Volvo B Aktie

Welcome to the Volvo Group Capital Markets Day 2026. It is 18 months since last time. And yet again, we are in a special location. This time, the headquarters of Volvo Construction Equipment in Eskilstuna, Sweden. And this month, something extraordinary is taking place here. We have 4,000 customers experiencing our products and services. But that's for later. Now, let's go inside where the live audience is waiting.

[Presentation]

Again, most welcome and especially to you in the live audience. It is great to see so many familiar faces in the crowd. We have an intense couple of hours together where we are going to share our view on how we are thinking strategically and what we are doing proactively to capitalize on our strengths in a very dynamic market.

So let's get into gear and welcome to the stage, the Volvo Group President and CEO, Martin.

It feels really great, Kina. And also from my side, of course, welcome to this Capital Markets Day 2026, Eskilstuna. The sun is shining. And we have a fantastic program this afternoon also because we have the setup, as you alluded to, with the Volvo Days with all the lineup of products, and you will be able to test and feel and get the emotions of the Volvo products and solutions. So welcome, everyone here in the room and, of course, also everyone online. It will be great.

And Martin, we met 18 months ago in this setting. We were in New River Valley. And the theme at that time was gearing up for growth, which is reflecting in organization building capacity and momentum. This year, the theme is built for resilience and growth. Slight shift in language. Why is that?

But first -- I mean, obviously, we have been on a journey for quite some time now and with the objective of continuously building resilience that is important in a business that is cyclical and in a world with many moving parameters. And at the same time, of course, taking the growth opportunities that lies ahead of us. And 18 months is a long period now, a long period. So a lot of things have happened since. And it has been really about continuing to building that position of resilience and accelerated growth. And that is what we will both see the achievements, but also what is about to come. So very exciting.

Very exciting. So resilience and growth, you will recognize will be a major part of our agenda today. We're going to start with geopolitics and how the current situation impacts our markets and our position in it. And then instead of giving you presentations business area by business area, we are going to look at growth opportunities from a segment point of view. And then, towards the back end, how we are investing for our future. Should we get going?

We get going.

We get going. And Martin, I know that many in the audience would like to hear your view on the world around us. So why don't you join me over here?

Absolutely.

So we are going to look at many different aspects of our business today. But I know, Martin, that you wanted to start with something which is really close to our hearts every day, our customers.

Yes. And that is always a tough start because I get emotional thinking about customers. But I think it is like this that, I mean, of course, the Capital Markets Day is tempting to start with the strategies and the big picture and the big bets what we want to do. But at the end of the day, and often, 95% of our time we spent, of course, on focusing on how to making -- how to make our customers competitive, successful. And we often say that, that the revenues and cash flow and earnings and building a stronger balance sheet, they are outcomes. They are not falling down from heaven. They are coming from customers that want to and they don't have to work with the Volvo Group. And that's the reason why we are taking that very seriously and spending a lot of time in all parts of the organization, in our business areas, in our different parts of the value chain to really make that successful. That is very important.

And we say that we live with our customers. And I mean, it's very common that companies talk about customer focus, but you talk about customer obsession rather.

We are B2B, and that means that for every customer, the solution, not a solution. And the solution that is really tailor-made for him or her, meaning that you need to understand the job to be done, and we will come back to that because that is one of the key factors of success in our industry, never compromise the optimized solution for the customer. Then, it's our job to make scale and scope and technology to happen. Customers couldn't care less about that. They want to have an optimized solution for their mission.

And here comes the first tricky question today. Since we met in New River Valley 18 months ago, how many customers have you met?

You asked me this question 1.5 weeks ago. So it's not that tricky anymore. But [indiscernible] to backtrack that also. And we came up to -- I mean, of course, I met thousands of customers since, but with meaningful conversations, more than like 20 minutes, where we have had feedback, 915. So yes, 2, 3 per day the year around. And that is super important for us because at the end of the day, we have millions of -- millions and millions and tens of millions of data points and important feedback, obviously. But that conversation about what is happening, what is the feeling and the different type of stories here. One example, a couple of weeks ago, was about this -- a big customer, by the way, in Europe talking about that, and we had a good conversation on both what we need to improve. It's always about that, obviously. But also he ended that conversation by saying, "Thank you, Martin and the team for bringing my driver safely home". And I mean that is a fleet owner that has more than 2,000 trucks, and that really matters, of course, the driver attractiveness, just as one example.

And just to back up a little bit, 2 every day, 365 days a year, including weekends, that's quite a schedule, I must say.

But I mean, I'm just representing the rest of us. If you ask Stephen or Roger or Anna or everyone here, I mean, that is how we live together with our customers because if we don't understand the job to be done together and build that trust, it will never fly.

Martin, let's change topic a little bit and talk about geopolitics. I mean, I don't think anyone could have guessed where we are as a world today 18 months ago.

No. And I think that is always the case. I mean, some wise guy did say that it is difficult to make forecast, especially about the future. And I think that is more valid than ever, obviously. We have a lot of moving parameters, we know that, and we need to live with that. But it has been so during a long period of time. Now, it's intensifying. Obviously, we have a number of cycles coming together. We have -- I mean, the normal economic cycle, what will happen. We have the geopolitical cycle that is intensifying, we have demographics, we have technology, we have climate and energy transition, et cetera. So there are quite a number of parameters to take into account. But that's the reason why it's so important with the team that we have today because you can look upon that from a challenging point of view, but I think we have a good opportunity to look from an opportunity perspective.

And more in detail, how is this uncertainty impacting the Volvo Group?

No, it's a lot about obviously continuing to build -- that's the reason why resilience matters because, obviously, if you have the ability in the group to react if that is necessary, but more important to act and be ahead of the curve and to do that with flexibility and speed, because that is important, that you continue also to have the right mix in your portfolio, both when it comes to the customer base, but also when it comes to the mix between, so to speak, equipment revenues and recurring revenues such as service. So a lot of these topics we have been working with, and that is a platform for continuous growth, obviously.

And just a couple of weeks ago, you were hosting a visit from Narendra Modi, the Head of State of India. In times of regionalization, how important is such a relationship?

Of course, it was an honor to have the PM Modi, I mean, one of the fastest-growing big economies in the world coming to Gothenburg. I mean, think about that...

Center of the Universe.

Yes. True. I think -- yes, if we should have been humble, we should have been perfect, right? No, seriously, PM Modi together with von der Leyen and our Prime Minister, talking about the bilateral opportunities between Europe and India, but also for us, obviously, an opportunity to talk about a very important region, India for India. Obviously, we have a very strong footprint there when it comes to sales and when it comes to customer base, but also when it comes to India for the world, carry back a lot of great opportunities that we have there.

We are now stepping up apart from technology, digital, also the fourth global industrial hub. We have Volvo Eicher Commercial Vehicles that is a hidden diamond, I think, for everyone, here included. Last year that ended last of March for VECV. They surpassed 100,000 vehicles for the first time. And with a growth rate that is double digit and with margins that actually are quickly approaching the group's margins. So this is an asset that we are very proud of, both when it comes to that development, but again, how they are taking care about the customers and the whole Indian ecosystem.

There is obviously a lot happening in our industries. And I think a talking point during the spring has been increased competition. You mentioned India, but there is obviously also China. What is your take on that?

Yes, there's India, there is China. There are new entrants. There are technology shifts, et cetera. And I think the first -- I mean, where there is growth opportunities, competition will continuously, of course, intensify. That's natural because there are opportunities for everyone. Having said that, we also see that the competition is not only there, but they are good, they are speedy and they are innovative.

And in a world like that, you need to continue to both maintain your strength, but also accelerate a number of areas, so you are ahead of the curve. But as I said, I think we have, I mean, capabilities, assets, we have people, we have customer base. We have the financial position, but we have the innovation power to get the job done together with our customers. But as in all competitions, and I like that, you need to always get better. And that is why market economy really works, right?

So being the best, that it -- that is what it will take to win.

Yes. I mean being not the best is not an option if you want to compete in a global market, but still being very local.

Talking about innovation and technology, Martin, the last couple of years has been a technology race. We have been investing heavily in traditional technologies, in more sustainable solutions. Going forward, how do you foresee that this will develop?

We see that it is plateauing now. But I think it's more the important reason behind that rather than the figures as such because I think we have been very consistent in our capital allocation. Strong financial position bring really the innovation to the table, and also, of course, good returns to our shareholders.

But if you take that innovations, one thing is that we always will provide what the customers want, meaning that now with the prolongation, and we see a clear prolongation of -- and actually a further acceleration of our combustion technologies, both with the traditional, but also renewables, we continue to invest in that. And we have created a number of platforms for the future that has brought us to a rather high level. Now, we see that, that is plateauing and decreasing.

You can take the BEV, the battery electric long range now, 700 kilometers, best payload, and so to speak, the maintenance schemes, charging times, what have you. And now that platform is there through our modular system, and we can really start to optimize. Then you don't have the same level of investments, but you have the platform to really build from. Same when it comes to certain capacity build-outs in North America, we will come back to for example. So plateauing and a slight decrease, that is not the same that we are stopping our innovation, not at all.

And that brings us to the transition to a fossil fuel-free future. That's the tongue twister.

Well done.

Thank you very much. I've been practicing. So how will the journey towards zero emission play out?

What we see clearly is, of course, that the overarching theme, including, I think, quite a lot in this audience 4, 5 years ago, has slightly shifted, if I put like that. So decarbonization as a theme for regions and governments is still there. But alongside decarbonization as such for the energy transition, it is also about resilience, it is national security and its competitiveness. And you need to act with these 4 factors in focus.

But if you do that, and that's the reason why we're still committed to Paris, for example, because, I mean, if you want to drive the energy transitions from these 4 angles, regional or national security, meaning regional value chains, competitiveness, resilience and decarbonization, that will be a winning formula. So we need to be there, and we want to be there and customers want to be there. But we will come back and talk about that later.

There is an expression that you use quite frequently in our internal events, and that is excelling on the basics will still make you unique. With that as a platform, what differentiates us as a company that will enable us to win?

No. But I think, especially, and we have talked about it, Kina, this morning. When you have a lot of moving parameters that you need to, of course, incorporate and integrate in your -- not only your strategy, but in your execution plans. You need to do that from an angle where it matters for real, regardless if that is new propulsion technology or AI or digital capabilities. And that is really get the job done, build trust with our customers.

And we have an extremely strong platform when it comes to the customer trust. That is an asset and a pride that we can never underestimate. But that is coming, of course, over time to deliver that TCO, to deliver that uptime, to deliver that fuel efficiency, to deliver that safety, to deliver that comfort, not from time to time, but every day. I mean -- and you do that, thanks to great people. And we believe in decentralized organization with the ownership mentality to make it happen. And if you do that really well, it will still make you unique, I promise you.

Martin, you wanted to start this conversation emphasizing our customers. How would you like to close?

No. I mean, closing that is, of course, about the first part here, you see, yes, how do we build customer trust. And when -- I mean, I can take these 915 great customers that we have really talked about, but also the feedback we are getting in other channels and all the colleagues here. Of course, it's about product and solutions, but it's so much about our people and how they are supporting our customers in all parts of the value chain and how our customers feel that, the drivers feel that, their fleet managers feel that, that we are really working closely together. And that feedback is super important.

And often, actually, we have Roger and myself, we talked about that a couple of days ago when we had an issue with -- I think it was '16, '17, we were in Eastern Europe and talked to a specific customer. And Martin is his name as well, by the way. And he said, "Martin and Roger, we need to fix this now". He didn't say you have to fix it now, but we need to fix this now, and that is the spirit. Thanks to our people.

And there truly is power in our people, and bearing in mind that we have 100,000 colleagues all over the world, that is a lot of energy devoted to winning the game. Take a look at this.

[Presentation]

I love this movie.

Yes, I love this movie, but I love our people even more.

Okay. I love the people, and I love the movie. So Martin, we're going to build on what you were saying about being a resilient organization and the fact that we over the last decade has built a platform that enables us to lead from a position of strength.

And to talk more about how we have created performance resilience, let's welcome to the stage our CFO, Mats.

You got a much more cheerful tone than he did.

Yes, I did.

I don't know how.

It's much better music.

Mats, resilience and growth. Why is that important?

The short answer is value creation. I mean, it's essential for value creation, looking at resilience and growth. And I think resilience that really shows the kind of core capabilities that we have in our operations, but also our ability to execute. And I think that is, to some extent, prerequisite when it comes to growth then. So resilience and growth goes a little bit hand in hand, I would say.

Why don't we take a look at our performance journey? And why don't you share your comments?

Yes, it's a good journey. So looking at margin expansion over time. But even more importantly, coming back to resilience, that we have less volatility, and it shows that we have been better in order to manage the business cycle as well. And I think it clearly shows that in terms of the margin development.

Martin?

No, just to add to what Mats is saying, of course, very proud of the journey together with the team here. And I think there are a number of key factors. We talked about flexibility and agility that we have a very clear toolkit, the decentralized decision-making, but also a clear toolkit of doing that. We have been bringing a lot of innovation and technology to the table, where we have been successful also actually to driving commercial conditions and value creation, both for our customers and ourselves.

Service development has been very important. And again then, the recipe for success that we talked about. And I'm very proud to see that this is a journey where all business areas and also truck brands have really make a contribution. So we don't have any clear pockets of drag anymore, I should say, and that is super important, obviously, both resilience and growth opportunities.

And you mentioned services, which is, of course, a core pillar. Why don't we look at our services journey? And maybe, Martin, you can share a few words.

Yes. I mean, also here, a very good journey, as you can see here, over then many years, still opportunities ahead. The most important is actually maybe not the figures. It is really what we see when we have a higher penetration of service content together with our customers. We have a higher retention. We have a higher satisfaction and loyalty. So from a customer perspective, super important. And then obviously, as a very positive byproduct, it is also the recurring revenues for us. So very proud of this that is happening across business areas and geographies.

You can see the smile, Kina. As a CFO, I love service. Then coming back to resilience and growth, I mean, the service business being less cyclical than the new vehicle sales, meaning that, that brings the kind of the stability and resilience. And on top of that growth, I mean, what you can see over this time period, close to 5% CAGR then. And if we're looking at the recent data points where we are today, in fourth quarter and first quarter, between 5% and 6%, so providing growth as well. And on top of that high profitability, so contributing to margin expansion. So service is great.

That explains your happy face. So finally, Mats, let's compare with our peers.

Yes, a little bit the same story over time. But if you're looking at that in relative terms, you can see also a relative kind of improvements when it comes to resilience over time and less cyclicality. And if you're looking at the latest data points here, representing them for truck, buses and engines, we are actually best-in-class when it comes to the adjusted operating margin. So a good development relatively as well.

Martin?

Of course, again, proud of that journey, but I mean, this is a relative, but more importantly, it's an absolute game also to continue to build our story with the potential we have. I would also like to comment Volvo Construction Equipment, I mean, starting on the lowest point then, a little bit more than 10 years ago, and have really built also a very strong foundation. amongst the best now when it comes to margin, the margin expansion. But I think it's time now, Melker, for some growth also, right? So maybe you can come back to us on those.

He will come back to that, I can assure you. So I think it's fair to say we are very proud of this journey. We are happy, but not satisfied. There is lots to do still.

Mats, take the stage.

Yes. And I will elaborate more when it comes to the resilience and growth. But before that, just spending a couple of minutes when it comes to the current situation now in the second quarter in terms of the trading update. And it's very much the same message as we gave when we reported the first quarter earnings then in -- I think it was April 24. Looking at the different regions, we continue to see a solid customer demand in Europe for April and May. So no big impacts when it comes to the Middle East crisis on the demand side in Europe.

Looking at North America, we continue to see a strong customer demand, and we are now taking orders for the third quarter and fourth quarter in U.S. And we are gradually also increasing the capacity in U.S. then. We have a general cost inflation that is gradually increasing, and this is the area where you can start to seeing impacts from the Middle East crisis then, most pronounced when it comes to increases on the freight cost, but also on raw material side. So that will have an impact on the cost side in the second quarter. And then last but not least, we continue to see high utilizations when it comes to the trucks and machines, meaning that, that is driving service revenue as well. So all in all, a very similar message to what we gave when we reported the first quarter earnings.

Turning back then to the more kind of long-term development and to the resilience and growth theme then. You already saw this slide, good margin expansion, high -- being resilient as well and less volatile. But there are also still room for improvements when we're looking at the financial development. Many of you probably recognize this slide from the previous Capital Markets Day. So this shows the adjusted operating income for Group Trucks for 2025.

And in 2 dimensions, basically then, looking at the different truck brands and looking at the different geographical regions. And as you can see, there are big differences between the different geographical regions in 2025. But overall, a pretty good adjusted operating margin given the environment, close to 10%. But the difference then, looking at the positives then in terms of performance, starting with Europe, very good financial performance in Europe in 2025 and especially looking at Volvo Trucks then that has been combining the market share leadership with a good performance. But also, we can see Renault continue to develop in a good way, being close to the group target of 10%.

I would also like to highlight South America, or as you know then, being mainly Brazil then with the footprint for trucks, where we have had a good financial performance despite very, very challenging external environment in Brazil. But this is also reflecting our end-to-end way of working when we have an integrated model in Brazil, meaning that we are swift when it comes to adjusting capacity to demand.

Looking then on areas with room for improvements. North America sticks out in that respect, as you can see here, though, mainly due to the external environment looking at North America with low demand, mainly driven by a very tough financial situation for our customers with yet another year of freight recession in U.S., but also in combination with tariffs and general cost inflation. So room for improvements, but also in our own operational system in North America.

The other one that sticks out being significantly below the target, that's the transformational ventures. And you probably remember that I was quite granular last time talking about the transformation ventures and also guided that we will likely see an impact on the trucks' margin of about 150 to 200 basis points. And that is what you see on this performance there. But going forward, we have done quite a lot on the joint ventures. So what we can see now is between 100 and 150 basis points going forward in impact.

So to summarize, a fairly good development looking at overall profitability, but with rooms for improvement.

Moving into the drivers or how we are driving performance overall in the Volvo Group with a couple of priorities. Martin already talked about the decentralized decision-making that we have. We are working in a decentralized setup, meaning that we have P&L responsibility, accountability far out in the organization. But that is also combined with decentralized decision. So we're utilizing the flexibility tools to adjust to the external environment using the flexibility tools we have in the system.

We have price discipline. You have heard this before. We are adjusting capacity when not using pricing in order to drive volumes. We are increasing the service business. We have already talked about that, and my colleagues will talk much more about the service business, but also how we are driving the total offer being very, very important. And last but not least, cost control. We have a culture of being cost conscious in everything we do, and that is something we are proud of.

Moving in then to the portfolio, and this is also a slide that probably many of you recognize from previous Capital Markets Day as well. We have actually done quite a lot when it comes to the portfolio since the last Capital Markets Day. We have addressed some of the low performers. We have divested SDLG for CE. We have made a decision to exit the ROKBAK business, but we are also adjusting a little bit when it comes to the ventures with a new business model for Flexis. And we are also welcoming Toyota into the cellcentric joint venture, which is important. But we are also making more forward-leaning, growth-oriented changes in the portfolio.

We have the Mexico footprint to facilitate growth. And this is something that Roger, Steve, and I believe, Jens will talk a lot about later on. We have also made acquisitions, and especially looking at the retail and service side, acquiring Swecon for construction equipment and the deal of Western Australia for Volvo Trucks. So very growth-oriented investments. And Nils will talk a little bit more about autonomous later on today, which is also a really exciting growth area that we see.

So to summarize from a financial point of view, we have built resilience, and we are ready to accelerate the growth. And I think this chart really shows that our strategy has been serving us, customers and the owners really well.

Thank you very much, Mats. We will see much more of you later. So please take a seat.

And Martin, looking at this slide, it happens to coincide with the same time period that you have been the CEO of this company. What would you say has been paramount to the creation of resilience under your leadership?

No, it is a teamwork. We are in 150, 160 countries around the globe, and it needs to happen every minute, every second out there. And to give the opportunities for our teams to succeed has been super important for me, for the executive team, and I think we have been successful in that. And also in a good way then combining this customer obsession with the scale needed and a number of other factors that we have been alluding to, but it's teamwork really that is driving that. And that we are long term and consistent in our way of thinking here. Customers must win. That is good for the company. And if that is good for the company, it's good for the owners of the company. So it's -- that's the logic.

But this is not the end of the journey.

It's not the end of the journey. The day you think that's the end of the journey, you should do something else probably.

So still lots to do. Great to hear, Martin.

We're going to drive into the next part of the program and look at the key value levers driving resilience and growth. And now the stage is yours.

Thank you, Kina. And what we would like to do in a couple of minutes is to pull together a little bit the introduction here with a number of main conclusions about what has happened, but more importantly, what is the journey that is about to come for us and what are the key levers, as Kina said here.

The starting point, obviously, is this one that the global demand for transport and infrastructure solutions, logistics and also compounded by a number of factors that we come back to will continue to grow across markets and the underlying trends of that, it's very strong, obviously. So the commercial opportunities there. But each job to be done for different reasons, and I will come back to that. It needs to be more efficient, more safe and eventually more sustainable to stay competitive. So that is the starting point, and we take it from that.

Then obviously, there are a number of very important transformative elements happening now, little bit busy slide. Bear with me, I've done it myself. That's the reason why it's not that professional. But it's an important one because we are super excited, and that's the reason why we love our business is that we are participating in a wealth creation for nations, societies. It's such a clear relation between advanced logistic transport infrastructure systems and the GDP per capita development on absolute level. The more advanced, the higher drive for GDP. So that's a great starting point, right?

But we also know that both logistics and transportation and infrastructure development also comes with a number of side effects. We are constantly improving these side effects, but they are there to some extent. It is about climate, but also pollution in cities. That I should argue for some of the big regions, especially the pollution topic in big cities is one of the key drivers of doing things, right? Noise congestion, talent acquisition is super important, the driver attractiveness. So there are 2 sides of that coin, either autonomous solutions for certain applications, but also constantly evolving when it comes to the driver attractiveness. And then obviously, energy resilience, energy transition.

To move that into green will be the winning formula. But of course, there are parameters that we need to take into account in order to make that happen. The regulatory push is obvious in many different markets and regions, and that is important. Without some of these regulations, things will not happen if they don't have natural links to the market mechanics.

Market mechanics also, of course, very important and customer pool combined with the market mechanics to create the right type of TCO, but also other incentives, market incentives. Enablers, I will come back to, in order to make transformative elements happening. And then, of course, the technology development that is also further than accelerating now. There are, of course, different priorities for different stakeholders here.

But at the end of the day, we need to relate to it together with our customers to be successful. That is how we drive business forward here. And in order to do so, it starts with a job to be done. It's easy to aggregate this to high levels. It's easy to talk about the bigger picture, which we eventually need to do in order to pull together scale, technology bets, industrial footprint investments, et cetera. But at starting point, it starts with this. It starts with the solution for the customer.

And here, I've just taken one example, and I've taken an example that is pretty well known in order to make the point here. And that is typical long-haulage application in Europe, probably 120,000, 125,000 kilometers, quite many more -- many customers doing a lot more there, but we took that for the point. A 4x2 tractor, in this case, diesel ICE operation. And what you don't see in this P&L, because every equipment is a profit and loss statement with the heart, but I will come back to the heart a little bit later, is the revenue generation.

The revenue generation for the customer is, of course, the starting point if you make a P&L. And there, payload, uptime and availability and durability is, of course, super important. And here, we are talking about the cost elements of the P&L. And where you see in this specific application, the vehicle, including trailer, so the equipment as such stands probably for depending a little bit on country, 12% to 14%, 15%.

I would make it clear for you that we are not the cheapest here by far on this diesel execution, if you take a Volvo truck or a Renault truck. But we are pretty competitive when it comes to the vehicle here since we have such a great residual value. So price minus residual value is, so to speak, the component what we look at here, the 12% to 15%. The more important piece of this is how this -- how does that affect the rest here.

Energy efficiency, uptime, driver attractiveness, safety, comfort, availability, both for top line and cost, that logic prevails regardless of region, application, segment. And it will always be the competitive set, the solution for the customer. How do we produce that? We produce that through the total offer. And the total offer is a combination of products and solutions that are eventually opted to be tailored for every application, customer, segment and geography. I will not go into detail here because my colleagues will touch on how we really execute on this in today's landscape. But it is important to continuously build a modular platform around this to be successful.

If we then take another example now, one of the transformative elements because in my -- when I described the transformation, that could be seen as, for example, propulsion technology, moving from a diesel or an internal combustion engine, even from diesel to a renewable or from an ICE, or internal combustion engine, to a battery electric or what have you. Then, if you take the battery electric here, what has happened since we last met 18 months ago, some good news and some a little bit more challenging news.

I will start with the good news, guys. The good news is that the logic here is exactly the same as for whatever. The cost elements might be a little bit different, but the logic starts with the same that you need to specify this to the exact need of the customer for long-haul or for construction or for an excavator or for a bus, right? What we have seen then is obviously, number one, that uptime, availability, safety, but also the infrastructure around will be even more important, right? And we have been early out. We have learned a lot around that, even if it's not scaling yet in Europe and North America, at least, Global South as well.

