Volvo Cars (VOLCAR) investor relations material

Executive summary

• Q2 2026 was marked by a challenging business environment, especially in China, with low consumer confidence and a sharp market decline, resulting in a modest 1.1% EBIT margin.

• Electrification strategy advanced, with BEV sales up 14% and electrified vehicles comprising 52% of total sales, outpacing the market.

• New product launches, including the EX60 midsize SUV with HuginCore, saw strong demand and production ramp-up, especially in Sweden, Germany, and Belgium.

• Achieved SEK 8 billion in cost savings in H1, surpassing the full-year target.

• Key events included US ICTS authorization, a MoU with Belgium for Ghent factory competitiveness, and rollout of Google Gemini AI assistant.

Financial highlights

• Retail sales declined 6% year-over-year to 171.5k units; revenue fell 17% to SEK 77.7bn, mainly due to China and lower volumes.

• EBIT margin dropped to 1.1% from 3.1% (adjusted) last year; EBIT was SEK 0.8bn.

• Net income was SEK 0.4bn, up from a loss of SEK -8.1bn.

• Cash flow from operating and investing activities was negative SEK -5.2bn, impacted by planned inventory build-up for new model launches.

• Gross margin improved to 16.8% (up from 13.5% YoY).

Outlook and guidance

• Expecting significantly stronger sales growth in H2 2026, led by Europe and US recovery, with China remaining challenging.

• Cost headwinds from raw materials and oil prices anticipated in H2, especially Q3.

• Full-year cash flow expected to be approximately break-even, with strong positive cash flow in late H2 as inventory is reduced.

• Two new electrified models to be revealed after summer.

• Continued focus on cost reductions and leveraging Geely synergies.