other interest bearing liabilities 1,160 1,073 Assets held for sale 7,849 - Other current liabilities and provisions 69,281 65,927 Total current assets 138,833 117,511 Liabilities held for sale 1,749 - TOTAL ASSETS 262,312 243,367 Total current liabilities 126,354 115,981

ROIC 8.4% 14.5% TOTAL EQUITY & LIABILITIES 262,312 243,367

Volvo Car Group Results Presentation January – December 2020 20 Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 21 BUILDING A SUSTAINABLE FUTURE THROUGH CONTROLLED INVESTMENTS WITH FOCUS ON ELECTRIFICATION

ANNUAL CAPITAL ANNUAL RESEARCH AND DEVELOPMENT EXPENDITURE (BNSEK) EXPENSES (BNSEK)

12 11.4 11.4 14 26.7 10.9 10.2 10.2 12 12.3% 10 9.5 21.0 9.7 20.9 10 19.3 18.6 8 10.8% 7.3 13.9 6.2 9.2 8 6 8.7% 8.3% 8.5 5.9% 5.7% 7.7% 6 4.7 7.1% 4.9% 4 4.3% 4.2% 4.3% 17.0 4 13.1 13.6 11.8 9.2 10.1 2 2

0 0 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

% of Revenue Intangible investments Tangible investments % of Revenue R&D expenses

Volvo Car Group Results Presentation January – December 2020 22 STRONG LIQUIDITY AT 94 BNSEK

2020 LIQUIDITY (MSEK) CHANGE IN NET WORKING CAPITAL (MSEK)

94,379 3,740

8,395 2.1% 2,600 2,592 24,700 22,965 1.0% 69,108 8,087 13,593 -20,670 -3,687 -0.1% 3,518 -0.8% MSEK -403 13,282 51,997 61,592 -1,961 -2.1%

-4,385 Liquidity EBITDA Net working Other** Investments Financing*** Liquidity 2016 2017 2018 2019 2020 December capital* December 2019 2020

Undrawn credit facilities Marketable securities Cash % of Revenue Net working capital

* Change in inventories, accounts receivable and accounts payable ** Change in other current and non current assets and liabilities Volvo Car Group Results Presentation January – December 2020 23 *** Including foreign exchange effects on cash (-2,853) Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 24 STRONG NET CASH POSITION

2020 MATURITY PROFILE AND SPLIT (MSEK) 94,400

24,700

Net cash 35,200 8,100 15% 34,500 24%

7,100 7,400 6,400 400 5,600 2,100 5,000 61,600 4,400 600

2,400 6,000 61% 5,000 400 5,000 3,000 2,000 200 Liquidity 2021 2022 2023 2024 2025 2026 2027 2020

Undrawn credit facilities Cash & cash equivalents Bonds Loans Green bond Marketable securities Loans Green bond Bonds

Volvo Car Group Results Presentation January – December 2020 25 GREEN FINANCING FUNDING ALIGNED WITH OUR SUSTAINABILITY STRATEGY

First Green bond successfully issued in October 2020

• Aligns our sustainability strategy with financing opportunities

• Cicero Second Party Opinion with a Dark Green shading

• Use of proceeds:

• Zero emission vehicles, new electric powertrain and platform technology

• Increased BEV production capacity and battery assembly

• Investments into Polestar to spearhead electrification

Refinancing Revolving Credit Facility in January 2021 with terms linked to sustainability targets

Volvo Car Group Results Presentation January – December 2020 26 Highlights 2020 Financial Review Outlook

Half Year 2020 Financial Performance Full Year 2020 Financial Performance Balance Sheet Cash flow Debt and Maturity profile Financial Summary

Volvo Car Group Results Presentation January – December 2020 27 FINANCIAL SUMMARY

Strong recovery Market share gains PHEV sales increase in volume, revenue and EBIT in most markets with strong more than double share of sales

during H2 sales mix outperforming CO2-targets

Disciplined cost efficiencies Strong cash flow Green financing showing effect and paving the liquidity above 2019 level with with successful Green Bond issue way for balanced cost structure a net cash position of 35bn and a sustainability linked RCF

Volvo Car Group Results Presentation January – December 2020 28 CEO Håkan Samuelsson Financial Review Outlook

Volvo Car Group Results Presentation January – December 2020 29 OUTLOOK

Assuming market conditions continue to normalise, we anticipate:

• Continued growth in sales volume and revenue

• Improved profitability to pre-corona levels

• Investments in new technologies and new products – similar level of capital expenditure

• Cash flow to remain strong

• Reduction in overall CO2 emissions per car Volvo Car Group Results Presentation January – December 2020 31

Appendix

Volvo Car Group Results Presentation January – December 2020 33 SEK APPRECIATION DURING H2 2020 VS H2 2019

30.5%

21.9%

9.9% 9.0% 8.8% 6.9% 6.6% 6.2% 5.6% 5.5% 3.9% 3.2% 3.0% 1.4%

EUR USD GBP CNY JPY KRW CHF PLN NOK CAD TWD TRY AUD RUB

Yearly average change % (+ Appreciation – Depreciation)

Volvo Car Group Results Presentation January – December 2020 34 SEK APPRECIATION DURING 2020 VS 2019

20.3%

12.4%

8.9%

4.1% 3.7% 3.8% 3.6% 2.7% 2.2% 2.6% 0.9% 0.7%

-2.0% -3.0% EUR USD GBP CNY JPY KRW CHF PLN NOK CAD TWD TRY AUD RUB

Yearly average change % (+ Appreciation – Depreciation)

Volvo Car Group Results Presentation January – December 2020 35 STRONG SECOND HALF FINANCIAL PERFORMANCE

2020 H2 KEY FIGURES

Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK) +7.4% +4.9% +8.0% +82.5%

392 151 9,500 26,100 365 144 8,800

6.1% 6.3% 14,300

2019 2020 2019 2020 2019 2020 2019 2020 H2 H2 H2 H2 H2 H2 H2 H2

Volvo Car Group Results Presentation January – December 2020 36 2020 FULL YEAR FINANCIAL PERFORMANCE IMPACTED BY COVID-19

2020 KEY FIGURES

Retail sales Revenue EBIT / margin Cash flow (K UNITS) (BNSEK) (MSEK/%) from operating and investing activities (MSEK) +14.7% -6.1% -4.0% -40.6%

705 274 14,300 13,300 662 263 11,600

5.2% 8,500

3.2%

2019 2020 2019 2020 2019 2020 2019 2020

Volvo Car Group Results Presentation January – December 2020 37 FINANCIAL DEVELOPMENT

RETAIL SALES REVENUE

+5.4% +9.8% -6.2% -4.0% 705 274 642 661 253 263 535 572 209 SUV 181 359 445 254 273 469 Estate 198 170 185 161 94 69 Other 42 101 98 99 98 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

EBITDA OPERATING CASH FLOW

29.9 35 30 26.2 27.4 15 32 21.5 23.0 27 25 27 20 12.5% 10EBITDA 12.1% 10.8% 10.9% 8.7% margin, % 10 5 EBITDA 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Volvo Car Group Results Presentation January – December 2020 38