We have also seen that some of the critical cost components are coming down quicker than we anticipated, but also that the global access of that for companies like us, both when it comes to internal innovation, and of course, also when it comes to our global supply partner ecosystem is there to a higher extent. And that makes us possible also to continue to develop that. And in particular, of course, battery technology, from cell all the way up to pack. But the ability to still tailor-made the solution is there to drive the same type of outcome.

What is a little bit more discouraging about this is that the equation in order to make this happen is going to slow in some of our key markets. Because when we look to this now here, we see that in quite many -- yes, segment by segment and application by application, we are actually getting to a TCO parity or even better in certain cases if you are factoring in the different parameters, city distribution, city buses again there. Where is Antoine? I mean, we see it very clearly there. We see it in some of the segments also for you, Melker, et cetera. So that part of the equation is there.

But what we see is going too slow for certain other enabling conditions. That's the reason why I talked about enablers before in order to make this happen, and in particular, in Europe and North America, but also in Global South, as I said. And I would like to pinpoint infrastructure built out, in particular for the public, and that's the reason why the depot type of solutions are going quicker, the energy and the grid network, but also uncertainties about the TCO parameters when it comes to -- and I will give you an example of that here.

Here, you see how it looks like now when it comes to the adoption of heavy duty. Zero in North America, 2% so far in Europe and 28% in China. And as you can see, it is pretty closely related to some other factors here. Here, you have the number of charging stations in the relevant areas. And there you have the biggest on the public side, and then also, how you have decided to drive so to speak the pricing on public stations.

And when you see these differences, you will not be surprised that you don't have the same adoption level. The trick for us is obviously that we continue to drive that through our modular car system and that we are continuing to refine the products, as I alluded to, with our new BEV and the access to the key technologies here.

The other angle of this, if you leave for one second the transformative elements that will be incorporated, is, of course, that every -- and this is illustrative, of course. But at the end of the day, it's hundreds of thousands of different applications. And every spot here represent just, I mean, Mack refuse or an excavator customer in Hungary or whatever it can be.

And there are no shortcuts. We see some short -- not shortcuts, but we actually see -- that is one of our most interesting, not trials and pilots, but use cases of how we apply digital intelligence and artificial intelligence is we have so much of data so we actually can drive the specification and support our sales force to even better refine that for every customer here. Because at the end of the day, obviously, it will turn out to be all these different type of pie charts.

And one pie chart here with different constitutions when it comes to the vehicle or the machine, when it comes to the fuel, when it comes to a lot of different things, needs to be really understood in order to make the high performance. And the assets we have to make that happen are, of course, quite a lot. But it starts with that we have a very clear view on how we are operating our brands around the globe: Volvo, the Volvo brand, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Trucks, Volvo Financial Service operating globally.

But of course, also that we have our strong regional brands also to further unleash the full potential. Of course, this is not exactly true. We have Renault Trucks in other parts of the world, et cetera, but where we really have the inertia.

And that we have very strong retail presence, global reach, yes, but extremely local, being there every day. Segment and application excellence enabled by our common architecture and shared technology. That is the essence how we can incorporate and combine the tailor-making with the scale and the technology leadership, innovation leadership and speed to market. And then, of course, in a world with all these moving parameters, regional value chains.

And this is produced based on our recipe for success that we talked about. That customer trust that has been built up for years, a customer base, a growing customer base that is truly trusting that we will do this together, that are living together with us, driving that TCO uptime productivity, safety, comfort, all the different aspects of the winning formula for our customers through a decentralized organization with speed and execution.

Kina?

Thank you so much, Martin, for giving us a strategic look at how we are going to grow. Maybe we can end by showing the different dimensions of growth.

Yes. I mean, you can combine the different dimensions of growth in many different ways, obviously. But we have decided now to talk about it in these dimensions, the growing global demand we have been into also and that you will see more about today, how we are targeting specific regions and growth segments with even higher growth opportunities, still combining our capabilities and assets, and how we through that also can outgrow both in market, the specific strategically selected segments through our total offer and how that finally also will drive content per unit, thanks to the optimization of the solution basically.

And coming to your point, Martin, that part of the resilience that we have created comes from the fact that we are present in so many different segments. And these are segments that we have chosen carefully and strategically and that simply put gives us many legs to stand on. And as I said in my introduction, we are going to focus on the segments today rather than business area by business area, Martin.

Absolutely. And the reason for that is, of course, also that we see a number of these segments coming together where we can combine on one side, our global capabilities, assets, global network with what they need, but also because some of these segments contain enormous opportunity when we are pulling together the capabilities from different business areas. And that is important.

And if you look at it, how it looks now, here, as you see then, the growth segments fitting our core capabilities and common assets. The risk is otherwise that we -- and we love that as well, obviously, that we will talk about our on-road freight, we will talk about the construction, maybe we'll touch on some of these others. But when we look at opportunities now, of course, they will continue here, and you will hear more about that, our core segments, on-road, both long and regional haul as well as construction, enormous opportunities.

But the compounded opportunity that we see in urban logistics, public transportation, and obviously, mining and quarry, where we have -- we are punching under our weight today when we look at our core capabilities and what we can achieve for sure, and we are now focusing on that as well as defense, same here, logistics, autonomous, last mile will play a super important role. Scale will matter with service capabilities. And of course, power generation, it looks 5% here. But -- now, we'll talk about something that I know that you will like how we are growing quickly now when it comes to the AI and data center infrastructure.

So exciting times, Kina.

We have a very exciting hour in front of us. I think you have deserved a break now, Martin. So please have a seat, and we will obviously see a lot of you during the day.

Thank you, Kina. Thank you.

So we are going to accelerate straight into our first segment, which is On-Road. So welcome to the stage, Roger.

So Roger, let me introduce you like with being the man with probably the highest truck margin in the world. How does that feel?

Certain pressure, but of course, we are very humble for the situation, but also then extremely proud of what we are achieving together with our people and our customers, of course.

And you are present in a number of different segments and [indiscernible] is the largest. I would like to leave the stage to you to present how you're going from best to even better.

Thank you, Kina, and good morning to all of you. So at Volvo Trucks, we have a very solid track record of profitable growth regardless of business climate. We have gone through very turbulent times, as you know, but we have continued to drive high profitability. And here you can see on the graph, our strong improvements of net sales and operating margin since 2017.

And if you are going back to 2023, we have the strongest record year in 2023 with a margin close to 20%. We are operating from a position of strength. We have taken significant steps as well of improving our market share, but it's not only to improve the market share. We are improving profitable market share. In Europe, we are the market leader for 2 years in a row with a market share of 19.3%. In Brazil, we have grown our market share with more than 8%, and we are the market leader for the fourth year in a row. In Australia, we are keeping up a very strong and solid position. We have a proven track record to grow our market share. Therefore, are we extremely confident that we can do the same journey in North America?

Our vehicle population, our truck populations is building resilience into our business. We have a vehicle population of 10 years that is 1.1 million trucks running on the roads every day. The majority of the trucks are between 3 to 6 years old. That is the sweet spot of the highest service potential.

If you look at the operating income from Volvo Trucks, we have a high profitability of new trucks driven by strong price realization. But we also then have a very good profitability of the service business, creating a strong resilience into our business, but also that we are extremely profitable in high markets. We will manage high profitability throughout business cycles. Martin was into this, our customers, our fantastic customers. And our business is such an emotional part of our business, and we are emotional as well. But we are working very tight with our customers. We have strong relations with our customers, and we know our customers and their business. We are constantly working on improving customer satisfaction. Today, we have a leading position, and we are winning together with our customers.

I will move over to our growth opportunities for Volvo Trucks. And I will go into 4 areas. I will talk about segments. I will talk about the total offer. I will talk about the services and then also then growth in key markets.

So let's start with segments in electromobility. We started electromobility in 2019. We have today models in all segments, and we have 8 modules in production. We have delivered close to 7,000 electrical trucks to 50 countries around the world. These trucks have been driven in commercial operations more than 400 million kilometers. We have built a lot of competence regarding electrical trucks. We recently launched our next generation of electrical products, improved payload, reduced charging time and then a range up to 700 kilometers. This is a new benchmark regarding the electrical trucks in the industry.

Moving over to our fantastic long-haul trucks. This is a new era of trucks into the industry, setting a completely new standard regarding design. They look completely beautiful. Fuel consumption severely improved; safety, a lot higher safety system; and also, then driver comfort. The all new VNL, 10% fuel reduction. The FH Aero, 7% fuel reduction. You can imagine that impact on the bottom line from our customers. We have strong deliveries of both models in production start. And we have an amazing growth opportunities with these fantastic products to gain further profitable market shares.

Another growth area is mining, construction and quarries. And here, we are working together with Volvo Construction Equipment. We have a broad range of trucks available into these segments. One is the FMX. That product is proven to handle under toughest jobs in the industry. Here, you can see on the stage, the electrical version. It's a powerful truck that runs up to 470 kilometers.

Now, I will move over to our second growth opportunities, total offer. I will explain how we are working and the potential with the total offer. We have a customer that operate in a segment. We will provide a truck model and specify that truck and add all the needed features, then we will get a very profitable truck price, but also a product with a high service potential. Then, we will add parts, workshops, digital services and uptime and connect that with a service contract, preferable a gold service contract during a long duration period.

Next step, we will add financing and insurance from Volvo Financial Services. Now, we have maximized the revenue potential of the product, but we have also given our customer a very profitable product with high residual value and uptime. But we have also then a lot of further potential to drive the total offer and gain further revenues into our business. Total offer is a win-win for us and for our customers.

The third growth opportunity is services in a growing truck population. We have a truck population of 1.1 million trucks, 10 years old. Every time we sell a truck, we are increasing then the truck population and then the service potential. Total offer, it's enabled us to grow than the service potential and secure them the revenues. And we have grown our service contract portfolio with 180% since 2017 to a value of SEK 70 billion. This is secured revenues for the future. But to manage our service growth, we need a very strong distribution network. And now, we are going to build an even stronger distribution network.

Today, we have a distribution network of 2,500 service locations around the world. We own 330 ourselves. Our distribution network is a competitive advantage. We have built this distribution network for over 100 years. You don't do this very fast. And now, we will build an even stronger distribution network. And we will do that by focusing on strengthening the private dealers. We will then grow organically in selected white spots, and we will do that as well with selected M&As.

Moving over to growth in key markets. We have a very solid track record of profitable growth in Europe, South America and in Australia. Now, we will take this proven success and scale that to other regions around the world. And let's look into Europe as a benchmark. Europe is an excellent example of very strong profitable growth. We have increased revenues, we have increased margins.

We have increased resilience and market shares. We have done that by focusing on profitable market shares, total offer and then growing our service business. We have grown our market share to 19.3%, and we are the market leader for the second year in a row. Our European business is very, very profitable. Now, we will do similar journeys in other regions around the world, like in North America. But we can still grow even further in Europe, like in Germany and other countries and also then with services.

Another key region for growth is, of course, North America. We will grow in North America now with our new product range, with new capacity in Mexico with services and then investments by our dealers. We are focusing on segment, very focused, and we are conquesting a lot of new customers. And now, we are increasing capacity in North America due to a very, very strong order intake.

India is also another potential for growth. With the industrial hub in India, we will create opportunities to grow in India and the rest of Asia.

To sum up, at Volvo Trucks, we have a solid track record of driving profitable growth. We are acting from a position of strength. We have a proven record to grow our business. We have the strategy in place. We have the products, we have the network and we have our fantastic people. Now, we will take the opportunities in the areas to grow our business even further to be even stronger.

Over to you, Kina.

Thank you so much, Roger. Crystal clear, as always. Why don't you join me over here because we are going to dig a little deeper into some of the key areas that Roger presented, and I would also like to ask Stephen to join us.

So we are going to focus specifically on North America. And it was pretty clear during our last Capital Markets Day, the market share ambition that we have in North America, 25% combined Mack Trucks and Volvo Trucks. And as Martin said, it has been a fairly challenging market out there. So with a finger on the pulse, where are we, Stephen?

Well, again, if I go back 18 months ago, when we looked at our heavy-duty market share for Mack Trucks, we were running about 6%, 6.5%, 6.7% share for about 3 years in a row, really driven by constraints in the supply channel and also some capacity issues. I'm glad to say we've worked extremely hard as an organization to solve those issues.

And if I look at 2025 results, we ended up at 8.7% heavy-duty market share. And more importantly, if you look at the last half of the year, we ended up at 9.3% market share. So 6.7% last half of the year in '25, now 9.3%, and we continue to see good momentum for market share. And this is driven primarily from just recapturing our business on the vocational side.

That's a good start. Roger?

We see where we are, where we are after May 2026, and we are taking the steps in the right direction. And it's important that we take steps and then growing shares and then profitability at the same time. And as Stephen, more into then, that we are doing it together in a good way. We are building ourselves stronger. We are rolling out now the products. We are building the network, and then, the capabilities of people as well to handle the higher volume that we are planning for.

And if we go a tiny bit deeper, can you share what we're doing specifically to gain more market share?

No, as I said in my speech here as well, it's important that we are conquesting new customers. We need more customers to gain market share. We need -- we cannot build this with the customers that we have today because we need to swim in a bigger lake, so to say.

Conquesting customers, it's super important and that we have the whole network with us to do that. To do that, we need to have more feet on the streets, more salespeople to do it. And then, when a weaker population is growing, we need to have more technicians. We need to build out the network to cope with the higher weaker population and to grow our volumes and the market share.

Stephen?

Yes. I think I said we've got the core business going in the right direction, but there's this long-haul segment that represents 43% of the heavy-duty industry in the U.S.-Canadian market, and we've not tapped that yet.

The good news is with the launch of our Pioneer and our all-new Anthem last year, we now have the truck to do this. This is a leading technology, 11% fuel economy, ride and drive and comfort are incredible. And the feedback we have from our customers shows that this is a truck that's going to help us recapture our fair share of that long-haul business. So super excited about where we're going with the long-haul truck.

So when we were in River Valley, we showed a photograph of a piece of land in Monterrey, Mexico, where we planned to build a new plant for both Mack and Volvo Trucks. Stephen, 18 months later, what does it look like today?

Well, I was there 18 months ago with Jens and the team, and wow, what a change. I mean, the fact that we've been able to greenfield a brand-new plant, building trucks as we speak and do this on time, on budget, just remarkable. And it just shows the dedication and the passion for our team of delivering this project, which will lead to higher truck sales for both brands in North America.

So as Stephen said, and complement to that one, but it's not only the building. You see the building looks just amazing. And here, we will build a lot of trucks then for Mack and Volvo. But it's also then to connect the whole supply chain with suppliers building up that strength and then growing the business and growing then the volume. Jens will come back to that later. But we need to then work end-to-end from our suppliers out all the way to the customers and our dealers. And that is what we are covering now to really make it happen to take the next step.

And Stephen, Roger, you said it's in your speech, another key area is obviously distribution.

Yes, super important in North America. We've seen a reduction of the ownership, which is important because we have big, strong dealers. We're now about 85 dealers, about 485 locations. These dealers have invested. They continue to invest, not only in facilities, but in people, in technology, in inventory, and they are passionate about growing the business.

No. What we are doing is well, we are having a detailed way of working with the dealers, how we are following up the dealers, how we are tracking them the performance, how we are tracking them that they are doing the investments and then taking the capabilities because it's not enough that we are building a factory. We need to get it out into the distribution, and we need to then get the support of the customers.

So the building blocks are in place. It's all about execution. Thank you for now, Roger. You will be joining us for the Q&A later.

And for you, Stephen, it is time to go a little deeper, looking at how Mack Trucks is driving forward to reach our targets, please.

Super. Thank you. Good morning, everyone. Super happy to be here in Eskilstuna. Just 6 years, I had the opportunity to be part of Volvo Construction Equipment. So it's good to come back to the headquarters here. But today, I want to talk about Mack Trucks. And I'm really excited to kind of give a direction on where we're going, what's happening and what outcomes are we starting to expect.

So in North America, we really have 4 areas -- for Mack Trucks, we have 4 areas we're focused on. U.S. and Canada, that is our biggest opportunity. We also have our export market, which I'll deep dive a little bit here in a few moments. We have an Australian business, which is our commercial sales organization, leveraging the Canadian -- or leveraging the Australian dealers that we have access to. And we also have our production in Brisbane. So a really good opportunity for Mack to continue to grow in Australia.

And then, our last opportunity is Mack Defense. Today, it's a fairly small operation, but we've been building up because the Department of Defense now has 3 major projects that they'll be bidding on, and we'll have a high potential to win some of these business. Our prototypes have gone extremely well. The feedback from the Department of Defense is that we're doing what we need to, to have the right product, and we're looking to bid these out in the next couple of years. These could be 2,000 trucks a year over a 5-year period up to a 10-year period. So lots of opportunity for Mack to take advantage of our commercial Granite and build out a military product.

I would also say that we see -- starting to see an improvement, and I think Roger talked about this in our order intake. The first quarter was very soft on an annualized basis. It's about 170,000 truck heavy-duty market. That's extremely soft. But we are seeing improvement in order intake. We are seeing a small prebuy. And what I'm happy to see is that a large percentage of our orders are sold orders, meaning that we actually have names tied to those accounts. Our dealers are also stocking up for those customers who have not made their mind up to purchase in anticipation of, again, stronger sales.

Great feedback from our Pioneer, as I said earlier. One bit of note, 45% of our sales are coming from Conquest customers. So for me, that's a really good indication that we're going to hit it out of the park with our Pioneer and our Anthem. As I said, the feedback has been super good, 11% better fuel economy, much better ride and drive and a much more comfortable cab leading to what we think is the standard in the industry.

Also, we launched in Motor Speedway in Las Vegas a couple of months back our vocational lineup, a renewal of our Granite, which is a key core product for us and also the launch of our Keystone product, which is both an on- and off-highway tractor added to our existing portfolio. So again, more to come, but we're very excited about where we are in the U.S. and Canada for that market.

And now, I'd like to kind of move over to another slide and talk about where we are from a total market. So if we look here, you can see 28% of our market is the vocational side, 29% is the regional haul side and the largest being the long-haul segment at 43%. You'll see some good growth already in our vocational segment as we've recovered lost sales. And you can see '25 moving from 11.5% to 13.7%. We continue to see good progress here. And again, quite a good order board going into next year.

On the regional haul side, again, also improvement as we started to improve our supply base going from 7% to 8% to 11% last year. And again, good momentum going into this year and into next year. And then extremely important for us is the long-haul segment. You can see even in the best of times a 2.5% market share. This is our opportunity to expand, again, 43% of the market, 2 new products that we feel will help us reach this in the matter of a couple of years.

And then lastly, we'll move to the export market. This is an area that we're really excited to return to. We used to have a very strong presence when it came to the export market. We've selected about 18 countries that we're really focused on. But if we were to pinpoint, there's 3 markets for Mack that are super critical. The first is Mexico. This is about a 25,000 truck market. We now have Mexican trucks built for Mexican customers, and this will be a game-changer for Mack. Instead of exporting from the U.S., we'll now have local trucks for local customers. And then, of course, we'll also be able to export those products from Mexico into Latin America.

And when I look at the other 2 countries that we're really focused on, it's Colombia and Chile. These are really good mature markets where you have strong fleets that are investing heavily in new technologies, sustainable technologies. And so again, we feel like we're now at the right point in time to launch our product going into EU -- sorry, into Mexico that will have both EU5 and EU7 technology to meet the emissions level. So again, super, super excited.

And with that, Kina, I'll turn it back over to you. And again, thanks for your time.

Thank you so much, Stephen. A lot is done, but still much to achieve. Listen, we communicated some time ago that you will actually be joining the next CMD either from your port or maybe the beach.

I'm picking the beach.

You're picking the beach. I was going to say the golf course, but you're picking the beach.

Yes. No, again, after 30 years with the group, super successful to -- and be a part of this amazing organization. I think Martin and the team have just done incredible jobs, and I couldn't be more proud. We have an excellent leader coming on board, Wilson Lirmann. I've known Wilson for a number of years. He's led the Brazilian market for a number of years, run one of the largest distributors. I'm super excited to work with him in the transition, and I know he will continue to drive the Mack portfolio even further down the road. So thank you very much.

Thank you, Stephen. So I have a question for you in the audience. Has anyone been in San Francisco lately, hands up? Melker, you're not -- there we go. Did you try a driverless taxi? You did. In San Francisco or in the other 15 cities in the world where you can find autonomous taxi drives. Autonomous solutions are really happening. And we are now going to spend some time looking at how autonomous is exploding in our business and to help us with that is, of course, Nils.

My friend, so since we last met, a lot has happened in the autonomous space. And I was listening to the Uber CEO some time ago, and he was saying that in 15, 20 years, the vast majority of Uber rides will be driverless.

Yes, absolutely. And I think the robotaxis are actually paving the way. They're paving the way for autonomous trucking. But I believe actually that deployment curve for autonomous trucking will be steeper, and it will go faster. BCG recently said that by 2035, 30% of all truck sales will be autonomous trucks. So we have something ahead of us.

And we -- that's a great opportunity, and I'll leave the stage to you to explain how we are going to lead the market.

Thanks a lot. Martin has said it already. The global economy really relies on transportation. Transportation, in essence, is the backbone of our economy, but it's also the backbone of our modern society. And putting physical AI on the road through autonomous transport solutions, we are creating new growth potentials for our economies.

By that, physical AI turns into an AI, which has a pulse and a purpose. It is the bridge between digital innovation and the physical movement of goods in our society. It is about sensing, thinking, acting with a level of precision that never gets tired, that never loses focus. It's about making split-second decisions, safety critical decisions in a world which can be messy, in a world which can be unpredictable.

We are putting physical AI to work right now, and we are at the brink of making it happen. We will start introducing autonomous transport solutions to the U.S. market. It is a large addressable market. 70% of all goods are already today transported by trucks in the U.S. Last year alone, the market accounted for USD 900 billion in revenues, and it is a growing market. Mass customization, urbanization, online purchase pattern, that are driving the growth, and it is structural growth. But it is a growth, which is meeting a market which already today suffers from legacy problems, from bottlenecks. It's a market which is set for disruption.

We all know about driver shortage. Already 80,000 driver positions are not filled today. It's forecast to double by the end of the decade. The shortage of drivers, of course, that leads to high driver costs. But the human truck driver can only operate 10 to 11 hours a day. Our autonomous truck is always available. We will add significant transport capacity.

Delivery reliability is an other well-known industry problem. Our autonomous truck doesn't need a coffee break, doesn't need a lunch break. Our autonomous truck is always available. Our autonomous truck is not limited by legal maximum driving hours. We're enabling predictability of delivery time, and we are enabling constant life tracking of the goods.

Road safety, today, very much impacted by driver fatigue, by the reaction time of the driver and the overall human error. Our autonomous truck is never tired. It's always awake. It sees with modern sensors much further than the human eye can see, and it has a constant 360-degree awareness of its environment at any second of the day. That contributes to road safety, and it also supports fuel efficiency, and it will help driving insurance costs down.

But we do more than just addressing the pain points. It's about creating new value. That's what Mats Backman said. With our autonomous trucks, we will double the asset utilization. I said it already. A truck today can operate 10 to 11 hours. We can double that with our autonomous truck, 100% more productive. That step changes the economics of trucking. It's a paradigm shift, and you cannot afford not to be part.

We're also enabling fleets to grow. If you're in the U.S. today and you run a large fleet, you basically have 2 core competencies, the transportation business and hiring of truck drivers, because the turnover ratio of truck drivers in the U.S. is 90% annually. We're fixing that problem with autonomous trucking.

Now, we have faster deliveries. Our trucks can go further. They can drive longer. And by that, we're taking down delivery time. We do longer distances in less time. The result then is a scalable, capital-efficient, higher-margin transport model with a structural long-term demand from shippers, from carriers, from 3PLs and from transport platforms.

The industry forecasts that by the end of this decade, by end of 2030, the installed base of autonomous trucks will be 25,000. But only 5 years later, that number goes up to 220,000. In other words, in less than 10 years, 1 out of 10 trucks you will see on a U.S. highway will be driverless. And that is a consequence of the step change in trucking economics. You cannot afford not to be part.

But autonomous trucking is more than just replacing the human driver with a virtual driver. Autonomous trucking is a new transport system, and each transport system has its own ecosystem. And we've built exactly that, and we call it Autona/freight, because the business model, the business model matters. It is a key question. Transport as a Service, our way to go to market, will unlock the large-scale adoption of autonomous trucking because we remove the main barriers for market entry.

By offering autonomy as a fully managed service, we lower the upfront capital requirement, and we will shift the operational, the safety, the regulatory responsibility away from the customer. We simplify the adoption through a single partner model, a single partner model. If you are a customer, you don't deal with an OEM, you don't deal with a virtual driver company, you don't deal with a dealer. You don't try to find a terminal operator. You don't need to hire operators. You don't try to chase insurance for an autonomous truck. You have one solution. This will drive adoption.

And with our approach, we are unique, and what we've built, our solution, we call it Autona/Freight. It is difficult to replicate, and it gives us a competitive advantage. We have invested in this for a couple of years. We know what we're doing. We know this industry. Important is, we're good to go. Next year, Q1 2027, we will start operating. This is our driverless launch.

In Q1 next year, we will have trucks on open roads without a human in the cab. And then, we will introduce during the year autonomous trucking to more and more customers. And by the end of Q4 next year, we'll have more than 300 trucks out on the road on the U.S. highway operating autonomously. 2028 and the years above, we will then utilize our strong position, and we will scale, and we will scale at industrial level.

Let me summarize. We have a very large addressable market. We have a very strong value proposition. With our solution, we will be 100% more productive. We will double the asset utilization. We have built a Autona/freight, our unique ecosystem, which is difficult to replicate, which gives us a competitive advantage. We are in this business almost 100 years. We know how to manufacture. We know how to industrialize. That enables me to say now that we are approaching our ambition to generate USD 3 billion revenues within 5 years, USD 3 billion revenues, which are having margins, which are accretive to the group.

Our agenda, our time line, our value creation is clear. As a brand, we have very solid customer relations, which we can nurture. As an OEM, we know how to industrialize, we know how to scale. Volvo, we are a first-mover, and we are here to scale this business. And this is what we've planned for from the very beginning.

Thank you so much, Nils. That's very exciting. I have been standing behind my desk there listening, and I'm kind of wondering what's in it for me as a consumer.

What's in it for you? Yes. We were -- not long ago, we were together in New York, right? You remember? And if we would be today in New York, and as it's season for strawberries, we actually come back to your [indiscernible], San Francisco, California, that's where the majority of the strawberries in the U.S. are actually grown. But there's a problem with the strawberries in the U.S. in the sense of that it takes 4 days to move them from California by truck to New York. But if you pick a strawberry, the average lifetime is then 5 to 7 days. So whatever you have on your plate then is not really, really fresh. Now, the autonomous truck does it in 2 days. So Kina, if I would offer you an autonomous strawberry, would you prefer that over a normal strawberry?

I would prefer going to New York and eat an autonomous strawberry in Hills if I could choose.

Thank you.

Like...

No, very good.

No, no, no. Thank you so much, Nils. Thank you. I thought he could leave with the strawberries. I think actually I share them with the audience to get some energy. I give them to you. You can pass them around. Thank you.

So it is clear that the On-Road segment is looking extremely strong with great potential for resilience and growth. And now, we're going to continue with another segment, adding a lot of value to society that is urban logistics and people transportation.

And I'm sure that all of you have heard the term urbanization. And it is estimated by the year 2050 that 70% of the world's population will be living in cities. And that basically means that all population growth going forward will be urban, adding approximately 2.5 billion people to cities over the 3 coming decades. So with this comes a lot of challenges, of course, but also for a company like us, a lot of opportunities. So to discuss this segment, let me welcome Antoine and Anna.

So Anna, let me start with you. What are the drivers that makes this segment so special?

I mean as more people live and work in cities, there is this increasing demand for efficient and reliable and safe public transport to make this environment function. So here, our solution really matters. And it's also very exciting in this segment because the transition to electromobility is really happening now.

Today, 40% of the buses that we sell to the city segment is electric. And by 2030, this will be 80% if we are successful. So a lot of transformation happening here as we speak. And as Martin also shared earlier, in addition to the positive climate impact and reduction of bad air pollution, these vehicles are quiet. So it opens up for new ways of city planning and also make cities more pleasant and attractive to live in.

Do you see the same, Antoine?

Kina, no. I see the same. I would say that this megatrend of urbanization is calling for an improved logistics system, primarily on the efficiency side, but as well on the electrification side, we see more and more electric vehicles running around the cities. And that's a faster-growing market. And you said it, given the density of those urban agglomerations. And if I take one example, as the light commercial vehicle business, which is where Renault Trucks is operating for medium and heavy vans, we see the market size today at around 1.5 million units, sizable in 2025 with an expected growth of about 10% by 2030. And that's a fantastic opportunity we expect to grab as Renault Trucks.

And I know that Urban Logistics is very exciting for you at Renault. Why is that?

Because at Renault Trucks, really, Urban Logistics has been in the DNA of the company for more than 130 years. When you look at our product range, Renault Trucks has the widest product range in the company and one of the widest in the industry in Europe. We are going from 2.8 tonnes with a small traffic van to more than 50 tonnes with a heavy-duty truck. And we are offering heavy-duty kind of service to our B2B customers. And I would say our customers love it. Our dealers love it as well because that's a good complement to our offer. And that's why we believe that Renault Trucks is very well prepared to address this growth market.

Anna, turning to you. I mean, you have been on a fantastic journey during the last years here, improving and creating resilience in your margins, moving from minus and now almost 10%. Very briefly, how did you achieve this?

Yes. I mean we've been on this journey. As you said, we call it our performance journey where we have focused on developing our business and setting a structure where we can deliver sustainable profit over time. And I believe the past years now, we have really proven that our strategy is serving us well and that we have built resilient, we have built flexibility to maneuver various external headwinds while protecting and also improving our profitability.

And today, Volvo Buses, we have a very solid coach business, representing 70% of our total sales. We have a selective approach in the city bus segment. And in both segments, we are truly driving solution sales, so sale of products and services combined to support our customers with productivity, uptime and safety. And 2 years ago, we completed a structural change to our setup in Europe, where we moved from producing complete buses to focusing on chassis production and working with partners for the bus body production. And this change of the model have resulted in lower breakeven points and also increased volume flexibility.

And now you have created this position of strength for yourself. How will you leverage it going forward? And where do you see growth opportunities?

We will continue to focus on profitable growth. We will continue to leverage on our existing structure that is very much set for just profit and growth, and we are now operating from a position of strength. We have ambitions to grow both in the city and in the coach segment. In Europe, we are preparing for substantial growth coming into our focus markets from low levels, but now with new product introductions step-by-step growing back. In North America, we have leading positions in the coach segment with more than 40% market share, both in Canada, in U.S. and in Mexico. So here, the primary focus is to keep those positions and continue to drive our service business.

Then, in addition to that, we also have ambitions to grow our business together with our joint venture partner, Volvo Eicher Commercial Vehicles, and we will start this year with selected markets in Africa coming in with new product offerings. So a lot of things happening in our company. Coming back to the city bus segment that we were into here in the beginning. The shift to electric buses is happening as we speak. And here, we meet fierce competition. So our focus is to continuously improve our product offers, so we can provide the best total solution to customers so that they, in turn, can enable sustainable and resilient public transport to citizens.

That was a very long list of growth opportunities that you presented, Anna. Antoine, you have also made an impressive journey when it comes to improving margins.

No, indeed, the Renault Trucks of today is very different from the Renault Trucks 10 years ago. And Mats mentioned it earlier this morning, then we are -- we have been in strong black figures for a number of years now, close to the company target. And how did we do it? And primarily along 3 main dimensions. The first one was to leverage our medium and heavy-duty range, which is a strength of the Volvo Group, of being part of the Volvo Group, where we recovered the trust of our customers, not only our customers, but we managed as well to expand our market share to 9.5% today in Europe, quite a significant move. And we as well applied a very strong pricing discipline, pricing, pricing, pricing every day. And as a fact, today, when we discuss residual value, which is really, I would say, the pulse of where the brand stays in Europe, now Renault Trucks in many markets is #3 and in some markets, #4, right? Then that's an outstanding result.

The second dimension we've been focusing on is, similarly to what Roger explained, to have a far better service delivery, more consistent delivery to our customers across the network, in Europe primarily, but as well in some international markets. We have 1,500 service points, and we want them to offer the same service, a total of concept across the globe.

And last but not least, this is what we've been talking about, this LCV business, which is a bit peculiar in the Volvo Group. We are the only one with this range, and we made it a profitable business with our partnership and co-investment with Renault Cars. And now we are cruising at a decent pace and only creaming the market, right? We are not competing with the commodity players. We are more creaming the market with B2B customers, which are happy with B2B service, right, uptime and I would say, on-time delivery.

So you have also created a position of strength for yourselves. Going forward, how will you gain market share and grab those growth opportunities?

Today, we have established a dedicated organization on LCV, right? We are as well developing new solutions, and you see it on that slide, again, applying a similar formula as the heavy-duty trucks, we are now moving to what we call customer adaptation or tailored solutions for our customers, uptime, guaranteeing uptime. And you need to know that this LCV segment is adopting electrification much faster than the heavy-duty side. We are at 12% to 15% in Europe. And with the recent developments in the fuel price, it's moving up. And we are launching with Renault Cars in H1 2027, the first software-defined vehicle platform, which was part of Flexis, and now it's going to be called Renault, I would say, Renault Trafic E-Tech. And that's coming up soon, very successful expectations since the product is outstanding.

And very briefly, what will this lead to?

This will lead to doubling the business. That's our expectation, doubling the business for Renault Trucks at the horizon of 2030. Profitable today, even more profitable tomorrow.

And you know that we will come back on that when you give a number like that.

I'm sure, I'm sure.

And now you talked about competition and competition changing. And the 2 of you are probably the 2 in the group that meets this competition in your -- in the market every day to the most. Still, customers work with you. Why is that?

I mean, first and foremost, I think our customers trust us. When we go into a market, they know we are there for the long run. We invest in local resources. We build competence. We build local partnerships, facilities. We are there to support our customers. And this way of working over many years has built very long-standing relationships and also knowledge of our customers' business. So to meet this competition, of course, we need to continuously improve our competitiveness, but also to build on this strength with the local regional presence and the strong Volvo Group global backbone.

Antoine?

I agree with Anna's arguments. I believe as well that the strong network we have, dealer network, is definitely a strong asset. Roger said it, 2,500 for Volvo Trucks, 1,500 for Renault Trucks. I mean, when you look at France, we have more than 330 service points. That's a clear barrier to entry, I would say, and a clear strength of our footprint.

Thank you so much for now. Please take a seat. We're going to move into our third segment, which is Construction and Mining.

And we are going to welcome to the stage the Head of Volvo Construction Equipment, Melker. Where's Melker?

[Presentation]

Sorry, Kina.

It is so typically you.

I promise this will never ever happen again.

I'm sure it will. What was that obvious question? Is it a stunt driver or AI-generated?

Actually, it was me.

I don't believe you.

It was me. And actually, I can tell you that yesterday, we had an opportunity with the team here to be out on the playground. And I must say that I was quite impressed by the skills of the team also. So we stay close to our customers and by that, close to our products.

And we know how to operate the big machines. So Melker, we have been speaking about the Volvo Days. What are the highlights?

Obviously, a big number of customers being here 4 weeks, you were a part of -- a little bit of part of that evening, and you will be a bigger part of that today. Of course, we are demonstrating our products, machines, services. But even more actually, we are demonstrating our hospitality, how we treat our customers, how we take care of our customers and how we care about the customers' business. And one thing that makes me really proud and happy is the feedback from the customers when they meet our people, because we have more than 600 employees engaged in these days during June. And when they meet the product experts, the business experts, they just love it. That is Volvo Days.

And we just saw some happy faces on the screen. Melker, you have also built a resilient organization during turbulent times.

Yes, I agree.

Agree. And by that, I'll leave it to you to dig even deeper.

Thank you, Kina. I think Martin was quite clear earlier here about expectations on growth, right? But I would like to start with this slide. We have proven ourselves now when it comes to margins, when it comes to resilience, when it comes to profitability. And as we know, that has been done during a period with a lot of external challenges, external headwinds. On the other hand, that's a lot of things that you cannot influence. So instead, do what you can, influence what you can. So we're taking a lot of actions, exiting paving business. We are discontinuing the Rokbak brand and the Rokbak business. And during the autumn last year, we divested our ownership in the JV in China, SDLG. And the combination of this with the actions and the earnings and profitability gives us the possibility to invest, to invest in the future, to invest in growth and even more important, to invest in the Volvo brand.

There are, of course, a lot of different things, people behind the improved performance, but there are also 2 structural reasons. One is our global geographical spread, which is, of course, helpful during many times. Secondly, we are present in all industry segments. Being in all segments is, of course, helpful for us to maintain stability over the cycles. But when it comes to growth, we have decided to have an extra focus on 3 segments: Construction, Mining and Quarry. And we take them one by one and look at Construction. That is today 50% of the Volvo CE revenue. It's big, it's growing. Demand, of course, coming from big infrastructure investments, urbanization, population growth. This is actually a very good fit to our investments we are doing in the excavator range and the excavator footprint.

Moving into Mining. Everyone loves Mining, right? We also love Mining, big, growing, of course, energy transition, supply chain security questions, et cetera. In Mining, uptime and productivity is key. And when I think about it, our products, our portfolio, our capabilities fits very well into Mining. And here, I see a big opportunity for expansion and growth, not at least within services.

And then we have Quarry and Mining, very diversified business, very local business, fits Volvo CE and the Volvo Group very well with the way of working and our broad network, so to say. And here, I must say, Roger was into it, but the lineup we have in the Volvo Group now, if we take all the BAs, everything we can provide, then we cover a big, big part of the customer needs in these segments. And on top of all of this, all these 3 segments also see or have an increased need of sustainable solutions.

I'm quite sure that you all have your projections of these different segments. We have, of course, with the CE, Construction Equipment, lens and some external research, we have our view. And we believe that these segments will have a yearly growth of some 5% to 6%. And of course, our clear ambition is that we should grow quicker than the market here.

Then I guess the obvious question is, how, how are we going to do this? And thanks to our heavy investments we have been doing, start with the products. We have renewed more than -- or around, I should say, 50% of our portfolio. Today, it's BEV, it's ICE, it's grid connected. And we see now that we have up to 10% productivity gains. Productivity is then tonnes per hour. We have up to 13% on the efficiency, fuel consumption or energy consumption per hour, which gives significant better TCO for our customers, 20%. That's a lot.

We have also invested a lot in new services, services that help our customer to improve the bottom line, uptime productivity services, site solutions, parts, pay per, we call it Equipment as a Service, growing, rental. And I think we can say that we're a little bit proud because we have had good and profitable growth here the last years. And the combination of this now -- the combination of this is that we have the capabilities now to provide the solution for the customer. The solution for the customer, that is what is the perfect complete customer offer.

Another very important parameter for us in the growth journey is our decision to move more into retail. And with the acquisition of Swecon in the beginning of this year, we now have the direct customer interface in key markets like Sweden and Germany, very important. Of course, this will help us to drive the long-term transformation of our construction business. But even more important now maybe this will help us to drive penetration of service contracts, penetration of parts, penetration of workshop hours. And if you take Europe now, revenue from own retail moving from 30% up to 65%, of course, give a very, very good position for us to continue to drive the growth here together with our customers.

We have also taken some decision to invest globally to make sure that our Industrial footprint is matching our commercial footprint. Most important now is excavator expansion, excavator capacity. And we are investing SEK 2.5 billion into our main site in South Korea, Changwon. We are investing in Shippensburg in U.S. Actually, the first excavators was coming out from that plant just a couple of weeks ago, very good for the situation in the U.S. And last but not least, as we speak, we are building our plant here in Eskilstuna in Sweden. And being a Swedish company, being in Sweden today, to have the opportunity to prove that we can be competitive building a vehicle plant in Sweden 2026 is just great. And the regional value chains with shorter lead times will be very important for us in the growth journey.

So to summarize, we have created profitability and resilience. We are investing in products, services, retail footprint. We are close to our customers. We are focusing on segments that we know will grow. And we have better possibilities than ever to grow quicker than the market. That's my answer.

Thank you, Melker.

Thank you.

Have a seat. Stay in your chair.

I will.

Because I'm going to ask you to come up in a little while as well. So Melker.

So when working in a diverse company like the Volvo Group, you get lots of different questions from you in the analyst and investor community, from media and from others. And lately, our last 2 segments have gained a lot of attention. It's Power Generation and it is Defense. And we're going to start with Power Generation. So let me welcome Anna. So Anna, I think it's fair to say that everything about Volvo Penta is Power Generation. I mean you're, of course, well-known for your marine business, but you have been part of the Industrial branch since the very start.

Absolutely. I mean we live and breathe Power Generation in Volvo Penta. And of course, we are at sea, you all know that. But we are also on land, and we have been that since we, as Pentaverken, delivered the first engine to the first Volvo car, and that was 99 years ago. So it's not a new thing for us.

And you are an incredibly innovative company.

Yes, we are. Innovation is a very integral and important part of the Volvo Penta culture. And we have launched many groundbreaking innovations over the years. And I would say that we have redefined marine propulsion and boating again and again. And now we are also pushing the boundaries with our Industrial products with the latest addition, our G17 that is specifically targeted then to power generation and data centers in the U.S.

We are curious to hear your growth story, please.

Thank you. Thank you, Kina. And thank you, and welcome all of you here. So Volvo Penta then. We have grown our revenue -- we have doubled our revenue over the last 10 years. So that's a CAGR of 8%. And that is done with both Marine and Industrial. Today, Marine and Industrial represents 50-50 of our revenue. And as you can see here, we have done that by increasing significantly the revenue per unit sold. When it comes to the Marine business, that growth is very much coming from that we have increased our scope of supply. So we have from the propeller to the helm station on the vessels. We have also grown into larger vessels. And I would say that this is based on our innovation. The IPS system and the features that we have built on the IPS are fundamental drivers for that growth that you see here.

When it comes to our Industrial business, we have grown volumes. And we have, in particular, grown volumes when it comes to our off-road business. We have been successful in growing into heavier application, heavier usage applications, being very positive for our parts sales. And today, the service business represents 30% of the Volvo Penta revenue. And I would say it's still a further growth potential for us as we move forward. And as you can see here to my right, we have accomplished this profitable growth with a very asset-light operating model.

So what is then the secret sauce of Volvo Penta, you can wonder. First of all, the synergies in production and in technology with the Volvo Group are absolutely fundamental for the business model of Volvo Penta. That gives us access to high-volume automotive parts that we can bring to new segments that you can see here to the right. And this represents some of our most important segments that we are addressing.

Here in the middle, you see Volvo Penta, and we are not only adding innovation. We are adding deep application engineering excellence, and we are adding a very close cooperation with our OEM customers. We are investing heavily in R&D on a yearly basis, 7% to 8% over the last couple of years. And we are doing that to develop our solutions to fit all of these segments and the various applications in those segments, all having different drive cycles, different requirements and different emission regulations. So if you pair this with a global commercial presence, a strong dealer network and 2,624 very passionated and very skilled colleagues, you actually get the recipe and the ingredients for a successful profitable growth journey.

If you look behind me now, you see a couple of applications that are powered by Volvo Penta. We have widened our scope of supply, including everything from the propeller to the stabilization, to the operation of the vessel, to the services. And this is meaning that we are becoming an integral part of the design of the boat. So we are a true system supplier for our Marine OEMs and a true partner. We are bringing those learnings from Marine into our Industrial business. And here, we are now launching and we have launched connectivity services, productivity services on top of our traditional services. So this is -- from this base that we are now taking the next step.

And the next step, ladies and gentlemen, will also be based on the Volvo Group common technologies, on innovation and deep application knowledge and, of course, a great team. On the on- and off-road side, we are now adding more Volvo Group components to our engine offer to include, for instance, axles and gearboxes and again, bringing the Volvo Group components into new adjacent segments. On the genset side, we call our next step, the power of plenty. What does that mean? In particular, for data centers, we make now modular solutions to compete with big block power generators, multiple engines, matching large engines by competitive TCO, by a competitive footprint, by a competitive deployment cost and, maybe even more important, availability.

On the Marine side, we have been working with multiple installations for many, many years, triple, quadruple. But last -- 2 years ago, we launched the power of plenty concept with our IPS Professional system, attaching 2 engines to 1 drive. That is also then making us compete with larger engines, bringing us up into larger vessels. It is again Volvo Penta redefining marine propulsion because this is providing our customers with more power, less fuel consumption, more space, better maneuverability and flexibility because in the same engine room, in the same package, you can select 2 diesel engines, in this case, D13s, or 1 electric engine and 1 ICE engine or in the very near future, 2 electric engines, so a fully electric solution without rebuilding or redesigning the engine room.

So what does this mean in practice? That means that the power of plenty has already opened up high potential profit pools for Volvo Penta and for the Volvo Group like the data center business. And if you look here, you see a perfect example of a power of plenty concept. This is a Switch data center in -- outside Las Vegas. I would say it's a midsized colocation. And here, you see 300 D16s packaged in a power of plenty concept, providing the backup power for this data center. And the whole integration and the packaging is done by our customer, the Central Power. We believe that the power and the cooling business of data centers will grow with a CAGR of 14% in the next coming 10 years. Today, the data center business represents 15% of the Volvo Penta order book, and I can tell you today that it is growing rapidly.

If you look at the Marine side, the power of plenty is making us move into larger vessels like super yachts and heavy-duty marine commercial applications. So our ambition is to double our revenue, but not only in the Industrial business, also in our Marine business, where we see also more potential. And we will double the revenue. The ambition is to do that within the next 5 to 10 years, sustaining a strong profitability and a strong return on capital.

So with that, and if you look very, very carefully on the picture here, you see down to the right-hand side, you see a Defense vessel. And I believe that is a perfect segue to what we are going to talk about now, Kina.

It is. Thank you so much, Anna. You did my job. I love it.

Thank you.

We are going to segue into the last segment, which is Defense.

Yes.

So why don't you join me over here? And I will also ask Antoine and Melker.

Thank you.

So we opened this Capital Markets Day talking about geopolitics, and I don't think that anyone has missed the need for Europe to build a deterrent defense. And we know a few things. We know that logistics and infrastructure capabilities, they will be key. So we also know by that, that many of the significant investments will be put in our sector. And here, the Volvo Group has a unique position because we can offer a wide range of applications, products, services that the defense industry needs.

Starting with you, Antoine, can you describe the buzz around Defense?

Yes. As you said, Kina, we have a number of conflicts, open conflicts in the world. Then all the armed forces are observing those conflicts and coming to the conclusion that everyone will have to invest. We'll have to invest in different equipment, but primarily in the logistic equipment, which are key for those conflicts, right, to bring all the different goods to the front or a few kilometers far from the front. Then that's a clear trend we are seeing. Then every country starts to have a plan. And I can tell you that I've been visiting many more generals, 4-stars, 5-stars general in the last few weeks than never in the past. Then they're all talking about investing. And you need to know as well that they have not invested in logistics trucks for many decades.

What we see as well, that we see a paradigm shift in Europe, mostly, where they are moving away from tenders of big equipment, I would say, or very specified equipment only for military applications, to more trucks coming from the civilian world, lifted up to their needs and ongoing purchases. That's what we see across the world, ensuring forward and backward integration as well technologically, that's a paramount for them.

Would you like to fill in, Melker?

Yes, I just can give a hint or a data point so you understand what's going on here. And today, we have ongoing business with some countries in the Volvo Group. And the number of countries that we are discussing future business with is double the size of the countries we are doing business with today. So just a flavor of what is going on here.

I guess you recognize this as well, Anna, what are you doing to grasp this opportunity?

No. But I mean, we see warfare changing, and I think everybody recognizes that it's more units and autonomous units is what the military is looking for right now. And we see that very clearly, that the navies around the world, the marine is looking for volume and autonomous. And our -- the fact that we are controlling from the propeller to the helm station makes it very easy to integrate an autonomous solution on top of our electronic system. So we are already delivering, and we are gearing up to deliver more and a lot of dialogues ongoing.

I'm looking at you, Antoine. What are you doing within Renault to grasp this opportunity?

Yes. And for Renault and Group Trucks at large, I would say that we are -- as I said, we are adding some capabilities on our platforms to really develop military-ready platform for their needs. And we are thinking of autonomous, of course, vehicles, but as well unmanned vehicles, which can be cheaper and faster to deploy.

Melker, we said that one of the strengths we have is diversity. I mean we can offer trucks, haulers, boats, engines, power generators. How do we synergize this and go to market as a group?

I think you're partly into it here. But I mean, we have learned all of us that defense is a lot of logistics. It's on sea, it's on road, it's off-road. And if you think about that versus our portfolio, it's a good fit. Then we come to the scale, and defense will not only be expensive, specialized equipment. And then we have our system, our production facilities, our volumes. And that will put this in a total different perspective because we also know -- I mean, the drones, you can also think about what does that mean on land. And that in combination with, you said, unmanned, I mean, remote-operated and autonomous, all the skills and the capabilities we have, will make a lot of defense organizations much more happy in the future when they realize what they can buy.

Anna, finally, we also know that the ability to provide services that will actually decide who will be the supplier of the vehicles. What is your take on services?

No, but it's clear, and I think that goes for the group. I mean we have a global, very dense professional service network, and that is required by military, navy around the world to have that. We can also, of course, train them to do certain service themselves, which we do today.

Melker?

I think the definition of uptime is really in this segment. And I mean, everyone has been talking about that, but the dense network and our service capabilities will, of course, be a super good fit for uptime for a while at least. You don't know how long. But when they're up and running, you need to have uptime.

I believe uptime and TCO because as well, the armies need to maximize the use of their budget.

All right. Thank you so much for now, to giving your view on the growth opportunities within Defense. Please take a seat. We will probably see more of you during the Q&A later.

So this brings us to the end of our look of our strategically selected segments. Martin, you have been sitting listening to your colleagues. Would you like to come up and share your reflections?

Absolutely, Kina. And first, I just would like to say, wow, what a team. I think it all boils down to people. We say that, and it's 100,000 colleagues around the world, but the team here representing all of them is just amazing. The second part I would like to say, and I put note of that today actually, with Anna saying that scaling Volvo technology by innovation and application excellence through people, that is what it's all about, when we take this segment lens onto it, because growing underlying markets, obviously, but strategically selected segments, important, where can we really drive growth.

And here, core segments, we know that we have the capabilities, we have demonstrated history. And we see now also with the increased focus on certain growth segments such as Defense, Mining, Power Generation, Power Solutions, et cetera, that will also require apart from the capabilities that we have already in terms of our total offer compounded by our technology, the network, the people, also partly concentrated commercial organizations that we are combining the strength in order to drive that opportunity. So underlying growth even further in selected segments and then outperforming in these segments. That is the recipe. And I think the team here has truly demonstrated the opportunities.

Thank you for that, Martin. We will see you soon again. And I hope that there is no doubt now that there are a number of growth segments in our markets and in how we also select our segments strategically. This, to build resilience and growth.

But if we are to capitalize on this, we need one more thing, and that is application excellence to drive technological advancements, and to ensure that all our value chains are effective. And to share how we are achieving this, I will present a well-known face, but with a slightly enhanced scope, Jens.

So my friend, you have stepped into bigger shoes since the last CMD, leading purchasing -- they look the same. Purchasing operations and technology. How are you finding things?

It feels exciting. And then of course, great responsibility. And we're living in unprecedented times with moving faster than ever before, but that's also the time to show what this organization is capable of. So feel good.

And what is your comment on those capabilities?

It's all about people, and it starts and end there. And whether that is to set up a new plant in Mexico within time, budget, now producing trucks or launching a completely new D13 platform that we're doing right now or the 700-kilometer range battery electric vehicles. I mean it's done by people every day doing the extra mile.

That's really true. So we are super curious about application excellence. So I'll leave the floor to you to describe how we are ensuring that we have the right product at the right time, at the right place and at the right cost.

Thank you. Starting with application excellence. Again, we said it before, it starts with the customer. And applications excellence and tailor-made equipment at scale is what makes us a little bit unique. I would like to take the opportunity to actually distance ourselves a bit from automotive. We are not automotive. We are producing highly specialized industrial machines every day at stack. And application excellence, we mentioned many times today, what does that really mean?

I'll give you some small examples. For instance, we have a customer here in Europe transporting glass, glass sheets from a glass mill. And the glass sheets, they have a certain size and you cannot change that. That means your trailer needs to be bigger. That means also when the trailer is bigger and higher, you need to lower the chassis to have profitability and competition creating a very competitive product. And that's what we deliver.

Or, for instance, our 38-tonne axle in a quarry or in a construction site, where you add on load in the rear and we measure every axle exactly what the weight is, not to load too much to be illegal and not load too little to not be competitive. That is what we are talking about being application excellence. And these are only 2 points.

I can tell you another 10,000 points where we do this in every segment, in every product, everywhere, and we do it at scale. So ultimately, for us, it's about creating TCO for our customer, uptime, but also productivity. And I would like to highlight also trust, trust we build by consistent performance, but also standing with our customers in good times and in bad times. We do that by servicing our customers. And we are at the point right now where we are delivering 99% of our order lines or spare parts within 24 hours in 180 countries, serving 1.9 million trucks.

If you add on the complete group, then we are talking about 3.2 million pieces of equipment that we can service, we are at the level still at 99% within 24 hours in 180 countries. How do we make this happen? It's by balancing -- balancing, having scale where scale matters, having speed where speed matters. Starting with where scale matters. That is in our tech stack, how do we create the best possible technology solutions.

Common architecture shared technology, starting with powertrain solution, software-defined vehicle, vehicle applications or platforms, connectivity and as Nils alluded to earlier, also autonomous coming into our complete global tech stack. So of course, having that global tech stack is enormously important to have the critical mass to have the speed, the capacity to invest enough in the right areas. But of course, having a big global organization also can make you slow. That needs to be balanced with a regional setup.

We are super clear in our regional strategy. We are having application R&D close to our customer, understanding what the customer need, whether that is in a mine in Peru or in train -- a road train in Australia, we need to understand what the customer needs. That means you need to have application R&D on local level. Adding on then local sourcing, but also local production, truly creating an end-to-end system supporting our customer every day.

The regional setup is also a way of dealing with resilience. I look at resilience from 3 aspects: financially, technology, geopolitically. Starting with financially, I think we have shown in the last few years, we have created a truly flexible industrial system that can adapt to volumes wherever they are in the world in the 3, 4 distinct regions: North America, Latin America, Europe and internationally.

Geopolitically, by having this setup where we source locally, produce locally, we are mitigating a big risk that we have with either tariffs or sudden impacts like transport issues or disturbances that we have seen over the last couple of years, shocks to the system, setting up a resilient system.

Finally, from a technology perspective, we have set up the system so we can balance up the system, both from an R&D, but also from an industrial perspective, ramping up whatever technology will be needed in different parts of the world, whether that is the combustion engine on different fuels, the battery electric vehicle or in the future, hydrogen. We can ramp up wherever it's needed, dependent most likely on this infrastructure, depending where we are in the world.

We are a growing company and starting with our service network. This is -- the points you see here are actually our distribution centers that are supporting the map that Volvo showed earlier with our different service centers. This is how we distribute our parts globally. We have invested over a number of years. We are in a good position right now, and that's why we achieved the 99%.

Going into our industrial system. Starting with North America. You know we have invested in capacity here. I think we are finalizing. We are in place. Going into Latin America, we are in place. Europe, very strong. We have a very strong backbone in Europe in place. And we are ramping up now our fourth industrial hump, India. We have some investments left, but we see that will be handled with more of a normalized capital expenditure. So I would say, very soon in place as well.

Looking at R&D. We have invested also here and we have had elevated levels of R&D spend over the last few years. We see now that, that has been peaked, but we have also invested in platforms in the combustion engine, in our long-range BEV, in our software-defined vehicle, but also in the autonomous area. We see now that our R&D expenditures are flattening out. So Kina, we have resilience, we have the discipline to balance between technologies, and we definitely have the capabilities to grow.

Thank you so much, Jens. So I have been standing on many stages with you, and there is one word that keeps coming back, execution, execution, execution. What do you see now in your big organization that gives you a lot of confidence?

Execution gives trust. But it starts and ends with people, and I need to acknowledge that. I'm a true believer in people and what can happen when you have the right people on board. And I would like to take a story about, Ed is here. You see on the slide here. She works in our [ koping ] factory where we produce our gearboxes for Europe. A while back, I met her on the shop floor. We were about to ramp up from a big rebuild that we did. I mean, on the AMT gearbox, that's a sensitive thing. That's where you support the complete European market with gearboxes.

And we were rebuilding that to have both our electrical drivelines with our AMT gearboxes on that line. And it's a bit tense, ramping up vertically after a shutdown. It is tense, and she was standing there looking me in the eye, simply saying, failure is not an option. And off she went. And it was a success, by the way.

But that is the type of attitude I see everywhere in the organization. I see it everywhere, wherever I go, whether that is to set up a new plant in Mexico, delivering our D13 engine or a service center or our long-range battery electric vehicle. I see that everywhere. And it's hard to beat a winning team.

And I see it in you, my friend. Thank you so much for now. Please take a seat. We will see more of you later. So Jens is speaking about our R&D budget normalizing and us having done major investments in our future. So with such a strong balance sheet, how do we leverage our position? Mats, may I look at you? Maybe you can put some figures to it. You're back.

Yes, you're right. And as you all have heard, I mean, we have been forward leaning when it comes to investments over the recent year, and we are well invested. If we are putting numbers on that and looking at the development we have had since 2019 on this short-term. So as you can see, we have increased the R&D gross spending, and we peaked in 2024. And as Jens said, I mean, from the peak 2024, what we're looking on is rather a slightly kind of decline from there or more of a plateau.

And R&D is also a big driver when it comes to capital expenditures. We can see a similar development when it comes to capital expenditures, but with somewhat of a delay. So we have been ramping up on the CapEx side as well, and we had SEK 18 billion in 2025. which is similar to the R&D side and at a peak level and where we see a slight decline in the same way as we have seen for the R&D growth side.

And how does this impact our way of thinking around capital allocation?

We are very consistent when it comes to the thinking around our capital allocation. And the most important part is that we are investing and we are investing being forward leaning in our operations as well. And this has been yielding over time, and we are on a return on capital employed of around 25%. So good returns on the investments we are doing. But in the same time, and this is also you have heard from all my colleagues today, we are forward leaning when it comes to investing in new technologies. But we are, in the same time, sharing this success with the shareholders, and we have been consistent when it comes to dividends as well.

Looking at the ordinary dividend where we have been increasing the ordinary dividend with SEK 0.5 over the recent years. And consequent, we will continue to be. And then on the extraordinary side, depending on where we are in the business cycle and depending on the cash flow, we have also been generous when it comes to the extraordinary dividend.

And with that, I love to return to this slide. I really love it when we're talking the total shareholder return. And we talked about the positive impact coming from the resilience and the growth, but capital allocation also being extremely important when it comes to the total shareholder return and the dividends we are paying, which is also driving the total returns.

Thank you so much, Mats. I'm sure that we have many happy shareholders. Why don't you join me behind the desk? We are soon going to open up for our Q&A session.

We are done with presentations. But first, I would like to ask Martin to wrap things up.

Thank you, Kina. What a great opportunity to present the story. And I mean, maybe 2 messages also if we start with what we have discussed today. Number one, demonstrated -- demonstration of my colleagues throughout the group about built for resilience and growth. As you have seen here, both when it comes to the reinforced resilience over different type of cycles, but also how we are continuously also tapping into the growth opportunities. And now with the 4 dimensions that we have been presenting through the segment lens, it's time to take the next step for the group.

So friends, a day like this, exciting times, right? We are living in uncertain conditions. We know that. But the demand in our strategically selected segments will continue to accelerate. This growth is driven, as we have been talking about today, by the underlying economic activities, obviously, driven by macro trends, but also a number of dynamic factors such as e-commerce, defense, mining, digital infrastructure and beyond. And also, we are coming to the point where we will see the enablement by autonomous solutions and energy transition that provide further growth opportunities.

And when growth prospects are good, competition is intensifying, and we like that. In these exciting times, the Volvo Group's capabilities and assets to move ahead have never been stronger because it all boils down to where we started this morning, that every customer will get what they need to stay competitive and successful in their specific segment, application and geography.

In other words, in their business, the solution for the customer, a truly competitive TCU, including uptime, payload, energy efficiency, safety, driver attractiveness, productivity and more. This is customer obsession in real life. But it's one thing to have an obsession for customers. It's another to have what is required to deliver what they need. With our global system of own innovation, technology and industrial capabilities, combined with the best and greatest, most reliable supply and commercial partners, we are either developing or getting access to the latest and greatest competitive key components and systems.

Competitive both, yes, in terms of cost. But when it comes to the solution, in many cases, even more important when it comes to durability, reliability and performance. Our modular product and solution system, cost, common architecture and shared technology is both fast and flexible and combine scale where it matters with the diversity needed for the customer. And our application excellence leverages our strong regional value chains in both core and evolving markets. And they are, what you say, Jens, these regional value chains, they are ready for more growth, right? So Melk, you don't worry, we are ready.

Growth driven by a world-class sales and service network that is global when it comes to reach. But on the other hand, and at the end of the day for the customer, it is very local or to put it even more precise, exactly where and when the customer needs us and wants us every day, 365 days per year, always. This approach has led us to a growing customer base that has a huge trust in our solutions and in our people, reflected in our high customer retention and new customer acquisitions.

And it's not just trust in the products. By leveraging the total offer, that has led to an increased share of service and solution content, another important signal of trust from our customers. We are working in an industry where the market is growing. We are focusing on segments that will outperform the growing market, and we are confident that with everything we talked about today and much, much more, obviously, we will outperform in these segments. Growth, on growth, on growth.

And based on these growth levers, our capital allocation strategy has been consistent in providing performance for our customers in reducing volatility and increasing earnings for the group and solid investor returns. This is what we at Volvo call resilient and profitable growth. And it will be done by the most precious asset that we have at Volvo, our people and our partners. You have seen the team, I would like to call it my team on stage today, and I'm very proud of all of you. Thank you, guys, for what you're doing.

And I know that -- but we are representing 100,000 colleagues around the world. And I know that many of them are watching online. So I hope that you excuse me if I turn and talk to them for one moment here. Dear colleagues, it doesn't matter where in the world I am, I meet dedicated dynamic business savvy men, women, colleagues, you. You are living our brands and values. And I know that you're always ready for the extra mile every day in every situation globally, but still extremely locally and all for the customer. I couldn't be more proud of you and what you are doing. Thank you for your great commitment.

At the end of the day, it is exactly that. It's all about people, our teams, our customers' teams, our suppliers' teams working together to drive society forward. So -- everyone online, everyone in the room, thanks for your attention. Thanks for your trust and interest in us. And we are -- we -- that have been on stage today, we are extremely proud of representing all the colleagues around the world. And we are the Volvo Group. Thank you.

He make me cried. I think we need to catch a breath a little bit, Martin.

I definitely need to do it.

It's time for the Q&A. Here it comes.

We are in an emotional business.

We are. Lets take...

Hold on. I see that there are many -- this is good. We have a lot of questions in the room already.

Very good.

So we're going to finish off with a Q&A, and we have a well-known face in the audience, Anders from Investor Relations. He will help us with the questions online. And we have Mats and Martin by the table. But of course, feel free to ask any questions to anyone in the management team. And we're going to start in the room, and you know the drill, you present yourself and then what? One question each. And I mean it this time because it is respect to the rest of the people in the room. So the question is who would like to begin?

Can I just get my glasses...

Yes, get your glasses. We have a microphone already here on the first row. Please introduce yourself and that is our first question.

You made it challenging to just select one. Daniela Costa from Goldman Sachs. But given it is just one, maybe I'll follow up in the conversation at the very end regarding capital allocation. So R&D is not going up. CapEx is not going up. You're growing more given all these initiatives, hopefully. And I guess there's still some room on the margins, at least in Construction Equipment when we looked at the first chart with the top of the industry and where you are.

Is there any room for large size inorganic moves to accelerate all of that? Or what are you going to do further with the cash beyond all that you already do?

Should I start? Thank you for the question. And I think we have been pretty clear in our different type of, if I may say so, inorganic moves over the last couple of years. And when Mats, for example, talked a little bit about the transformative ventures. On one side, you can say, okay, it's profitability, and we want to be transparent. On the other side, you can also say that quite a lot of those are, of course, add-on technology investments that are still about to come on board.

We talked about autonomous, obviously. You heard about Nils, we are getting closer to this. We see that in a number of others. The other big part that we see is that it has been good for us to take further steps when it comes to the sales and service network distribution coming even closer to the customer. It is building further growth opportunities for us. Both when it comes to the penetration of market shares in these segments, we can do even more.

Truck Center in Western Australia was a great performing dealer. But with now the integration into the group Australia -- the Volvo Group Australia, we see an accelerated penetration of core segments up in Port Hedland and Pilbara, et cetera, for example, because we need to combine different things and also the service opportunities. So we are working structurally -- very structured around the funnel of opportunities, but with the right balance, that is how I look upon it.

No, totally agree. And I think that if you're looking at the last 12 months and what we have done and especially when we're talking about the dealership and the service focus with Swecon and Western Australia, I mean, that's the path we are on. So I think that's reflecting the priorities going forward in a good way as well.

And when you look at, I mean, other inorganic opportunities, you need really to see where it can add to your competitive -- I mean, just add units, we don't need because there we have the organic capability of driving that. So the 1 plus 1 adding just to gain size, it must create value for real and not being dilutive in any sense, so to speak, because then we are just losing focus.

All right. Thank you very much. Hampus, you have been waiting, so I'll leave the microphone to you.

Hampus Engellau, Handelsbanken. One question. Maybe coming back to the market shares. It seems like Mack having good momentum on the market share while Volvo has a tougher task, if I look historically, it's been very segmented in the long haulage with Freightliner absorbing international market share when they went into trouble. How do you aim to like break into this and capture like clients that never have considered the Volvo brand?

Maybe, Roger, if you would like to take that.

Thank you for the question. And I was into it before. And we need to also then be aware about that the long-haul segment in North America has been down more than the construction segment, so to say. But as I said, we are now building our capabilities. We're widening then the product range which make us more possibilities to grow then the shares in segments that we have not been out in before.

But the #1 thing is, of course, conquesting new customers. We are then working with a lot with more sales force, with more conquest from a customer point of view. And the number of customers that we are taking on now that is new one is massive. So we see now a good increase in terms of order intake. So we are pretty confident that this will come in the market share as well.

And I think also, I mean, what Roger said, I mean, you showed it so well, and you have been into it. But when we look at North America, Hampus, as you know, I mean, it's a continent. And we really demonstrate also that we are able to do that. We have, I mean, dealers and markets, as you say, with this. So it's all about granularity and driving that. But I think the platform is there. So we feel confident about that.

Thank you. We will take one more from first row, Mattias.

Mattias from DNB Carnegie. As you probably are aware, there's been a lot of discussions and speculations regarding the structure and if there's potential to make construction equipment into a separate entity. I think you've shown a pretty strong proposition with the cost and service network, et cetera, why it makes sense to have that as a group. But I still think it would be interesting for us to hear your perspective on the structure, if you want to put the discussion to rest, so to speak, or if there might be merit to this discussion, but perhaps a few years too early.

I mean I think -- and Mattias, I think this is, of course, always a very important discussion when it comes to a group like ours to have, I mean, a reflection on how does the portfolio look like? Do you have enough, so to speak, common capabilities, assets to defend the structure that looks like Volvo. I think both when it comes to how we have been developing the group, the different business areas, development, both in resilience and growth opportunities, but also finding the right combination of, on one side, common capabilities of scale or technology or industrial and service network opportunities that really is shared and good opportunity.

While at the same time, have enough decentralization, you are not losing speed, focus and accountability and ownership. And we have done a number of moves where we have said that these parts of the business are not fitting good enough into the group. And then it's better for them to develop on a stand-alone or in another context.

What we see now, and I think that has been demonstrated, there are -- in addition to the journey that we have done, I think also market and segments reasons to really drive this even further, defense, mining, power generation, quarries, construction as well. I mean, the core construction. So that's the reason also why we, in certain parts of the business now are combining the business area setup also with a segment setup, so we even further can drive opportunities across the group. So we are happy with the structure that we have. And I think also the outcome has shown that this model is working.

Very good. We will take one more from the room. Agnieszka?

Agnieszka Vilela from Nordea. So you gave us a very good glimpse into the growth ambitions and kind of revenue pools for your different businesses. Would you consider disclosing more formalized growth and EBIT margin targets for your business areas in order to improve transparency and accountability from analysts and investors?

No. I mean we have the segment reporting, we have and also when it comes to the financial targets. And I mean, that might develop over time depending on how the -- depending on the development of the different segments and so forth. But for now, I mean, we are happy with the way we are presenting the group and the kind of the key ratios and the KPIs we have.

Very good. And I think it's time for the first question online. Anders, would you mind?

Sure. [indiscernible] talking about vehicle expansion. In which regions do you aim to expand in this space?

Yes. I mean, first and foremost, it's important for us to come back to what Roger said. We still see that it's a good combination of having a mix of -- I mean, when we have high-performing, if I may say, so private dealer partners, that is also, of course, a very good model. But we see due to different aspects that there are reasons for us. It could be succession. It could be that we really want to focus even more on a specific segment, specific geography where further add-on investments are being made.

But what has really changed over the last, I should say, 5, 10 years is our own operating performance in our retail network, both the private and our captive network when it comes to, of course, the financial performance, but also when it comes to driving growth, driving services, driving entrepreneurial spirit, the decentralization.

And that combination with the fact that we now have business that are accretive to our margins when it comes to the retail since it's in the same flow and even more recurring business, we see that as a good opportunity. But we will take that step by step. Coming back to what Mats said, strong financial position, drive innovation and growth opportunities and also make sure that we are attractive for -- and that is very attractive, by the way, with the return on capital that we have demonstrated for the investors. And on top of that, dividend opportunities.

But this is a strategic area. We are coming closer to the customers. We can drive core segments even further. And I should argue the last 4, 5, 6 acquisitions that we have done have demonstrated that we are -- that it's possible -- not only possible, it's very positive having this bolt-on add-on strategy when it comes to the distribution.

Very good. Let's see if we have any questions on this side of the room. Any hands up? No. Then I'm moving over to this side of the room. Here, we have a few. We can start with.

Lots of hands. Good.

Bjorn, Danske Bank. I keep on asking about the bolt-on acquisition. And if you -- I mean, would it be possible to add 1% or so to growth? Or if you can give some color on the potential for acquiring companies like Swecon with -- I mean, that drives growth and also resilience, of course.

No, as you say, Bjorn, I think there are a number of things. Number one, it is also from a group perspective, further driving the resilience when it comes to recurring revenues. That's obvious because it's both traditional, if I may say, the core businesses of workshop hours and parts. But more and more solution requires also investment for the retail network when it comes to electromobility, when it comes to autonomous, when it comes to different other type of digital capabilities, et cetera.

It is important for our competitive position over time. And it is -- and as I said, when we have done acquisitions and we have a good pipeline and funnel, we see that we are adding growth both when it comes to the products and the services and increasing that. So -- I mean, I will not give a percent, but it's both growth, it's the competitive set because you're even closer to the customer and it's resilience for sure. And I think it's very good for the investors, if I put like that.

Very good. We're going to continue on this side of the room. Right here.

It's Nicolai from Deutsche Bank. Also one question on the corporate structure and this time is on Penta. Great journey over the last years. Now you're trying to double revenues. But still from a capital market perspective, Penta is just dwarfed by trucks and construction in terms of earnings. Any ideas here to separate this business, just put it more in the spotlight that we see so much momentum in data centers and power generation?

No. I mean I think, again, we are crystallizing that business very well. And I'm very happy that you brought it up, Nicolai, also because, I mean, it's another jewel in the crown and the growth potential is obvious. I think we have -- and the team at Penta together with many colleagues in the Volvo Group have demonstrated that driving this now segment by segment, of course, the Marine that we thought was rather full leash, but we are unleashing, so to speak, further potential now with the bigger vessels, et cetera.

And when it comes to industrial, it's a huge potential. And since we are still in a very high level of growth mode there now, also when it comes to the service business. But when you start to think about, as Anna described also, the core elements in the backbone and then adding on the core capabilities of Volvo Penta and then providing the solution to start to do a separation with a lot of complications will just make the focus put in the wrong place. I mean we are disclosing, everyone can -- you are good in calculating. You can see how much that will add to the group's potential moving forward.

Yes. And we are quite granular when it comes to Penta, and I shared a lot today when it comes to the targets going forward as well then. So I think you have quite a lot of information in order to visualize the value we have in Penta.

But great opportunities. And if you think about -- and I've been involved myself together with Anna and the teams because I'm really interested in this field with the whole energy transition. And when we look at now the innovation, not only when it comes to the technology innovation, but also when it comes to the business model innovation, availability, scale, when it comes to digital capabilities or electronic capabilities to synchronize all these different type of engine that's not only for backed up, but I'm convinced that we will come in also to the prime side of thinking.

I mean, if you have 100 engines and you have a smart round robin system also of, so to speak, the maintenance schemes, this is an outstanding solution because with the 16- and 17-liter engines, then if you even drive it on natural or biogas, et cetera, the sweet spot of such a generation when it comes to fuel efficiency and energy efficiency is unbeatable. But it's about the synchronization. And with the capabilities we're sitting on today when it comes to control systems, et cetera, that will, of course, come as well. So here is great opportunities.

Thank you, Martin. I think we can conclude that divestment rumors is a no.

I mean, again, it's all about delivery. The day -- and that what I can assure you, the day we feel that being part of this group is hampering someone from driving resilience, growth, customer satisfaction and outcomes, then, of course, we should consider a different structure. But we feel really good, and we have a lot of discussions in the team. We feel that we have a good structure that gives good outcome.

So, clear now. Thank you very much. Let's continue in the middle of the room over there.

Harry Martin from Bernstein. I wanted to ask about the autonomous trucking business and the SEK 3 billion revenue target, that would already be quite a sizable number compared to the size of the U.S. business today, likely implies a higher market share of that business than that 25% target as well. So I'd love to understand some of the assumptions behind that target when it comes to the number of trucks in operation, the market shares, the revenue model and why Volvo as a company should outperform in what is a very competitive end market.

Would you like to start, Nils?

Just step forward and it will work.

Okay. It's magic. First of all, as I said, it's a very large addressable market. And if you look at the competition, you need to distinguish a little bit what is the role of the OEM, what is the role of the technology partners. And we have an approach where we work with multiple technology partners, bringing the virtual driver technology, which we then integrate and then we go to market with the Volvo brand, with Volvo Autonomous Solutions. So we are the ones which are generating the revenues.

And then, of course, in the back, we are having a certain split of the revenues, which go to us, respectively, what will go to our technology partner. But it's -- what is very important to understand is that in order to bring that technology to the market, you need to understand what the market -- how the market is operating today and how you bring that technology to it. That's why the business model is so crucial and so important. So this go-to-market strategy, which we have where we start with Transport as a Service, here, we're really making it easy for the customers to benefit from autonomy without having the hassle of operating it.

Over time, we will add more and different business models where our role will be smaller. But nevertheless, we will still have -- it will still be service business, which will contribute over proportional to the growth we have in the service business and particularly in the margins. And of course, I'd be very happy if with Autonomous Solutions, we overproportionately help the growth of the market share of Volvo Trucks in the U.S., and Roger will support me there.

Absolutely. And I mean, if you look upon it also, one thing, an important thing, by the way, is, of course, the decision engine, the virtual driver. But then it's also, so to speak, the redundant and autonomous capabilities of the whole system and that we have been working really. We have actually had discussions how much should we disclose on this, et cetera, in order to -- from a capital allocation standpoint, et cetera.

But we said it's so important that we are actually taking that in our transformational ventures, taking a little bit of heat that we are not disclosing it because we wanted to stay ahead of the curve and do these investments, both in the product, but also in the ecosystem that Nils have been explaining. So now we are really excited for '27 that coincides with our 100-year celebration also. So we're excited about that because that will be a milestone.

Very good. Thank you very much. We have a gentleman over here.

Klas at Citi. So I had one short-term and one long-term, but it's only one question. So it's been a lot.

You will incorporate the 2 of them in 1.

Yes, exactly follow-up. So I'm going to go with the one on short-term. And Mats, you said that the cost inflation is going to start to bite from the second quarter. And we have some hopefully positive offsets. We have the North America volume ramp. You are going to see from mid-May that the under-absorption is gradually going to sort of start to fade. You're raising prices. I'm just curious -- first of all, on the cost side, has that got worse than what you planned for?

And then on the other things then, North America volumes very strong. So are you going to have a bigger boost from utilization than you originally planned for?

I will not give a margin guidance. But talking about the different components then. So for sure, looking at the kind of the effects from the Middle East crisis and especially on the freight side, I mean, we will have higher cost than anticipated in the second quarter driven by that and in combination to some extent with raw materials as well. So that is kind of a net negative on that side.

Then you're right. I mean, we have a good trend and a good momentum in North America with a higher order intake. We are in balance when it comes to our industrial system then starting May. And now we are increasing capacity, as Stephen talked about as well. So that will help us going forward, so to speak. But please remember in the second quarter, we are talking May, so it's only kind of 1 month left. So that will be a gradual kind of improvement.

But utilization is good, as Mats alluded to also in the trading update. So we see that in the service business also. So I think that is holding up well. And that is, of course, very encouraging to see because eventually, I mean, when customers are active, that is good for everyone. So that is still holding on.

And as previously communicated when it comes to the service business, and I think Roger will give us underlying that as well then. I mean with the population we have out there and getting into the sweet spot in terms of aging of the fleet as well, I mean, that's also driving the service business in terms of parts consumption and so forth, also being positive. But that's nothing new then. I mean we talked about that when we released the first quarter as well.

The second question. Without a microphone, that has to be super quick because we have one more online before we wrap up.

I mean no changes from what we have said previously when it comes to the pricing environment.

Thank you, Klas. Anders?

Yes, sure. I have a question from Mats Liss at Kepler Cheuvreux. Following the SDLG investment, Volvo has reduced its exposure to China. Do you see a risk of being underexposed to growth opportunities in one of the world's largest truck and construction equipment markets?

Obviously, I mean, that specific exposure has gone away. But when it comes -- there are 2 elements of this question, I think that is important to bear in mind. Then is the market opportunity in itself. And there, of course, we are continuing to drive the performance development of Dongfeng Commercial Vehicles, where we have the joint venture. We are also putting a lot of focus now in our core segments also with both Volvo Construction Equipment and Volvo Trucks when it comes to China.

But other dimension that is very important, that's the reason why we are also very active in China is also to continuously tap into that ecosystem when it comes to speed and innovation alongside other opportunities that we have, both China for China, as I talked about India for India, but also China for the world where that matters, so to speak. So we are active. We have a strong footprint in these different dimensions, and it will continue to be so.

Gentlemen, time is flying when having fun. That was the final question. Any final words from you, Martin, before we wrap up?

No, not more than we will be available the whole afternoon, obviously, from management. So I mean, take the opportunity to just grab us, discuss, put questions or provoke us. You do whatever you like as long as we can do it together. And we will, of course, also have more in store now for the afternoon, but that we'll talk about, but we are around for further conversations for everyone.

Absolutely. So this wraps up part of the Capital Markets Day. And as Martin said, for those of you who are here in Eskilstuna, there will be plenty of opportunities to ask more questions. Now all materials will, of course, be available online. And there you find the contact information to our Investor Relations department if you have further questions. So thank you so much, everyone, for joining us today here in...

Teams also...

I'm coming to that. He is hopeless. You can take it.

Thanks to the team that have [indiscernible].

So thanks to the team. It's a big effort putting a day like this together, as you can imagine. Thank you, Martin. And again, thanks for everyone in the room. Please stay seated because Melker has some important information.

And for all of you who have been watching online, thank you so much for joining us today. I hope that we have been able to keep you glued to the screen. Bye-bye.

Good morning, and welcome to the Volvo Group First Quarter Press Conference. Today, we'll listen to the presentation from Martin and Mats about the first quarter results, and then we will follow up with a Q&A session later on in this session. So with that short introduction, I hand over to Martin.

Thank you for that, Johan. And also from my side, good morning to this quarter 1, 2026 press conference. Great to have you here.

First and foremost, the group and all colleagues and business partners delivered a solid result in the quarter with an adjusted operating income of SEK 12.2 billion and a margin of 11% and continue to demonstrate strong earnings resilience despite that market volumes moderated compared to last year. And despite many moving parameters, as you're all aware of, such as geopolitical turmoil and tariffs.

Performance was good across all business areas with a high customer confidence in our products and services, reflected in good order intake and low cancellations throughout the quarter. We also launched several new business offerings as well as portfolio moves to further improve our competitive set and enable continued profitable growth.

To mention a few examples in the intro here from the first quarter, we have further reinforced the regional haul and conventional business offerings in North America for Volvo Mack. Super excited about that. We are continuing to roll out these new offerings. And as you did see also here in the -- in [ true movie ], Volvo has launched our next generation of battery electric offerings, including also the new FH Aero Electric long range with up to 700-kilometer range, which is, of course, a significant and benchmark step.

As regards our company portfolio, we continue to optimize our structure and capital allocation with a number of important moves in the quarter. First, the intention of Toyota to step into cellcentric, being an equal shareholder together with us and Daimler Truck, paving the way then for the hydrogen journey.

The intention and execution, I should say, we are waiting for a merger clearance there on the Flexis divestment, our 45% share to Renault Group, still then having a considerable, so to speak, lineup of [ LCV ], including the Flexis vehicles. So that will further clarify that part of the business for the Renault Trucks.

The [ Vicon ] integration, strengthening the retail sales presence for VCE started during the quarter and also the announcement of discontinuing the Rokbak brand when it comes to our whole business within Volvo Construction Equipment that has been subscale and low profitability not at least with our decision in '22 to leave Russia, amongst others.

Here and now, and despite uncertainties order intake also developed positively, as you have seen with, for example, an increase year-over-year of 14% for group trucks. As one example, and when it comes to the market forecast for the full year, we are [ for ] trucks down then slightly revising upward for Europe and Latin America while reiterating the forecast for North America on the back of stronger order momentum.

I guess it would be certain questions about, I mean how that is playing out, obviously, but we will come back to that more in detail why we are reiterating that as gradual now coming back in the North American market. And operationally, I think that is also important. We are utilizing our flexibility toolbox, both for upwards and down [ one correction ] to maintain balance between demand and supply and to keep inventory levels on the right level, so to speak and that has been well done during these more stormy waters, and we will continue to do so.

Focus is also on effective cost control, generally speaking, but also further optimizations of our structures across the group that we have done during the quarter, primarily in the truck segments. Commercial discipline continues, of course, to be very important. We have a very strong total offer, and we should utilize that. And what is very, very positive is, of course, also the service business growing with 6% organically, showing that our customers around the world continue to utilize their equipment. But also that we have an increased share of wallet, and that is, of course, driving loyalty and customer centricity, but for the group, of course, also resilience.

So while the recent geopolitical tensions and the Middle East conflict have so far not caused any major disruptions in our operations, we are, of course, keeping a watchful eyes whether and when they might affect primarily if they will, the general economy more broadly and thereby our demand. But with our flexible business model with an increased service business together with strong market positions, and disciplined cost control, we are well positioned to navigate potential short-term swings in demand.

And you have heard me saying that before, in times like this, we focus on what we can affect and what we can impact and staying close to our customers and business partners to continue to drive resilience and growth. Moving forward, there will be an increased structural need in the world of efficient and effective transport solutions, Infrastructure and Energy Solutions, and the group is well positioned moving forward.

If we go into the figures then. The first quarter, net sales amounted to SEK 111 billion with an organic sales growth of 2%. And we have, and you will hear that from Mats and myself, we have introduced a term organic sales growth to illustrate the underlying sales development pace and thereby neutralizing also the M&A effects, for example, if you take VCE then [indiscernible] the [ second ] the effects in the quarter and, of course, also FX. More granular information about this is disclosed as part of the key ratios section in the quarterly report.

And we continue to focus on earnings resilience, as I've said, adjusted operating income amounted to SEK 12.2 billion, with the margin expanding to 11%. For trucks, our European business performance compensated the underabsorption cost for the -- from the U.S. truck manufacturing operations that was standing still approximately 25% to 30% of the time available time in the quarter. That was a conscious, tough, but a conscious decision. And eventually, as we see it, the right decision, to have these stop weeks as we now have available production capacity to meet the increased demand we have seen recently.

As for May, we are in balance in North America. Operating cash flow had a normal seasonal effect and amounted to SEK 400 million. Net financial position end of quarter 1, SEK 56.8 billion. Return on capital employed, 24.5% and earnings per share, SEK 4.09 per share. So we can then conclude another strong and resilient quarter here.

Group news, as I said, quite a lot of things have happened or a very busy quarter, I have to say. First and foremost, and as you can see here, the Toyota Motor Corporation aiming to join the Volvo Group and Daimler Truck as equal shareholder in the fuel cell joint venture cellcentric. The combination of the parties' complementary experience and know-how will support and accelerate the joint objective to develop, produce and most importantly, then commercialize fuel cell systems for heavy-duty vehicles but also for other heavy-duty applications, such as energy solutions, for example.

And this is a very, very good industrial move and industrial fit as these 3 significant OEMs on forces to drive decarbonization. Super happy, obviously, to have Toyota on board with a long-lasting story when it comes to this journey of hydrogen and the hydrogen economy. This will further strengthen an already well-functioning joint venture actually.

Also, as I alluded to, Volvo Group, Renault Group and CMA-CGM has been an agreement now on a strategic change for the current joint venture Flexis that contains the next-generation electric light commercial vehicles. And the [ movies ] that Renault will buy, Volvo's 45% ownership and CMA-CGM is 10% in Flexis. But Volvo Group through then Renault Trucks, that is the counterpart will remain a partner and investor in the vehicle project and will commercialize and distribute Flexis developed products from 2027 adding to the lineup that we already have together with Renault Group, also a very successful setup by the way.

AGM of AB Volvo Annual General Meeting of [indiscernible] was held at World of Volvo in Guthenberg, very proud of that. I can say, I mean, that is a manifest also of both the history and the future for Volvo. And as always, of course, it is a special moment to meet with our shareholders. The AGM decided also along with the Board's different proposals and amongst those, of course, also to -- not of course, but to shift SEK 26.4 billion to the shareholders or SEK 13 per share.

On volume side, the truck deliveries decreased by 3% to 47,500 vehicles with lower volumes than in North America and somewhat also in South America, but partly then compensated in Europe. And Volvo [indiscernible] equipment, Volvo-branded volume, that is the relevant these days now, I mean, since we have completed the divestment of SDLG. It did grow with 12% in the quarter driven primarily by the European market.

Electrification, first and foremost, with different uncertainties related to the electrification still in our key markets. Demand continues to be slow. Orders of electric vehicles decreased 22% adjusted for SDLG, mainly on the back of a broadening offering from competition. That is natural. I mean, we have been rather along with some players, but we see more and more players coming in. And I think that is a good sign.

But also the general uncertainties in the market. The reality is that the base of calculating market share is very, very low. So you will see rather big swings here moving forward as well. But deliveries of electric vehicles and machines did grow with 15% adjusted for SDLG. And this growth was mainly supported in this quarter by a strong growth of light commercial vehicles, electric business.

When it comes to the total vehicle and equipment sales that was flat in quarter 1. Trucks organic sales decreased 3% on the minus 3 truck volumes showing generally then continuous price discipline in the market. Construction Equipment grew 16%, driven by Volvo-branded Machines in Europe. Organic sales growth for buses, 14% driven by [indiscernible] mainly in North America. And since we are doing complete buses for [ Pivo], of course, the sales value per vehicle is rather high here and Volvo Penta grew sales by 14% with solid growth both in Europe and North America.

One example, as I alluded to last time is also the growth in data center segments continues showing a continuous high activity levels. I think it's portfolio and growing for Penta. So that's very interesting. Underlying service sales growth also amounted to impressive, I should say, 6% in the quarter with positive service developments across business areas, while it was flat for VFS, and that was, of course, related to volumes in the other business areas. They were keeping penetration, as you will see.

VCE and trucks did grow with 7% and 10% organically. And the 12-month rolling service sales amounted to SEK 123 billion and represented over 26% of the group's revenues, and it was actually 28% for the quarter. And again, coming back to the importance of that, that we have diligently worked with, I mean, the service penetration and the rolling fleet and getting higher penetration per unit here, loyalty and closeness of course, but also resilience.

On the truck side, a busy quarter as well, came with a lot of product news and launches. Here, you see the Mack Granite, it's the iconic Mack Granite. That is now fully updated still with this typical Mack look. And we reveal that the ConExpo together with a brand-new Mack Keystone that is also for the demanding heavy haulage application amongst others.

And of course, a very, very important launch for Mack since these 2 models are also part of the 2 core segments of Mack moving forward and also as we speak. Also in North America, Volvo Trucks and Mack Trucks started production of their new regional haul trucks, the Volvo VNR and Mack Anthem. So as I said, we are more and more now completing the rollout and are getting ready for having a well-greased system in North America and up to a level that we have seen in Europe before.

Volvo has begun also on-road testing. Maybe some of you did see that in the introduction movie here also heavy trucks powered by hydrogen combustion engines, and we are continuing this approach, obviously, with battery electric, combustion engines driven on renewables and also fuel cells and the commercial launch is planned before or around 2030.

On the electric side, as I said, will reveal a number of new executions now in April. For the versatile and vocation, and you can say also HFM and FMX selected models are now available with up to 470-kilometer range on 1 charge, which means that the absolute, I should say, I mean, the absolute majority of missions in those segments will be handled with overnight charging. And that is, of course, a change in the game for our customers.

You remember it was a time when you could live a completely with [indiscernible] 1 short also on the phone, that change the way you're thinking about that. Volvo has also, as you did see, showcased a new long-range FH Aero Electric with a range up to 700 kilometers, and that is a true benchmark, obviously. Same there, then you can do missions even really the most advanced long haulage operations and also coming with mega charging as you did see.

Market forecast. For North America, we repeat our market outlook for 2026 at 265,000 in retail sales. Order levels have been elevated, as you have seen in recent months, while retail sales, that is how we measure the market or retail deliveries, pace is lower because that is related to the order intake at the end of '25, but is expected now to regain momentum in the second half of the year. And the [ EPA 27 ] prebuy is included in that view. So we don't expect any material prebuy, which I think is a good thing for the market dynamic generally speaking.

European registration pace continues to gradually increase. We have lifted our market forecast with 5,000 units to 310. [indiscernible] units for '26 and similar, even if we have a falling trend still in Brazil, market contracted through '25, as you know, and we see that continuing, but still we are lifting the forecast from 75,000 to 80,000 heavy duty trucks in '26, so plus 5,000.

Indian market is driven also by a healthy replacement demand, infrastructure investments and a general increased freight demand. And here, we live with 20,000 units for medium- and heavy-duty trucks up to 400,000 vehicles. And on a side note, I have to say that I'm very proud of also our joint venture in India, Volvo IC commercial vehicles that actually sold for the first time because they have their fiscal year ending at the end of March, as companies normally have been in Asia and sold over 100,000 vehicles for the full year, which ended now done in March 31.

And what is interesting is, obviously, this is a 15% growth -- and historically, we have been thinking about Volvo commercial vehicles, a slightly medium duty, but the reality is that it's more than 25,000 heavy-duty trucks, but we are also calling heavy-duty trucks. So that is starting to give real leverage and also carry back opportunities for us when it comes to technology. You know that we are already doing the 5- and 8-liter engines in India with very, very good results and the industrial system is gearing up here. We announced -- so I think that is a great achievement by the team and a great asset moving forward.

And for China, we reiterate also our 2026 total market forecast for of 760,000 medium and heavy-duty trucks for the China market. Book-to-bill, positive, obviously, as you have seen, 135% for medium and heavy duty in the quarter and 99% rolling 12-month rolling. North America, we had a book-to-bill of 12% on the back -- on one side, on the back of strong order intake, mainly from fleets, but also retailers coming in, but also that we still had planned stop weeks.

So you have that, so to speak, effects on the 2 sides between 25% and 30% of the total availability. So that was quite extensive. But we said, keep the balance but keep ready. We had still also some stop days during April. But from May, we will use the installed capacity. So we feel that the right decision to utilize that flexibility tool for quarter 1 here, even if that came with under-absorption cost, and you will hear Mats talking a little bit about that later on here.

Europe, 150%; South America, 134%, and the Industrial Systems may need to be tuned upwards given the gradual increased customer demand. We have been in balance here already as we speak. And now when we see, so to speak, support from order intake, we will have the flexibility tools necessary here. And you can see primarily Asia, Africa were seeing a good balance.

Market share side in Europe then continued to deliver strong market share for the quarter with the Volvo at 19.3%, the Renault Trucks at 9.4%, giving a total share of almost 29%. On the battery electric side, as we said, as more OEMs are now delivering Volvo Renault Trucks delivered 23% combined market share for the quarter. And we will still see these swings now moving forward as the market still is rather low.

Now we are coming in with new executions and that will come back, et cetera. I think it will be this type of stepwise approach. But more importantly, we proceed with our efforts, we proceed with our 3-pronged approach, as I said, branched approach with combustion technology, electric and hydrogen to drive decarbonization.

And in North America, we had a combined share of 17.2%. So starting to go in that right direction. Super important that Mack Trucks self-help is giving results. We are now at 8.7%, and we see a good momentum here that we are not hampered by our own industrial system and other deficits. And one example is the cab over engines. I mean, the waste collection units where Mack has always had a leading position when we had, so to speak, the problems here, 1, 1.5 years ago, we're down to 30% market share in that specific segment. Now we're back to plus 50% and so that shows also how important it is that we have the capacity in the different type of segments here.

And also, Volvo Trucks are back on the right track, absolutely not on the level where they should be, but back on the right track and regains their position. And of course, it will be further support when over the road is expected to become better here.

Brazil is strong, 23.7% and also a good start, I should say, 22.5% combined for Volvo and Mack in Australia. Construction Equipment. Closing of the acquisition of [indiscernible] then in this quarter. So Monday has passed. We always talk about Friday on Monday. But Monday has passed a very good sentiment when it comes to the integration. We are super happy to welcome all new retail and service colleagues into the group in these core markets. It's Germany. Sweden, it's Baltics. And all our great colleagues here will further strengthen the Volvo CE service and market position in core markets.

And that is, of course, one of the key factors also of continued success and such an important part of the TCO for our customers. So a great opportunity to further strengthen customer centricity, competitive set through total offer in resilience. By the way, one of the areas that we will further discuss at the CMD.

It is also with regret that the decision has been made, as I alluded to in the introduction to later in the year, discontinued the subscale and loss-making Rokbak articulated hauler business. We have tried all together to be frank. But given also the fragmented footprint here, we have decided that the Scottish [ mother ] well site will be focused into a center of excellence for large rigid mining business carrying the Volvo brand. And the onetime costs related is under the adjusted section and you have seen that.

When it comes to the market forecast, it can be rather swift, we are not changing anything in relation to the last report, the full year report of '25. So plus 5%, Europe and China flat for the other regions. Book-to-bill, I should say, also a positive sign that sends 110% in the quarter driven primarily by North America, but also somewhat by Europe. North American demand is broad-based, as stated last report, similar pattern, data center energy sector onshoring of manufacturing as well as the possibility of -- for customers to write off quicker.

And the European demand is still encouraging but with also here increased uncertainty among customers due to the conflicts in the Middle East. Buses, important launch actually. You know that Mexico is super important for us when it comes to buses. The new 9,800 was launched for the coach market in Mexico, marking another milestone in the Mexican passenger transport industry. The Volvo 9800 has the new aerodynamics and the comprehensive design, fuel consumption improvement of 4% and [ Coach ] is a very important tool for passenger transport in it. So 4% with the miles produced is very, very important.

Book-to-bill 130%. It was mainly driven by somewhat lower delivery volumes. However, with higher sales value per bus, as I said, because it was a lot of prewar into those figures. But we have a solid field rate for the full year here Volvo Buses. And Volvo Penta, great to see on the marine side to start with recognized for its leadership in marine innovation, sustainable marine innovation with its hybrid electric IPS propulsion that was named the Technical Development of the Year at the [ Motor boat awards ] in Düsseldorf or maybe you have visited the Düsseldorf boat show. I always find it interesting, by the way, that it is in Düsseldorf. It's not a lot of lakes or seas out there, but it's a great show anyhow and a very important one. and also strong market interest.

What you can see on the slide here, that is the Volvo Penta the 1-liter gasified power generation offering for mission-critical applications such as data centers. And that I said also that is growing, obviously, not at least for standby and [indiscernible] power and good order board are. Book-to-bill reached 95% and 92%, 12-month rolling. But generally speaking, a good activity level, what we have seen basically during quarter 1 is if you take the 4 main segments, marine commercial, marine leisure and industrial speed, all stable levels when it comes to order activities and deliveries.

It is really in the power generation, Europe, Middle East slowing down temporarily, and that is related to the conflict because you have an instant effect of that. But obviously, that depends on the length of the conflict here. Yes, I can also mention, sorry for that. No, I think we're ready with that.

And VFS finally continue to grow the portfolio on a currency-adjusted basis through solid new retail financing penetration, as I said, sustained and portfolio performance continued to be good, although delinquencies and write-offs remained at the high levels that we have seen during previous quarters, but it's still well within the bandwidth, depending on where we are in the cycle.

So no signs of worries in that regard. And we also continue to focus on enhancing the portfolio when it comes to utilizing, so to speak, the VFS capabilities insurance offering is now on the rise, for example. So that was the business update. So I will leave the word to you, Mats, for the financials. So the one in only Mats Backman.

Thank you for that introduction. So looking into the first quarter financials, then and starting off with the group net sales.

So organic net sales increased by 2% comparing to last year. Vehicle sales were flat year-over-year, while service sales increased by 6% with contribution from all business areas. Looking down at the organic net sales development in the different regions. European volumes increased, which led to increased sales of 15%, driven mainly by trucks and construction equipment. In North America, sales decreased by 16%, driven mainly by trucks, while sales were higher for both buses and Penta. In South America, net sales were flat comparing to last year and net sales decreased by 2% in Asia.

Overall, FX effect was negative with about SEK 9 billion due to a general appreciation of the Swedish krona. And the main driver was the U.S. dollar depreciating about 15% versus the sake. The adjusted operating income for the group was SEK 12.2 billion with an adjusted operating margin of 11%. In Q1, earnings were again supported by the positive development of our service business, R&D net expenses and a positive product and market mix.

The U.S. tariff net cost was on the expected level of about SEK 1 billion. Severe weather conditions in the beginning of the quarter led to higher freight costs. In the first quarter, we continued to see higher manufacturing costs on the back of under absorption from the stop weeks in North America.

The R&D capitalization effect in the quarter was positive at SEK 1.4 billion with a year-over-year effect of SEK 800 million. The year-over-year increase in selling cost is mainly due to selling costs from acquired business. And FX had a negative impact of SEK 1.1 billion in the quarter, driven by the strengthening of the SEK compared to our main currencies.

In the first quarter, cash flow amounted to SEK 400 million. The limited cash flow contribution in the quarter was mainly driven by the seasonal buildup of working capital. Return on capital employed trend declined 24.5% on a rolling 12-month basis. Net cash in industrial operations amounted to EUR 57 million, but this is, however, before the dividend distribution of SEK 26 billion in April.

Net sales for group trucks decreased by 1%, and this was driven by lower volumes, but offset by positive development of the service business. Adjusted operating income amounted to SEK 7.6 billion with an operating margin of 10.1%. The adjusted operating income and margin was flat currency-adjusted comparing to last year. Lower volumes in North and South America, higher manufacturing, freight and tariff costs were offset by continued good development of the service business and a positive market mix and currency had a negative impact of SEK 800 million in the quarter.

Construction Equipment organic net sales increased by 14% versus last year. Adjusted operating income reached SEK 2.5 billion with an operating margin of 13.6%. Product mix with more Volvo-branded products and more heavy machines together with positive development of our service business were the main drivers behind the improved performance. In the quarter, tariff cost and accounting effects from the Swecon acquisition had a negative impact on the result. Currency had a negative impact of SEK 150 million in the quarter.

And then moving over to buses. Organic net sales increased by 11%, driven by both higher service sales and a positive vehicle mix. Bus delivered another strong quarter with adjusted operating income of SEK 492 million with 8.8% in margin. The result was supported by good price realization in combination with high efficiency in the production. In the first quarter, U.S. tariff costs were building up and had a negative impact on the financial performance. Currency had a negative impact of SEK 47 million in the quarter.

Penta organic net sales increased by 13% which was driven by more industrial engines and the service business. Adjusted operating income amounted to SEK 1 billion with an operating margin of 19.8%. This was again on the back of strong volume development for both engines and services. But despite unfavorable market product mix and the U.S. tariff costs. Currency had a negative impact of SEK 145 million in the quarter.

And then looking at Financial Services. The credit portfolio adjusted for currency increased slightly to SEK 264 billion with a rolling 12-month return on equity at 9.8%. Portfolio performance continue to be good with delinquencies and writers under control. The adjusted operating income amounted to SEK 938 million, impacted by increased credit provisions, but supported by the portfolio growth. Currency had a negative impact of SEK 80 million comparing to the same quarter last year.

And then finally, looking at the forward-looking guidance and starting with the FX. Based on the currency rate end of March, we expect the neutral currency impact year-over-year in the second quarter. The net impact from tariffs in the second quarter is estimated to be around SEK 1.2 billion. We reiterate our expectations on R&D net capitalization at approximately SEK 3 billion for the full year 2026. With a year-over-year negative effect of about SEK 1 billion. And finally, we also reiterate the guidance from last quarter for a tax rate of 24% for the full year 2026. So with that, I leave it for Martin to summarize.

Thank you, Mats. I will be short on my summary, so we have time for questions. But I think what you should have with you a strong resilient quarter given external any moving parameters. Strong order intake coming back, obviously, that we are reiterating the main aspects of the market conditions and a growing service business. So with that, Johan, I think we are ready to start the Q&A.

Thank you, Martin. Thank you. So in our Q&A, we please pick your most important question, so we respect your peers as always. We have people on the line, and we have people in the room. We start with Agnieszka.

Agnieszka from Nordea. Maybe starting with your outlook for North America truck market. We're a bit surprised that you didn't actually raise the outlook given the fact that order intake was rather strong in Q1. So maybe just can you comment on what's your expectation or explain what was driving the order intake in Q1? Were you surprised by the strength? What's the quality in the order book? Is there any risk for cancellations? And how is also above the production planning and kind of delivery planning from that orders?

Thank you, Agnieszka. I mean -- and that is, of course, an important one I alluded to. I suspected that there should be a number of questions around that. But if you look at, I mean, the build rate and the delivery rate, basically retail sales, because, I mean, even if it goes a little bit quicker since it's retail sales that is constituting the total market than in Europe, where you have the registrations, it is still a lagging effect, obviously.

And since we had still a soft order intake in quarter 3, 4, 20 -- and we were idling [ 25% ], 30% in first quarter still keeping up our market share still even improving them. And also some but fewer stop days in April, and we are in balance in May. And then when you -- I mean do the backward calculation and take out the medium duty of our registration is approximately a run rate in quarter 1 of 50,000, 50,000 plus. Then you have a total market or 2 those -- so to come up to the [ 265 ] means that now from now on, you will have a gradual recover.

And what we have seen is also obviously, that the order coverage is, first and foremost, on the right level now in quarter 2, but it's also a number of fleets that would like to secure their slots. And that is, of course, the balance to your point, so you keep the quality and the pricing discipline given the uncertainty. And here, we have also as we see it found the right balance.

But for us, it holds when it comes to the figures of -- and if we should come to this, I think it's another positive effect is that you don't -- will have a negative overhang into '27 because it will be the underlying demand balance that is actually driving it rather than some prebuys. And I think that is a very positive thing for the market and the market dynamics. So we feel it's throughout the logic actually all right. Take a follow-on. I think it's in the interest of everyone here. So please.

Maybe just a follow-up actually to Mats. Can you quantify the under-absorption costs you had in Q1? And how should we think about it in Q2 and going forward?

I mean, as we said, without giving any kind of exact numbers then, but you can see -- if you're looking at the kind of the bridge effect and the numbering on trucks, then it's a top 3 then on that. So it is a rather big effect and it was bigger than in the fourth quarter. And then going sequentially into the second quarter, like Martin said, I mean we are basically balanced with the current capacity then in May, meaning that this underabsorption is that kind of declining, then we're getting into a normal situation, so to speak, in North America starting May.

And I mean, when you look at the bridges, if you take the truck bridge, I mean, we try to have them in a reasonable hierarchy also when it comes to the positives and negatives as we are well aware of. So it's also some guidance.

Good. We'll take one more in the room. Hampus from Handelsbanken.

Thank you. Sorry for staying in U.S., but on your [ 265 ] outlook, you're increasing run rate in May. Is that another step then after the summer? Or is it initiative in 3 steps? That's my first question.

And second question is also in the U.S. relating to the orders, you were up 78%. Market is up 90%. We hear [ Freightliner ] international are kind of more guess on pricing. What's -- are you getting your share? Or are you holding back by being more conservative on pricing? Or how should we think about that?

Yes. I mean -- and I think when it comes to the order share, I think that is, of course, an important information, but still to take a little bit with the grain of salt also given the fact that it depends on different companies, and I cannot -- I don't know the other companies strategy on that.

But how ready do you ought to make order placements quite far out in time. And when we look at, so to speak, the reasonable step-up that we're doing now, now we -- we did it to Mats' point, 25%, 30%. So that capacity is what we have ready now and then obviously, as we go along and feel that the, so to speak, the underlying demand is supporting this level and beyond, we will, of course, have the opportunity to further go up.

What we can say at this point in time is that with the [ 265 ], it will be a gradual recovery and thereby a gradual ramp-up because -- we don't want to come too long -- too far out in the order guidance, so to speak. And that is related to your second part in order to also have the right balance when it comes to the commercial discipline also because -- or the commercial opportunity, I should say, also in a stronger market.

Gord. We move to the telephone line and to Jefferies, Michael Aspinall.

Yes. Michael here. I'll switch over to Europe, and I was a little bit surprised on that kind of upgrade to the Europe market guidance. So maybe you can just give us some context as to kind of what regions or end markets you see driving that? And what you kind of incorporate from a macro perspective, I see some of the European countries downgraded the GDP forecast recently?

Yes. Thank you, Michael, for that question. And first and foremost, I mean, there's no, I think, draw mine in the uptick. I mean we are talking about [ 5000 ] units, but [ 310,000], to your point, is still a strong market. But we're also coming into a replacement cycle when we had also very strong shipments for I mean, with the exception of [indiscernible], obviously about for a number of years. So it's also part of that dynamic.

Rather broad-based, I have to say, then you can say that it's a little bit lower the order intake in relation to lost years, quarter 1, but that was also not a very strong quarter. So comp figures are very tough to have here. So generally speaking, it's broad-based rather solid and it's supported by what we have seen now. But I mean, [ 310 ], good market but not extraordinary strong, so to speak, in relation to what we have in replacement, et cetera.

Good. We'll take one more question on the telephone line, and we're leaving the word to Klas Bergelind from Citi.

The first on the tariff guide of SEK 1.2 billion into the second quarter mark. I'm trying to understand how the new section to [indiscernible] from April 6 will now impact your construction equipment and buses. I guess construction and buses could see a sequential increase in the tariff cost while trucks to go down or provide an [ MSRP ] input credit. Is that the way to think about it? More color here, the split between the segments on the [indiscernible]. That's very useful.

It was a little bit difficult to hear them. But how much time do we have with -- starting with tariffs. But maybe to give kind of an overall view on where we are and the outcome for the first quarter, but also the guidance. So we had the SEK 1 billion for the first quarter, and then we're guiding for 1.2 billion in the second quarter. And if I heard it correctly, then the question is the kind of the distribution between the different business areas.

And the reason behind the increase of the net impact in the second quarter is mostly related to construction equipment actually cost. With the changes in Section 232 then from, I think it was April 6, that will also include excavators and wheel loaders, meaning that we would basically have the full product range when it comes to CE included landing Section 232 and that will increase the cost up. So it's on CE.

So we say that we had about 50% in the first quarter was related to CE of the tariff in the second quarter is probably somewhat more than 50%, and so that is increasing. Then we have trucks and I'm coming back to trucks a little bit in relation to the 2 other kind of moving parts with [ AIP ] and the Section 232 credits on the truck side.

But we also have buses with an impact of about SEK 100 million on a quarterly basis, that is related to the [indiscernible] bus system from Canada going into U.S., also a Section 232 question. But what you can ask yourself, and that's probably the question then. So will we see any kind of positive effect then going forward when it comes especially to the truck side than driven by the Section 232?

We have nothing included in the first quarter and not in the second quarter when it comes to credits on the Section 232, the [ 3.75 ]. We don't have anything included on any claims when it comes to the changes on the -- that will probably be positive then, but we will have -- we will play [indiscernible], but we will also have customers claiming money from us then, but net, probably positive. So it is probably an upside, but we need -- we need to kind of clear guidance in order to not the exact number. And secondly, also a kind of a clear guidance on when we can get the credits done, but nothing of those kind of positive items are included in the first quarter.

Good. We'll take one more on the telephone. We'll leave the word to Shaqeal from Morgan Stanley.

Shaqeal from Morgan Stanley. I'd like to ask about North America. It seems like we're in an unusual situation. PMIs are up, spot rates of risen orders have increased freight volumes and not meaning to be improving. So what are the customers saying? Is the reduced capacity enough to warrant replacing the fleet? Or are they placing these orders who view that trade demand improves in the second half of the year? And perhaps also wanting to secure build slots ahead of [ EPA 27 ]. And then we've heard some reports that customers are increasingly pushing for delivery later in the year. Have you noticed this also? And can I confirm that there are no penalties in case of cancellation?

No. But I think generally speaking, you did a good analysis yourself there about the different dynamics that are coming into play. We have had more or less over-the-road freight recession for quite many quarters, obviously. So there is a replacement need coming in. And then also, to your point about, I mean, also number of underlying effects on that, but both spot rates and contracted rates getting better.

And then there is probably also a certain element, not necessarily only on [ EPA 27 ] that is not significant as we see it, but more of also getting availability of the slots, both from a dealer perspective as well as a customer perspective because deal is also what we see in the inventory levels are on the right level. We don't have any excess inventories. We didn't need to have that, obviously, since we are building in North America as well.

And that's the reason again why from the order figures, it can look like that we are a little bit on the lower side of share in relation to the total. But I think at the end of the day I remember [indiscernible] said that we own the midfield, but we lose with [indiscernible]. So I mean, at the end of the day, I think order share is one thing. But at the end of the day is registrations that count.

And then Shaqeal, to your point, it's important to have the right balance in the order board because if you are taking it too far out in time, that is our view, then you need to introduce a number of rather complicated mechanism of the cancellation fees or what have you in order to not having a hedging into the board.

Good. We take a question from Mattias from DNB.

Mattias Holmberg, DNB Carnegie. I would like to go back to Europe, and I think that your raised market guidance is pretty clear. But I would be interested to hear about the ramping. I understand that you might have increased capacity gradually through the year. Or are you sort of at the level where you need to be? I know that this is a quite small revision to the guidance, but still, and then also on that topic, we heard from one of your peers that they had sort of canceled the plan, the capacity increase in Europe due to customer demand hesitancy on the back of what was going on in Iran. I take it that this is not something you're seeing given the raise guidance, but it would be interesting to hear any comments on this at all.

Thank you, Matthias. If anything, as we said, I mean, not a material change in that sense. But I think more importantly, that is supporting a rather good level and that is what we see.

As I said also in the introduction here or in the presentation, if anything, we are planning for some adjustment upwards. But that is well within our flexibility tools because with the current levels that we have both in [indiscernible] for Volvo, but also [ Borg ], we can also contain this type of flexibility moving forward. We did see also Mats you said that, well, also -- I mean, Europe did a very strong quarter 1. Good capacity utilization, good leverage -- and that was an important thing of offsetting, so to speak, the rather big other absorption that we did have in North America. So I feel that in Europe, we are in -- we start from a good balance, and we can support, so to speak, this upside absolutely during the course of the year. I don't know if you would like to add something?

No, nothing dramatic. And we have a really good flexibility both upwards and downwards in Europe.

That is a really strong machine that is going on for us in Europe, actually.

We move to Bernstein and Harry Martin.

The first question I had, I'm interested in your conversations that you've had with customers about the Iranian crisis and the rising fuel cost because the fact that you haven't seen any cancellations mean that the customers are just confident the crisis wouldn't be a long-term one or however long at last that they will be able to pass on higher diesel costs into their customers in the freight market.

Thank you, Harry. I think it is I mean I was in U.K. at the end of last week and talked with quite many of our bigger holders that are, of course, mainly the British base, but also doing quite a lot of hauling into Europe as well and in the U.K. I think it's a mix actually of the 2.

First and foremost, I mean, how it will play out when it comes to the duration, to your point, eventually, I mean, I think the bigger topic will be how that will affect, so to speak, the general economy and the general demand. And that was a conversation that we had there, and I have quite many customers.

And to your other points, even if that is coming with a certain time lag, especially when it comes to the more fuel consumption-based applications like long and regional haul, you have fuel clauses, obviously. But of course, there is a time lag of that as well, but that is not abnormal that it's fluctuated. Now it has been very dramatic in a short period of time, obviously. But I should argue that it's more the general economy and the sentiment there that will eventually affect the needle [ transporter ] there by demand.

Good. Karl Bokvist from ABG.

The first one, if I remember correctly, when you look at Europe, the Volvo Aero of orders or something was a material part of the order intake full year last year. And if we then think about North America, however, if you're willing to comment the first quarter or how you think about this year, the new products as a share of your order intake and what that effect could be even?

Yes. I mean, of course, we are -- as we have said, we have had the staggered approach, and we are not doing clean cuts, obviously. But for the sleeper segment, we will, more or less, as from now have the, so to speak, the full effect that it will be the all new [ VNL ].

It's -- we are phasing out, so to speak, the legacy on the sleeper -- as we said also, we are starting now with the [ B&R ] that is the second big segment for Volvo Trucks in particular, the regional hole now, and that will be mix during the course -- during the year on that side. For Mac, it is still a big proportion of that is legacy because what we presented now with the Mack Granite and Mack Keyston, the vocational segment that is very much on the core pieces of max volume that will come later this year.

So the absolute majority will be legacy. But more importantly, for Mack is really that we have got the machine to be more smooth. We have not had the same type of industrial capability, as I have alluded to in North America, and in particular, for Mack that we've had in other regions. And there we have seen considerable improvement. So we feel more confident now when demand is coming back also on the Mack side. And then again, I have to say that even if we don't talk so much about it, but the CE part of the [ cabover ] engine for waste collection and other type of construction activity, et cetera, is on very high volumes in relation to what it has been. So it's a mix.

Good. Thank you for that. We turn to UBS and Hemal.

Hemal Bhundia from UBS. I appreciate the color regarding the transport operator. Would it be accurate to say that when transport operators start to pass on these high fuel cost to end customers is when you possibly saw an upward inflection in order momentum? Or has it been relatively stable throughout?

Yes it's probably the same question. No, but I think, again, as we said, I mean this is, I mean, the more important to fix. So if I understood the question correctly, Hemal, this is the more important question. I mean, what will happen with, so to speak, price pressure if that continues for -- I mean the transport being one, it could be chemistry or chemicals and different things and thereby bringing inflation and thereby us, in turn, affecting the general economy.

I think that is much the bigger question then, so to speak, the immediate effect of fuel increases for the customers because they can pass it on in the fuel clauses. That is our review. Then, of course, I mean, it depends on what segment you are operating, how the contracts are looking, but more material volumes of our -- of our type of customers base have few clauses for sure. So [indiscernible], it's coming back to the general economy more.

Good. We move to Goldman Sachs and Daniela Costa.

So I wanted to ask regarding the 900 head count reduction you did in the U.S. and in Europe. This is despite, I guess, the better outlook in the increasing production. So I imagine it's more on the fixed cost side. Should we think about that as it was kind of a one-off in 1Q? Or is it part of like a more broader revisit of your fixed cost base? How should we think about savings and impact sort of fee margin from here? Maybe if you could address that.

No. I mean this is a kind of continuous ongoing process when it comes to kind of efficiency and savings. I mean, more of a kind of a continuous improvement. But -- this time, we saw that we have had a couple of changes when it comes to our way of working and also the organizational changes that made it kind of possible to do a little bit of a bigger exercise this quarter.

And like you said, it's affecting about 900 employees, and we had -- if you're looking at the one-off than about [ SEK 800 million ] on that one. But this will kind of continue going forward, but not to the extent that you saw here with restructuring costs and then it's something we're doing every day in terms of continuous improvement, though.

And if I may add there, I mean, just to give a little bit of flavor to it. I think also we announced a couple of I mean it was around Christmas that we are a little bit changing our way of working in our industrial and technology backbone with what we now call trucks technology and industrials and that is more regional based. And that has a structural impact of this.

But also the technology development, we are working in different ways. And we see that also in our commercial business areas, both in North America and Europe. So this is a structural, so to speak, improvement in order to further make sure that we have the competitive set to be clear and also to increase speed.

I mean the structure that we have had has really served us well, but we have also been [ rather stubborn ] and having that for 10 years. We are not super reorganizations all the time because that is causing a lot of confusion. Now it was the right time. More flow-oriented when it comes to our industrial backbone, regionalized agility and speed in order to make sure that we are fit for the future.

Yes. And you can summarize it as white collar kind of productivity efficiency, what's behind it.

Right. Maybe we take one more final question. And we turn to JPMorgan and Akshat.

Akshat from JPMorgan. A couple of questions, please. The first one, coming back to the conflict. Can you just remind us on your main sensitivities to energy costs or material costs on the P&L and what's the time lag with which this should impact the different business segments, please? That's the first question.

And the second question is on the truck margin. As we think about 2026 outside of fixed cost under absorption and U.S. loan [ call ] sales, what are the other key drivers we should look at in terms of improvement in that truck margins for the year, please?

I can start maybe on the margin or on the truck margin then. So if you're looking at -- if we take the kind of the first quarter as a starting point than sequentially. So what's kind of changed in that -- and in terms of the positive ones and what we can see is a kind of -- and this is a year-over-year effect as well. And so we see a declining kind of currency effect given that the development we have seen on currencies to the later part of the quarter. So that's one item.

Important, I mean, the North American production system that we talked about that we're starting to get in balance in May is kind of also positive from a sequential point of view than -- on the negative side, I mean, we don't know where it will end up if we're looking at kind of the Middle East and what's going on. But what's already now clear is that we will see increases when it comes to freight cost for an instance. And I mean that's something that we see fairly early then.

We're not seeing it so far, but it will probably come down -- and then it's kind of unknown the kind of general impact on the overall business cycle than from Middle East, but also a couple of the highlights then. And as we are taking up the guidance when it comes to the total market for Europe, we feel pretty kind of confident on Europe and our capabilities in Europe. So those are the kind of big ticket items.

And as you know, I mean, I fully agree. But I would also like to reiterate the strong development in services. And I mean it was 7% underlying in the quarter here. And when we look at, so to speak, the contract penetration, I mean, we can continue to focus on that and I mean, the portfolio growth that we have had. And then you should not only think about under absorption in North America, I think also, again, coming back to the better capabilities for Mack trucks in particular, should not forget that Mack has been hovering around 6%, 6.5% market share.

Mack is not a 6.5% market share company. It's an iconic brand with fantastic products, but we have not have the end-to-end capability. This is a year where I think we can take further steps in the journey as well. So it's as always, segment by segment. Latin America has been depressed. And we have guided for further deterioration. We have been holding up volumes well there anyhow in market share. Now we're guiding a little bit upward.

So again, average is the mother of nothing. So we need to continue to be very granular in our strategy execution in order to be successful. But I think it's a strength with a rather hefty underabsorption that we had in quarter 1 to deliver 10.1% on the trucks.

And go that [ you ] stressed service. I mean one data for 28% of the total in terms of the top line service for the quarter, it's a very, very strong number.

Good. On that note, we thank you all for coming and for tuning into the webcast. And with that, we thank you, and see you next time.

Thank you, everyone.

So welcome this morning to the Volvo Group Fourth Quarter Press Conference. Today, we'll do, as we always do, we will listen to the presentation by -- from our CEO, Martin, and then listen to Mats. And then we'll follow up with a Q&A session.

So with that short introduction, let me hand over to you, Martin.

Thank you. Thank you, Johan, for that. Also from my side, welcome. It was always special with the full year also report and of course, also in more detail quarter 4. So maybe then to get started.

As you know, we are still in a period with uncertainty in our key regions and in particular, for North and South America, where we have seen a continuation of cautious stance among our truck customers. Having said that, lately in the later part of the quarter and also in the beginning of the year, there are signs of stabilization and somewhat a recovery. And while Europe had a positive volume development in the quarter, volumes in both North and South America were lower in the quarter and are expected to be weak also in the first quarter of 2026. And that is, of course, related to the order intake that we had earlier in '25. But however, when it comes to the market forecast for the full year of 2026, we are revising our market forecast upward for North America as we do also for Europe, even if that is more marginal.

Despite many moving parameters, the group had a solid performance in the fourth quarter with a flat level of sales if you adjust for currency and the divestment of SDLG, an adjusted operating margin of 10.3% and good cash generation. Operationally, we continue to drive what we can impact ourselves, not at least by utilizing our flexibility toolbox to maintain balance between demand and supply, and very important where we are in the cycle to keep inventories at the right levels. Focus is also on effective cost control, commercial discipline and the service business. And services did have a positive development during the quarter with a strong underlying growth of 5% adjusted for FX and SDLG, showing that our customers around the world continue to utilize their vehicles and machines. And that is, of course, a very important feedback. And it also means that the fleet replacement rate eventually will have to increase. That is a given.

While having strict cost control, selling, admin, industrial, our priority in innovation and technology continues. At the same time, also in these areas, we are continuing to gradually adjust and to have a correct time phasing for our project and product portfolios. Having said that, there are segments that are moving quicker than anticipated with good growth prospects, both here and now and moving forward. The huge demand, a little bit surprising also for smart and not at least speedy alternatives for energy and power is driving the demand for Volvo Penta's power and energy solutions, not at least for data centers and AI factories. And with the recent launch in the beginning of this quarter of the gas-powered G17 engine that is building on our existing technology and industrial stack, meaning that we can benefit from scale immediately, that position will strengthen further. The same goes also for mining and defense areas where we will continue to increase focus.

So moving forward in these turbulent times for global trade, we focus, and I've already said that, on activities that we can influence ourselves. Apart from what I've said in terms of cost and commercial discipline and services, we continue to build on our strong regional value chains, combined with global capabilities. The world is moving from a more global synchronized system more in steps into a regional platform. And there, Volvo is well positioned.

So as we conclude the turbulent '25 with solid sales and group margin supported by underlying resilience, I would like to take the opportunity when we have the full year report to thank customers, business partners and colleagues for great cooperation. With uncertain business conditions, strong and close relations are -- they are always important, but more important than ever. And finally, the world will still need efficient and effective transport and infrastructure and energy solutions, and the group is well positioned to leverage these opportunities moving forward.

So if we look then into the fourth quarter, net sales declined to SEK 124 billion on the back of lower truck volumes, but it was flat development when adjusted for currency and divestment of SDLG. We delivered a solid result in these turbulent times, resulting in an operating income of SEK 12.8 billion and a growing operating margin of 10.3%. Cash flow amounted to SEK 19.3 billion, which resulted in a net cash position in Industrial Operations of SEK 63 billion. Return on capital employed in Industrial Operation at 25.3% and EPS SEK 4.73.

Moving over to volumes. Truck deliveries declined by 3% in the quarter to 56,700 vehicles with drag in North and South America that I've already said, offset by then growth in Europe. For Construction Equipment, deliveries decreased by 46%. But when adjusting for SDLG, the machine deliveries increased by 9%. And if you want to be even more granular, they increased by 10% for the Volvo brand since Rokbak back then previous Terex didn't increase as much. So 9%, excluding SDLG.

Electrification, still with different uncertainties related to the electrification, not at least when it comes to a number of the enabling conditions, underlying demand continues to be rather slow. But orders for fully electric vehicles adjusted for SDLG increased still by 3% and deliveries increased with 20% when adjusting for SDLG. This growth was mainly supported by a 15% growth of electric light commercial vehicles in the Trucks segment. That is not surprising. We are now more and more into the new Master also Renault Master for Renault Truck in that segment. And obviously, that is also a segment that will continue to grow with last mile deliveries, et cetera.

Coming over to top line and sales. If we start then with vehicle, machines. Overall sales of vehicle, machines declined 1% adjusted for currency and SDLG. Truck vehicle sales were down 4% on the minus 3% truck volumes, which is showing that price discipline also in this quarter in the softer market environment is working well. Construction Equipment adjusted for SDLG was growing with 13%, which was supported by sales of Volvo-branded machines in mainly Europe. Penta, 18% sales growth, FX adjusted, supported by North American data centers as well as the mining segment, also good demand in Asia. And Buses had a growth of 28% in the quarter, primarily driven by the Prevost brand in North America and by the Volvo brand in South America.

Top line for service. Our service business, as I said, continued to develop well, and we grew 5% in quarter 4 adjusted then for currency and SDLG. You will hear that a couple of times with positive development in all business areas. And these developments, as I said, and I think this is very important, are proof points of one part, our push for more extensive service offerings that have been alluded to many times before, not at least when it comes to service, repair and maintenance contracts, et cetera, but also then that our customers continue to utilize their vehicles and machines and that the installed fleet needs to be renewed sooner or later.

Buses were particularly strong with growth of 17%, driven by strong sales in Europe, Asia and Mexico. And Penta also continued to be strong with 8% and the same goes for VCE, excluded then SDLG, also had 8% growth. So the group's service business pacing at SEK 124 billion, 12 months rolling represent almost 26% of the group revenues, which is, of course, good in this part of the cycle.

On the Trucks side, very proud, of course, and maybe you did see also the press release yesterday, super proud for our Volvo Trucks colleagues here. Second year in a row, Volvo Trucks was the heavy-duty champion in the European heavy-duty market with over 90% market share. And we really see that also on the back of strong customer satisfaction and a very competitive offering. You did see the FH Aero here that has really been doing great strides into the market. So tremendous offer by the Volvo Trucks team and led by Roger and all the colleagues there, but of course, the complete value chain.

Volvo Trucks in North America, also important, delivered the first -- or the 125 all-new Volvo VNL to Highlight Motor Corporation, marking the largest order of the next generation of the all-new VNL in Canada to date. So now we are getting in also with this step-by-step with these volumes. And the first all-new Mack Pioneer was delivered to a customer in October, in the beginning of the quarter. And this marks, of course, a significant milestone for Mack Trucks, bringing the rejuvenation of the product range into the market.

Also in October, the Volvo Autonomous Solutions team and Waabi, the leader in physical AI, have successfully integrated the Waabi Driver with the Volvo VNL Autonomous redundant truck. With this integration complete, both companies together now are focusing on really deploying this and support broad commercial deployment.

Market environment, always very interesting. If I start with North America here, North American freight market, as I said, remains if you look at the figures and also the order intake during the bigger part of the year in recession. And so far into quarter 1, we believe that the North American will continue to be primarily replacement driven on the back of an aging fleet. The EPA '27 emission change will, in our view, only drive, if anything, a modest prebuy effect. So our current assessment of full year '26 is 265,000 heavy-duty trucks in '26.

And we have increased then the forecast with 15,000 units versus the guidance provided in quarter 3. And what we can say is that later part of quarter 4 and also in the beginning of this year, we are starting to see somewhat better activity level. If that is a sign that will prevail, maybe too early to say, but of course, there are a number of parameters supporting that.

The European registration pace continues to increase, and we have lifted the '26 total market forecast up to 305,000, which is then 10,000 units versus the guidance we had in quarter 3. Brazilian market contracted through '25, and we believe that the total market will continue to decline. We repeat and reiterate our total market of 75,000 for '26, even though that there are some movements in Brazil, not at least related to FINAME and the financing. And all of us that have been part of this for a while, we know that, that has normally a rather big effect. So let's see if that can support on the upside. But we -- for the time being, we reiterate that. And both for India and China, we are reiterating the market forecast as we had it also for quarter 3 or in conjunction with quarter 3, I should say.

Book-to-bill, the overall book-to-bill for medium and heavy-duty amounted to 94%, both for the last quarter and for 12 months rolling. We managed our industrial system well in quarter 4 and had a book-to-bill balance both in Europe and North America. And also, as I alluded to with the right levels of inventory, that is super important where we are in the cycle right now. And for North America, we kept the balance by also working with a number of stop days, causing an under-absorption that Mats will talk about. But that is the right thing to do now rather than to take a further structural adjustment downwards.

So on the back of the weak U.S. demand during the fall, we will also have some stop weeks for Volvo and Mack in the U.S. in the first quarter. And we take stop weeks, as I said, in quarter 1 rather than to structurally adjust for further -- adjust further downwards. And the reason is that we anticipate also partly supported now by recent order activity, a gradual recovery during the course of the year and in line with our full year guidance that we are increasing then, as I said, to 265,000.

In South America, we have been more restrictive with the order slotting in quarter 4, and that is also explaining then the book-to-bill of 80%. We wanted to ensure that we did sell out more retail inventories, and we now have a situation that is in good balance when it comes to the inventories. Africa, Oceania and balance. And in Asia, book-to-bill mainly impacted by, number one, strong deliveries in quarter 4 in combination with lower demand in Middle East and Indonesia in the quarter.

On the market share then, Volvo, Renault Trucks continued to deliver strong market shares for the full year. Volvo at 19% and Renault Trucks at 9.4%, giving a total of 28.4%. And Volvo Trucks then ended as a market leader. And on the battery electric side and despite that more OEMs are now delivering BEV solution, by the way, which is good because we need to accelerate that for Europe. Volvo Renault still holds a 39.1% market share combined for the year.

North America, Mack Trucks self-help activities, not at least to stabilize the supply chain paid off during the course of the year, and they have step-by-step now regained momentum and their share is now 8% for the full year and later part higher. And Volvo Trucks are back on the right track also after the introduction of the all-new VNL here. So we also did see better market shares during the later part of the year, but 8.5%, I think it was for the full year.

Brazil, Volvo remains market leader, market share of 23.2%. And Australia has been transitioning during the year from Euro 5 to Euro 6. We were ready with that rather early, lost market share when market were selling out Euro 5s, but we have seen also a good momentum during the later part of the year. So we expect that to stabilize.

VCE selected Eskilstuna. You're all aware of that in Sweden as a location for the crawler excavator factory for the European market. Capacity of 3,500 machines in the 14 to 50 ton classes. And these excavators will be built on a mixed model assembly line for all these models, but also for both electric and internal combustion engine. And the closing of Swecon acquisition, our retail partner and wholesale and retail partner, I should say, in Sweden, bigger part of Germany and Baltics is expected to close this week on January 31. And this acquisition will strengthen Volvo CE's market position further, not at least then in the very important service business.

Market forecast, similar picture, you can say, as truck. For North America, we are now guiding a flat market in relation to previous year. That is a 5 percentage point upgrade since the forecast in quarter 3. Same goes for Europe. Now we say 5% as midpoint of the market saw somewhat growth, and that is also an upgrade of 5 percentage points. China, as a matter of fact, same plus 5% as midpoint, 5% percentage growth. And for South America and Asia, flat, and that is no change in relation to what we said in conjunction with quarter 3.

Book-to-bill Construction Equipment reached 118% in the quarter, driven by both North America and Europe. North American demand is broad-based from the digital development, data centers, energy sector, onshoring of manufacturing as well as the possibility for customers to write off 100% of the machine value of the first year of operation. In addition, refilling of inventory at dealers given the better outlook now and where also dealers would like to have the right type of capacity to deliver to the market. And the European demand is encouraging with the larger markets such as Germany, U.K., Sweden now gradually coming back as well as the fact that dealer inventories are clearly moved into customers' operations. And also the other markets are supportive with largely then positive book-to-bill.

For Buses, the transition towards electric vehicles in city traffic continues in quarter 4. Just to mention one very important example. Volvo Buses secured an order from Vy Buss for 73 electric buses that will operate in the city of Boras, from April '27. The order comprises city and intercity buses, including articulated buses. And just as a small anecdote, they will also be produced in Boras. So even if you are talking about regional value chains, maybe that is a little bit of an expiration of having that full circularity in the same city, but it happens to be there, we are very proud. And book-to-bill, 91% in the quarter, 98% that is more relevant for the bus business, as you know, with rather long lead times. So that is a healthy and good book-to-bill. In the quarter, somewhat lower was on the back of somewhat lower demand in markets such as Brazil and Mexico.

Penta, as I said, it's interesting to see the rather high -- or I should say not rather, but high activity level when it comes to the power generation and industrial segment. Launched its first gas engine, both natural and biogas for sure, to strengthen the lower emission power generation offer. This will further strengthen Penta's position to meet the global energy demand across many segments and not at least data centers and AI factories. And again, that I think is interesting now with more and more of the customers in this space wanted to have alternatives for lead time and volumes. And with the control system capabilities that you have today to really bring in more engines with the right type of capabilities is a very efficient way of doing it for lead times, for cost and for efficiency.

And the Volvo Penta IPS Professional Platform, the biggest now pod for propulsion systems, the biggest IPS, which was launched in '25 and opted for commercial use, but also for big yachts has made strong inroads in the yacht segment and very, very well received with several OEM now placing orders. And Volvo Penta has a positive demand momentum. Book-to-bill reached 109% in the quarter and 102% 12-month rolling.

Financial Services, finally, the portfolio continued to grow with a stable new retail financing. It doesn't look like it's growing here, but that is -- I mean it's growing, adjusted for currency. And the sound portfolio performance was maintained, although increased delinquencies and higher write-offs. But if you see where we are in the cycle, I should argue that we have a stable and good situation well under control here. And the penetration rate full year '25 came in on a solid level of 30%. And also what is positive to see is the focus that we have had also on insurance offer from VFS working together with other business areas and the group brands to enhance the total offer for our customers.

So by that, I will leave the word to Mats Backman, our CFO, to present the financial figures. So please, Mats.

Thanks, Martin. So looking into the fourth quarter financials then, and we are starting off with the group net sales. So net sales decreased by 2% on a currency-adjusted basis compared to last year. Vehicle sales dropped by 4%, mainly due to lower volumes on trucks, while service sales increased by 4% currency adjusted with contribution from all business areas. European volumes increased, which led to an increased sales by 10% currency adjusted, driven mainly by Trucks and Construction Equipment. In North America, FX adjusted sales decreased by 8%, driven mainly by Trucks, while sales were higher for both Buses and Penta.

In South America, net sales decreased by 18% currency adjusted compared to last year, and this was driven by lower truck volumes. In Asia, net sales decreased by 10% adjusted for currency, driven by Construction Equipment and the divestment of SDLG. Excluding SDLG sales increased with 21% in Asia. Other regions experienced slightly increased sales, mainly driven by Trucks and Buses. Overall, FX effect was negative with SEK 11 billion due to a general appreciation of the Swedish krona. The main driver was the U.S. dollar depreciating 13% versus the SEK.

The adjusted operating income for the group was SEK 12.8 billion with an adjusted operating margin of 10.3%. In Q4, earnings were again supported by the positive development of service business, continued lower operational expenses and improvements from our joint venture business. The tariff cost increased during the fourth quarter with a net impact for the group of SEK 800 million, and we expect net impact from tariffs of about SEK 1 billion in the first quarter. In the fourth quarter, we continue to see higher underlying material costs in North and South America, and we had under-absorption costs in the U.S. manufacturing system on the back of lower demand levels. The net R&D capitalization effect in the quarter was positive at SEK 1.5 billion with a year-over-year effect of SEK 800 million. FX had a negative impact of SEK 2.1 billion in the quarter, driven by the strengthening of the SEK.

In fourth quarter, cash flow amounted to SEK 19.3 billion. The cash flow contribution in the quarter was driven mainly by strong inventory management, partly hampered by continued high level of investments. Return on capital employed trend declined to 25.3% on a rolling 12-month basis. And the net financial position amounted to SEK 63 billion with support from the cash flow in the fourth quarter.

Net sales for Group Trucks decreased by 3% currency adjusted, driven by lower volumes, partly offset by positive development of our service business. Adjusted operating income amounted to SEK 8.1 billion with an operating margin of 9.5%. The lower adjusted operating income and adjusted operating margin were mainly driven by lower volumes in North and South America, higher material and tariff costs, partly offset by lower operational expenses together with good development of the service business and joint venture performance. And currency had a negative impact of SEK 1 billion in the quarter.

For Construction Equipment, net sales decreased 8% FX adjusted. Adjusted for FX and the SDLG divestment, net sales increased by 12% in the quarter. Adjusted operating income reached SEK 2.6 billion with an operating margin of 13.9% Product mix with less SDLG from the divestment in the third quarter and more heavy machines together with positive development of our service business were the main drivers behind the improved performance. In the quarter, the tariff continues to building up and had a significant impact on the financial performance. The volumes were lower versus same quarter last year, driven by the SDLG divestment and currency had a negative impact of SEK 700 million in the quarter.

For Buses, FX-adjusted net sales increased significantly by 26%, driven by higher deliveries on both buses and services. Buses delivered another strong quarter with adjusted operating income of SEK 683 million and 9% in margin. The result was supported by higher volumes with continued good price realization together with service business performance. In the fourth quarter, the tariff costs were building up and had a negative impact on the financial performance and currency had a negative impact of SEK 113 million in the quarter.

Penta net sales increased significantly by 16% adjusted for currency, which was driven by more industrial engines and the service business. Adjusted operating income amounted to SEK 608 million with an operating margin of 11.9%. This was again on the back of strong volume development for both engines and services despite unfavorable market product mix and higher freight costs. Currency had a significant negative impact of SEK 337 million in the quarter.

And then looking into Financial Services. The credit portfolio adjusted for currency increased to SEK 256 billion with a rolling 12-month return on equity of 10.4%. Portfolio performance continued to be good with delinquencies and write-offs under control. The adjusted operating income amounted to SEK 889 million, impacted by increased credit provisions, but supported by the portfolio growth. Currency had a negative impact of SEK 84 million compared to same quarter last year.

And then finally, looking into a summary of our forward-looking guidances in the quarter and starting with FX. Based on the currency rates and 2025, we expect a negative first quarter effect from transaction and translation of about SEK 2 billion. We expect R&D net capitalization at approximately SEK 3 billion for the full year 2026 with a year-over-year negative effect of about SEK 1 billion. And finally, the tax rate that we estimate to 24% for the full year 2026.

So with that, I'm leaving for Martin to summarize 2025.

Thank you, Mats, for that. So let's go to that. We are closing also the full year 2025. Just a few comments on that. We can summarize the year with close to SEK 480 billion sales with vehicle sales declining 5% FX adjusted on -- or vehicles and machine sales declining 5% FX adjusted on 8% less truck and 8% less CE volumes with -- and on top of that, which I think is important with also several production adjustments throughout the year back and forward and across regions. Another important piece of resilience is services that did grow 2% FX adjusted. And as I said, our own activities, but also that customers are continuing to utilize the equipment.

Gross income margin was at 25.3% despite volume decline, certain price pressure, even if commercial discipline was good and tariff headwind. And adjusted operating income amounted to SEK 51 billion with a margin of 10.7%. Cash flow at SEK 22 billion for the year and the return then on capital employed came in, as I said, on 25.3%. And the Board of Directors then proposes an ordinary dividend of SEK 8.5 and an extraordinary dividend of SEK 4.5 for approval at the Annual General Meeting in April later this year.

So by that, we end the presentation, Johan, and I think you will lead us through the Q&A session.

Right. Thank you, Martin. Very well. We will do, as always, please concentrate on your most important question. And we have a number of guys on the telephone line, but we'll start in the room, and we'll start with Bjorn from Danske Bank.

I don't normally say this, but congratulations, solid execution in the quarter. It's about time to say. Yes. On North America, again, you're talking about a replacement-driven market and also a minor EPA-driven prebuy. But I mean, isn't this really about, I mean, increased visibility? I mean, tariff situation is better visibility, EPA, much more better visibility than previously, and we have record high truck age in North America. I mean gut feeling isn't it, this could be a really good year in North America. And with that backdrop, maybe a comment on what to see about the under-absorption of fixed cost in North America throughout the year.

Yes. If we start with your comment and analysis regarding North America, I think it's absolutely correct. If we can continue to see that what has been put on the table now in terms of tariffs from different regions, flows, et cetera. And on top of that, the EPA '27 clarification uncertainty, I think that is very, very important for our customers. The cautious stance among customer has rightly so been what will happen, how does it look like, et cetera.

And we see that also a little bit in the volatility in the order intake because, of course, some of the bigger fleets, depending on where they are sourcing, et cetera and said, okay, we place orders, but we will also have a discussion later on, so we give -- so I fully agree. I think this is very, very important if that will continue with a certain level of stability on top of it with average fleet age, not at least that we haven't had an on-road, almost freight recession for a couple of years now. There is fundamentals underlying that is supporting that.

Then it's more the time phasing to your point. And as we said, if we look at the order intake during '25, we had more of a hammock situation in quarter 2, quarter 3 that was reflected in quarter 4. We said we will be brutally disciplined on our balance in inventory because we know also in North America, if you don't have that, there is an endless discussion about the inventory. I think we managed well. So we had an under-absorption already in quarter 4. And as we guided for, quarter 1 is still there because that is more reflected later part of quarter 3, beginning of quarter 4. But then we see already now a more positive situation for later part of -- really late part of quarter 1 and beginning into quarter 2. So there we start to see that it's more coming the effects that you're alluding to, Bjorn.

And if anything about the under-absorption, I can -- I think it's okay, Mats, give you a guidance that if anything, a little bit higher as we expect right now under-absorption in quarter 1, even if -- I think we managed it well anyhow in North America for quarter 4. But if anything, to be a little bit more granular. But again, right thing to do, muddle through now, keep the eyes on the ball, do what is right because the market will come back in North America. And then you should be on the right level when it comes to capacity and inventory.

No, I think -- and it's like you're saying, when it comes to under-absorption, the effect -- we had an effect in the fourth quarter, and that was visible on the slide I had on the operating income. And given what Martin talked about with the kind of stop weeks in the first quarter. And then, I mean still being dependent on the order intake earlier in the fourth quarter, and then we see a gradual pickup from the other, but still under-absorption in the first quarter, yes.

We'll take one more question in the room from Agnieszka from Nordea.

I have a question to Mats. Could you please update us on your CapEx plans for 2026 and also going forward? And maybe if you could provide also the status update for your Mexican factory? And do you still plan to have an in-house battery production or how you feel about these plans?

I can start with kind of the capital expenditures. And if you take a couple of years view on the CapEx, we are on a higher level, and you saw that for 2025 and especially driven then by the investments we are doing in Mexico. And in terms of timing, we will still have some of the investments in Mexico also in 2026, meaning that we will still be on an elevated level when it comes to CapEx, but I would say slightly lower comparing to what we have seen in 2025, and it's starting to normalize then, but still somewhat higher than driven by the bigger projects that is ongoing there.

But I think also, I mean on that note, we have also been leaning into a number of bets now when it comes to the retail business, which I think is super good and interesting. Volvo Trucks did it in Australia. We have done a number of smaller things and then now Swecon, for example, of course, that is also -- but what I like about that is also really continue to drive strong resilience for us, service business. But also competitiveness because at the end of the day, our business to have the total offer close to your hands in a more and more world of hypercompetition, I think, will be crucial and critical.

And then battery production, I think both when it comes to technology, time phasing and maybe what are the right levels of scale, a lot of learnings have been done. So if I may a little bit take -- maybe you don't start to build a 72 whole golf course directly, maybe start with 9, even a pay and play, et cetera, et cetera, and then you move along. And a little bit same here with technology development, what is the reasonable scale, et cetera.

So 2 things. We will need that for different reasons. I mean it will be -- I mean the battery [ act ] and other things and electrification will come and will be there as a very important part for sure, for many different reasons, not at least for competitiveness, by the way. But it will be a time phasing, both when it comes to when will we start and how will we ramp it up because how you are thinking about cell and module and pack manufacturing today is rather different than only, let's say, 5, 7 years ago, I should argue. So we have learned a lot being close to our partners here.

Good. I think with that, we move on to the telephone line, and we have Klas Bergelind from Citibank. Can you hear us, Klas? No one on the line there.

Then we continue in the room. Hampus from Handelsbanken.

Two questions for me. When do you think you will present the EPA 2027 truck given that that's a big decision-making on fleets? And is it the reason for you guys to maybe present it earlier this year with price increases to see how tough we look for the fleets?

Second question is related to tariffs. If you could maybe model a bit for the full year given the discount system we're seeing in 232?

I can maybe start with the tariffs then. I mean like we said, about SEK 800 million in the net effect in the fourth quarter. And we are -- what we foresee is about SEK 1 billion in net effect in the first quarter. And then we have the different business areas are kind of going in different directions now then because for -- if you're looking at Buses, for instance, then you have a tariff kicking in with Section 232 then with the business we have going from Canada into U.S. So there, we have an increase then that will kind of gradually -- it will gradually increase.

And the same goes to some extent for Construction Equipment as well then with -- I mean the Section 232 is kind of helping the Trucks, but it's not helping the Construction Equipment. When it comes to Trucks, I mean, we are still building up, but what we foresee is kind of a decrease then going in maybe to the second quarter sequentially. But to make any guesses beyond the first quarter in this environment, I find pretty tough then. But with what we know right now, it's the SEK 1 billion in net effect in the first quarter.

But I mean how the play is really there. I mean of course, now -- and coming back to Bjorn's question also about stabilization, I mean, if that is continuing to be stable, as quarters go along, I mean it's an absolute situation with tariffs and it's a relative situation with tariffs, obviously. And eventually, it needs to be compensated, obviously. And there, as we see it on the Trucks side, it is an opportunity basically.

Then you can say also that we had already before this in pipeline plans for CE, both when it comes to wheel loaders and excavators for production in the United States. So that is ongoing so we saw basically.

And then when it comes to the presentation of -- yes, we will do that, obviously, because it's coming in 1st of January. And it will be -- yes, we will present it during the year here. So we will have a good visibility. I should argue that it's not -- I mean, given now the clarity of this and not at least when it comes to the life length or the life cycle demands, and you can say not relaxation, but clarity on that. I should argue that it's a more reasonable step for the customers also. So that's the reason why we don't judge, so to speak, the prebuys to be significant in relation to previous events when you have had a much bigger step basically.

Good. Now it seems that we -- still no connection with Citi, all right, then we continue with the DNB Carnegie, Mattias?

I'm interested to hear more about the U.S., which we've already talked a lot about. But given your sort of relative advantage versus some peers in the U.S. market, I would have expected to -- and also adding that you have a very strong lineup now with models, both for Mack and Volvo. I would have expected to see a stronger market share on the order intake in Q4, in particular in light of the big order number we saw for December. So perhaps could you elaborate on, is there anything in particular going on in that quarter competitive perspective that sort of explains the lower relative market share here?

Yes. I think -- I mean if you look at the order intake, I fully agree. I mean December, in particular, was very strong for the industry. I think it was north of 40,000, 42,000 or something like that. And I mean I think it's exactly related without knowing, but it is also a way of securing deals, et cetera, because as we go along, the market will be what the market will be, where are you producing, what do you need to do when it comes to your price realization, et cetera.

So -- and so I think it's a little bit distorted by almost like preordering, to be frank. We feel rather good with what we have in order intake in quarter 4 because I think we had 11,500, give and take now, Mattias. And if you think about it, that is the incoming then for later part of quarter 1 and quarter 2. And that is basically supporting a level of like 200,000. If we are talking about stable or somewhat uptick in market share, that is supporting a level of 260,000 to 265,000. And then we are also saying that we are thinking about a gradual recovery.

So if we are not completely out of bounds when it comes to how the market will come or develop during the year, I think the order intake that we have had is in balance with what we see. And again, it has been super important for us to have demand, supply inventories in control because if you are starting to get too much of disconnection there, it's also dangerous. But I agree to what you say. I think it's a little bit of, yes, possible preordering.

Good. We continue in the room, and we have Karl from ABG.

On Europe, which seems to be improving a bit. Is it -- you talked about it a little bit during the presentation, but is it due to any kind of asymmetrical country mix or because you actually see the European truck market genuinely improving here?

Very good question. No, I think it's rather broad-based, to be frank. And so I mean we have, of course, a lot of contracts with our European organization that's rather broad-based. It is, so to speak -- and we did see it already. I mean we have alluded to it a little bit already in quarter 3 reporting. We did see it, volumes came in higher in deliveries and in orders for quarter 4. I should argue that it continues now in the beginning of the year.

We don't see -- I got that question from -- I get that question from time to time, I mean how much is defense and energy and infrastructure and playing in. And I mean the investment programs, not too much yet, which I think is also another support for Europe for the years to come here. But this is more based on, to your point, Karl, I mean the underlying market as we know it, that a little bit the same dynamic that we are somewhere expecting also for North America, but a little bit earlier here. And I mean we are guiding for 305,000. And I mean it's a rather good market, I mean to be frank, so...

Yes. Right. Good. There seems to be some disconnection with the telephone lines. So we are free to continue in the room if anyone want to continue. Karl?

Otherwise, they can text it to you.

Yes, they can.

They can do that. Can send an SMS to you. Sorry, Karl.

Yes. No worries. Meanwhile, I'll switch to Buses. I'm not sure about the competitive landscape in the textile city of Boras. But when we think about the electrical transition on Buses, which seems to have gotten going a bit faster than Trucks, how do you think about the competitiveness there? How you position yourself in terms of performance, price points compared to, let's say, non-European competitors, for example?

No. I mean we see that in quite many of the deals around the globe, not only in Europe, not even only in Boras, by the way, but around the globe that in many deals, we are meeting more or less 100% Asian competition, Chinese primarily competition in the tenders and the bigger deals. And as Volvo participating, there are, of course, I mean differences here. But not at least when it comes to fully electric offerings, we have been early out.

I think what is promising to see, obviously, we are working, of course, a lot with our competitiveness when it comes to, I mean cost and the right type of execution and everything like that. But even more important is that I feel that -- and that is encouraging for other electrification patterns that we see is that, I mean the city side of buses have been doing this for quite some time now and are more and more mature to really take the full equation into account. The famous TCO, the famous life cycle equation, both when it comes to revenues and cost and uptime, et cetera. And I think that is playing in our direction, not saying that the others are not doing a good job. We have the biggest respect for that.

But I have to say that if I look back on '25 on Buses, and maybe when I stood here 1 year ago, I should say that I'm more optimistic today than I was 1 year ago. So I think we have found our place. We know how to -- where we can, so to speak, be successful and where we cannot be. In some of the deals where it's a pure CapEx upfront play, we are not normally successful in that because we have another business model when it comes to uptime, fuel efficiency, safety, not at least and cybersecurity.

There is a question from [ Jefferies ], texting in here. So the question is on -- first, on the group functions and other, what are moving the lower cost base there?

I would say generally 2 things, I mean given the big picture and the improvements we have seen. So first of all, as you have seen overall on the operating expenses, we have lower costs, and that is going for the group functions, especially. And secondly, as you also probably know, we have some businesses, it's group functions and other. And we have a bus business called Nova Buses that you probably recall, and that has been a turnaround if you're looking at this year where they have done really, really good, meaning that we have been going from loss-making into profit throughout the year. That is also contributing to the group functions and other. So those are the 2 kind of main items looking at the delta on that one.

Right. And also from [ Jefferies ], they wonder whether the Mexican plant will have any drag on EBIT margin in 2026, given that we are sort of ramping during the year.

No, I mean we have material.

So it's kind of a slow, gradual ramping, so not material.

And we think that will come in handy, by the way, also talking about the recovery because we are anticipating then a gradual ramp-up, rather small volumes to trim in Mexico during the later or you can say, second half. And so...

Then we will move on with -- from our -- let's see here, one question -- we need to be quicker. Bernstein -- wonders. And we have Harry Martin from Bernstein. He wonders, given the EPA '27, et cetera, and the guidance for North America, how do you think about pricing? Will price on trucks still be tight in 2026? Or will that sort of be possible to push price to some extent in '26?

I mean -- and you can add to this. I think first and foremost, and that you can see also, I mean in top line in relation to volume, et cetera, I think the commercial discipline in the group, but also part in the market as we can judge it has been better than, if I may say, so normal in our industry, which I think is a good thing. I mean better flexibility, generally speaking, in the industrial systems, higher share of service, et cetera.

So pricing better. Then there's no secret, obviously, that, I mean supply/demand and normally, when we see a recovery, when it really takes off and you're gaining momentum, there can be a squeeze. And then, of course, in that part of the cycle, there are always opportunities. When will that happen during this recovery, given that we say that we are rather -- we are really anticipating a recovery, but still a gradual one during '26. So let's see. But the dynamic will be there when that starts to happen, obviously. I don't know, will you say something more?

No, well said.

Thank you, Mats.

Next question is coming from London from Daniela at Goldman Sachs. He wonders some of your peers are talking about autonomous commercial start in 2027. And where are you guys on that?

Yes. I mean as I think it's familiar, we are working -- I mean when it comes to autonomous commercial start, I think in that case, Daniela is meaning, I mean, the hub-to-hub public sort of on-road segment in U.S., right? We are already in commercial operations for confined areas, et cetera. And as we speak now, we are running fully autonomous lanes in U.S. together with our key partners there. We have built up also terminals in order to host this and make it possible. Still, it is with safety drivers, but now we are getting really close to this, maturing the whole system. So this is without being too exact, but this is not too far away.

And even to say to Daniela, that I think you are in the right neighborhood, which I think is a significant opportunity for the industry on that happening. Because if you think about it with automation and robotization, as an old production engineer or it was a long time ago, not old, but I remember that during the '80s, in particular, in the '90s, it was an over automization of the factories, and an over-believe in things.

And then you really found, so to speak, the right type of balance on where should you have robots, where should you have CNC machines, where should you have different type of place and pick and smart, so to speak, control towers, et cetera. And where should you have a human interaction. I think for the hub-to-hub concept, it's a very good way of looking at the same journey that if you can really do it for hub to hub with terminals along the road, you will take out a rather big part of the equation that are bottlenecking, so to speak, logistics today. And that's the reason why I'm very -- I mean very optimistic about that development.

There was also a follow-up from Daniela regarding the fleet mix. We spoke about having more fleets into the mix in 2025. Do we see that, that continues also into 2026?

Do you want to say something?

No. You can start.

No. I mean if you look at where we are in the cycle, I should always argue that when you're getting -- start with Europe, when you're getting a little bit more of a broad-based recovery, then all actors are coming into the market. Because obviously, if you are -- I should say, in that respect, I mean a smaller midsized fleet, you are even more cautious about, okay, how should I think about my replacement, et cetera. So I should argue if we continue to see that more broad-based recovery that we talked about in [indiscernible], the mix will be more evenly distributed and not leaning because it's more in the down cycle where we normally have an overrepresentation of fleets.

And maybe to add, and I know that Daniela is normally on top of the kind of the revenues per truck as well and looking at the kind of the development over time. And I think if you're looking at specifically at the fourth quarter, it's also a question of mix if you are looking at the revenue per truck now with a higher share of LCVs, light commercial vehicles as well as a geographical mix with less North America. So I think that is also important to say.

Then Klas Bergelind from Citi, who was first on the line here, but he has a question here. He asks, in Q1 2026, will you get any benefits from the Section 232 MSRP credit?

No. We see it probably gradually into the second quarter rather than the first quarter.

Right. And also in Europe, you talked about better demand in U.K., Sweden and Germany in Construction Equipment. But how about improving demand for Trucks, at a country level, what countries are you seeing any improvements?

No, Mats -- I mean -- and partly, we got that question here. I mean rather broad-based and also certain signs that more of Central Europe is moving that has been a little bit slow, not at least Germany, et cetera. So rather broad-based, which I think is good. And it's also related to where we are in the replacement cycle, et cetera.

Right. I think we are ready to close unless there are any further -- Mattias?

Maybe a bit premature, but you alluded to already have thought about adding capacity for construction equipment in the U.S. before the tariffs. Could you give us an indication of if this could sort of fit within the current CapEx program for construction equipment or sort of the potential timing? Are we talking a year, 5 years and potential magnitude of investment?

Great question. I mean you can say that it's in the current because, I mean one of the advantages we have is that we have rather big from [ SA ] or real estate facilities in Shippensburg that came along with Ingersoll Rand acquisition back in the days. And then we have reshuffled and the industrial footprint, but we see clearly that we need that for wheel loaders and excavators to start with. And thereby, we have a good starting point because they are made for that type of equipment, and we can utilize, so to speak, the real estate.

And we were there actually during the fall, looking at that. So I think it's well incorporated, and we will start at the -- during the later part of this year for wheel loaders and then gradually move in, so to speak. So I think that is an advantage that we have, that we have, so to speak, rather good facilities, both for powertrain and on the Trucks side and also then on the Construction Equipment side that, if anything, has been underutilized from a square feet in that case standpoint.

I'll take one final one from UBS. So we made sure that we covered all the lines here. We guided for SEK 1 billion headwind from tariffs at the time of Q3 for Q4. We came at SEK 800 million. What was the difference versus what we saw in Q3?

We said about SEK 1 billion. So I don't think it's not a huge difference on that one. But I mean to a certain extent, timing. I mean it's difficult to see if you see the accounting effects when you are building up inventories and having a positive impact from that. So I would say more kind of a timing.

Timing through the balance.

Yes. And you can always say exactly, I mean exactly where do you have all the inventories when you start and now we are getting more and more a steady-state situation. On the other hand, we will work on the other side of the net effect also with commercial conditions as well.

Absolutely. Right.

We covered all the banks. We're on time. So thank you for coming. We'll see you in a quarter.

Thanks a lot, everyone.

Thank you.

So welcome to the third quarter press conference from the Volvo Group. Today, we will listen to our President, Martin Lundstedt; and to our CFO, Mats Backman. And then we will follow up with a Q&A session. So with that short introduction, I hand over to you, Martin.

Thank you, Johan, for that. And also from my side, welcome everyone. It is encouraging to see, by the way, the new VNL here. You did see that -- maybe you did see Johan, most here in the studio, by the way but for everyone listening into the web, I think you did see the VNL. Now when it's a little bit turmoil situation in North America, it's encouraging to know that we have a great product range coming out when the market is turning back basically.

Yes. But coming to this quarter then, we are in a period, as you know, with weaker demand in our key regions anticipated to some extent but also, of course, some other factors. And especially then for North America, with a high level of uncertainty and wait-and-see mood among our customers. But I have to say, despite the many moving parameters that we see right now, the group had a solid performance with an adjusted operating margin of 10.6%, showing a good earnings resilience also with these moving parameters. Here and now, we focus on what we really can impact in the group. We have adjusted and will continue to adjust our operation, utilizing the toolbox that we have for volume flexibility. We have applied strict and effective cost control, have remained firm on commercial conditions and continue to drive our service business that showed a positive development during the quarter with underlying growth of 5% adjusted for currency and the divestment of SDLG.

That is showing that our customers around the world continue to utilize their vehicles and machines, which means also that the fleet will also need to be replaced eventually also in North America. We have generally good traction also to adapt cost across the board, selling admin, industrial while we, at the same time, are maintaining a high priority on innovation and technology. But also in these areas, we are continuing to gradually adjust given the situation, for example, for the transformation with slower demand in for example, electrification and thereby, we are time facing some of our activities.

Specifically also for volume flexibility, we are in good balance for almost all markets and business areas. The only exception is group trucks. North America and partly, I have to say during the quarter also South America, where we continue to have more costs in relation to the current demand. Firstly, then, if you go to North America, there is a wait-and-see mode, as I said, amongst customers to place orders given the current uncertainties. We are, therefore, continuing to adjust production levels in addition to what has already been done during spring and summer here, but also other cost to minimize the under-absorption going forward.

And secondly, of course, even if that is a good timing from another perspective, we still have some effects from the continuous ramp-up of the all new on-road ranges for both Volvo and Mack where extra resources still are needed. But I think it's important also in a period that we are into now to reiterate that even if the situation in group trucks North America affected and rather heavily than the global group trucks margin negatively yet another quarter, we have high ambitions for North America. We have a strong platform to maneuver from now, and the continuous ramp-up of the new range is important, so we are even stronger, both from a capacity and a product range standpoint when the market comes back, and it will come back. So don't worry about that. Leverage from volume in that particular market will then be crucial, obviously.

Moving forward, in these turbulent times for global trade, we focused, as I already said, on activities that we can influence our ourselves. We continue to build on our strong regional value chains that in today's landscape is, of course, a strength, combined with global capabilities and also then that combination to mitigate the effects from tariffs and other type of uncertainties. So as we conclude the third quarter with a solid group margin and resilience, I also would like to say a big thanks to customers and business partners and colleagues.

So if we summarize the quarter in figures, net sales declined to SEK 1,100 billion on the back of the lower truck volumes. It was a year-over-year drop of 5%, but actually an increase of 1% when adjusting for currency. We delivered a solid result in these turbulent times. Adjusted operating income of SEK 11.7 billion and operating margin of 10.6%. Cash flow was negative at SEK 1.7 billion, which resulted in a net cash position in industrial operations of SEK 45.4 billion. Return on capital employed at 25.2% and EPS was at SEK 3.71 per share then.

Moving over then to the volume development. Truck deliveries declined by 4% in the quarter with lower volumes in North and South America, while deliveries in Europe improved. As you know, we've had a very strong order intake, and we needed also to push that through now. So good work in Europe here. And for Construction Equipment, deliveries decreased by 4%. But when adjusting for the divestment of SDLG, machine deliveries increased by 14%.

In Electrification, with the different uncertainties, both as regards to cycle, but also the enabling conditions and the rollout of them, underlying demand continues to be slow in the field of electrification. Orders for fully electric vehicles decreased with 4% and adjusting for SDLG again, order intake declined by 13%. Deliveries increased with 27% when you have adjusted for SDLG, and the new Renault Master had a significant positive impact in the truck segment.

So in summary, despite the slowdown, we continue to push here, obviously, which is, for example, reflected still in our high market shares for medium and heavy-duty trucks with more than 50% in Europe, even that we see now peers are coming in also with different type of products. But however, as we and the industry have the products and solutions ready, as you have seen for quite some quarters now, it is more than overdue for policymakers and other key stakeholders to push for the enabling conditions such as charging infrastructure and actions to stimulate demand in these sectors.

When it comes to the top line for vehicles or vehicle sales development, the overall figure then for vehicles and machines declined 1% adjusted for currency. Truck vehicle sales were down 3% on the minus 4% truck volumes, which is, even if it's an average proof point, but still a proof point of our price discipline also in this softer market environment. Construction Equipment did grow with 9%. And when adjusting for SDLG again, the growth was 17%, which was supported by sales of Volvo-branded machines in mainly Europe.

Volvo Penta's 11% sales growth was supported by North America and Europe in both the Industrial and the Marine Commercial segments. Service sales, as I alluded to in the beginning, a positive development, and continues to develop well, as I said, with a growth of 4% adjusted for FX in quarter 3 with a positive development in all business areas. But if we also adjust then for SDLG, growth was underlying 5%. And these are proof points of our push for more services per unit, of course, installed unit, but also that our customers continue to utilize their vehicles and machines and as I said also before the installed fleet needs to be renewed sooner or later. Penta was particularly strong with 17% growth on the back of increased service penetration in the industrial segment. As you know, that we have been growing the Industrial segment over the last quite some years now. And of course, now the installed population starts to be rather material, but also strong sales to OEMs for Volvo Penta.

The group's service business pacing at SEK 126 billion, 12-month ruling, and represented over 25.5% revenues, 12-month rolling, actually 28% in the quarter, which adds stability and earnings resilience. As per September 1, and also the SDLG divestment was concluded and finalized. And I would also like to take the opportunity to say it was done in good faith between the two partners. It has been a successful journey. And now we wish the Lingong Group and SDLG continues good success with their business also in the future.

When it comes to truck news, Euro NCAP's first-ever safety test for heavy-duty commercial trucks took place late 2024. We reported that here, where Volvo scored 5 stars and Renault scored 4 stars and took the podium. In September '25, we did it again, I can say, and both Volvo and Renault kept their scores, and Renault also earned the City safety label. And this is important to us. Safety is a key priority for our customers, and we stay committed to our core values here, quality, safety and environmental care. And that's why it feels very encouraging where an external panel such as Euro NCAP recognize our focus in these areas and rate the group's brand at the top.

In September, also Volvo Trucks passed the landmark of having 1 million connected trucks on roads with further opportunities then in our service journey to serve our customers with advanced digital solutions. Mack Trucks started production for the all-new Mack Pioneer at its Lehigh Valley operation facility in Macungie, Pennsylvania, United States. And that is, of course, also a very important milestone for Mack Trucks since we have not had for quite many decades now a real, so to speak, proposition for the long haul segment. So a very promising start of that as well.

Market environment. Of course, early days, we are now guiding for '26 for the first time in a market that has a lot of uncertainties. But if we start in North America, as I've already been in, customers are currently in sort of wait-and-see mode. We have trimmed our '25 forecast to 265,000 units, and that is minus 10,000 in relation to previous forecast. And for now, we forecast the 2026 retail sales levels around 250,000 heavy-duty trucks. That is, of course, subject to a high level of uncertainty, given that there are quite a number of parameters in flux as we speak. In Europe, registrations continue to pace towards 290,000 heavy-duty market in 2025. That is a forecast that is unchanged in relation to last time. And we expect the European market to move slightly up to 295,000 level for '26.

In Brazil, the market is continuing to correct. We have kept our '25 forecast unchanged at 85,000 units on the back of sales from dealer inventories, while production levels are gradually taken down. But we see the current cooling off will continue into new year. And for now, at least, we estimate the Brazilian market to be at 75,000 heavy-duty trucks in 2026, but also here with the recent development, of course, contains quite a high level of uncertainty.

In India, we keep our forecast of 360,000 for this year, and we believe that the recent momentum also in the Indian market will continue through '26 and thereby forecast a slight increase to 380,000 for next year.

And in China, the market has increased mainly on the back of the trading incentive program in the market for all propulsion technologies, diesel, natural gas and battery electric vehicles. Forecast for '25 has been lifted to 760,000 medium and heavy-duty trucks for this year, and we now expect the market to remain flat in relation to '25 or '26.

Book-to-bill amounted to 80% in the quarter globally and a good balance of 98% 12 months rolling. For the quarter, we had two regions that significantly impacted overall order intake and thereby the book-to-bill, and that was Asia at a book-to-bill level of 48% and South America at a book-to-bill level of 33%. And for certain countries in these two regions, we have been very restrictive with order slotting into us, given that we want to keep a healthy balance between order book, inventory levels and production output since we are working with also dealers and market or distributors in many of these markets with block orders. And it is important in this time now to keep the pipeline in trim. So have that in mind also for these two regions when you look at the overall order intake.

For Europe, the book-to-bill reached 91% with a strong production push in quarter 3 to cope with the good order levels in previous quarters. European demand is currently stable with 2025 largely sold out, and for 12-month rolling, the European book-to-bill is at 105%.

And in North America, the book-to-bill was in balance on the back of capacity adjustments made during spring and summer. Further adjustments might be needed given the high uncertainty. However, with our strong U.S. manufacturing footprint for the North American markets, adjustment can also be on the positive side, but it's too early to say right now. So flexibility is the key word now as we move forward, not at least in North America.

On market shares, Volvo and Renault continued to deliver strong market shares in Europe year-to-date September with Volvo at 19.3% and Renault at 10.5%, giving a total share of almost 30%. On the battery electric side, despite that more OEMs are now delivering battery electric vehicles, Volvo and Renault combined delivered a 53% market share. In North America, Mack Trucks continued to deliver market share gains on their improved supply chain, and they are now at 7.5% year-to-date. Volvo Trucks have stabilized their changeover process that affected, of course, the market share during the beginning of the year here and reached 7.9% year-to-date August. However, Volvo is also affected by the segment mix where the on-highway segment are under pressure, as you are aware of. Nevertheless, we see that Q3 was better, and we are now around 9% in the quarter here.

And in Brazil, Volvo remains solid and market leader in Brazil, with 23.1% heavy-duty market share. Australia is transitioning from Euro 5 to Euro 6 this year. And for now, Volvo and Mack are at 21.5% combined. We have seen that other actors have been selling Euro 5 from inventory, but expect an improvement of market share when the whole market has transitioned now during the later part of the year into Euro 6.

So by that, I'll leave trucks, moving to Construction Equipment. CE also continues their global product renewal. We started last year. And in Q3, the latest hauler models were launched into the important markets in Asia, not at least then for mining. Market forecast here, of course, also here, uncertainty is elevated. But for Europe, South America and Asia, excluding China, we continue then to forecast a flat development, '25 to '24, unchanged forecast and also flat development as midpoint for '26 in relation to '25 for these three regions. For North America, we guide now for minus 5% as a midpoint for '25 versus '24. That is an improvement of 5 percentage points in relation to last forecast. And then '26 to '25, also a minus 5%. So somewhat further correction of the market also anticipated for next year.

China, plus 10% as midpoint versus '24. That is an unchanged forecast and '26, in relation to '25, flat development.

Book-to-bill. Overall, book-to-bill is in good balance or rather good balance when it comes to Volvo CE, 94% in quarter 3 and 102% 12-month rolling. And North American book-to-bill reached 80% in the quarter and 95% 12-month rolling. The North American sentiment is stabilizing somewhat on the back of healthy new equipment inventory levels as well as rental equipment rates and improvement of utilization levels. The European book-to-bill reached 90% in the quarter as the dealers are gradually stocking up their inventories based on somewhat better sentiment and especially excavators. And that gives, of course, a push in deliveries. But orders also in Europe was plus 34% in quarter 3, and the rolling 12 book-to-bill at 113% for Europe. South America, Africa, Oceania and Asia maintained a healthy balance.

Buses, positive momentum when it comes to product launches then, continues to build on the success of the electric BZR chassis platform, which they now have launched with industry-leading battery capacity over 720-kilowatt hours designed for the Coach segment. And also when it comes to the European bus strategy with partnerships, has also -- during the quarter, formed a strategic partnership with Marcopolo, one of the world's leading body builders to broaden its product portfolio and strengthen the position in the European coach market. So as I said, an important step in the execution of the European turnaround strategy with partnerships together with strong body building partners.

Book-to-bill 94% in the quarter as well as 12-month rolling. Customers are somewhat more hesitant in Mexico and in Brazil, while demand is stable in other regions.

Volvo Penta, great momentum here. Penta's -- also some product news here. Volvo Penta's autopilot takes seamless boating to a new level. And the autopilot is now also available for all Penta propulsion packages with electric steering as well. Also, when it comes to energy storage, energy segment, energy transition, Taiwan-based SEETEL New Energy has selected Volvo Penta for their energy storage solutions in Asia Pacific, and then for use cases in industrial, mining, remote medical support, roadside electromobility assistance, et cetera. For Penta, book-to-bill 88% in the quarter and 108% for 12-month rolling.

Then as a last point here, and we had a discussion where to put it because it is in segment group trucks normally, but that is Volvo Energy, that is one of our latest additions. But I wanted to connect it also here because it's also in the energy sector. Volvo Energy launched their Volvo Power Unit 2000 based then on our vehicle technology when it comes to batteries. And the PU2000 is a high-performance energy storage solutions with a battery capacity of 2,000 kilowatt hours with versatile use cases, including peak shaving, load shifting, energy cost optimization, et cetera. But what is important to remember, there are many players in this area, but we have world-class cybersecurity. And remember me saying that because you will see a lot of use cases where that will be a key driver if you are getting the deal or not because everything is getting connected, as you know. But very promising start also in this with high customer interest.

Finally, VFS, Volvo Financial Services maintained solid earnings in quarter 3 and delivered over SEK 1 billion in adjusted operating income for the third quarter. Portfolio continued to grow and was up 4%, currency adjusted, but also, of course, very important now in -- where we are in the cycle, demonstrated a solid portfolio performance, although somewhat increased delinquencies and write-offs have been visible in some markets, and business segments, but are on a normal level at this point of the cycle. And there, I have to say it's great that VFS is working so closely with the other business areas, but also, of course, with other customers. So by that, that concludes the business update. I will leave the floor to our CFO, Mats Backman, for the financial update.

Thank you, Martin. So looking into the financials then for the third quarter and starting off with the group net sales. So net sales increased by 1% on a currency-adjusted basis compared to last year. Vehicle sales dropped by 1%, mainly due to lower volumes on trucks, while service sales increased by 4% currency adjusted with contribution from all business areas. European volumes increased, which led to an increased sales by 7% currency adjusted driven mainly by trucks and construction equipment. In North America, sales decreased by 6% currency adjusted, driven entirely by trucks, while sales were higher for buses, Penta and construction equipment.

In South America, net sales decreased by 9% FX adjusted compared to last year, and this was mainly driven by trucks. In Asia, performance was positive, and the net sales increased by 5% adjusted for currency, mainly driven by trucks and construction equipment. Other regions experienced slightly increased sales, mainly driven by trucks. Overall, FX effect was negative with about SEK 7 billion due to a general appreciation of the Swedish krona against other currencies. And the main driver was the U.S. dollar depreciating 9% versus SEK, with a negative FX impact on sales of about SEK 3 billion. The Brazilian real and the euro depreciation also had a negative impact on the net sales.

If we're looking at the adjusted operating income then. Adjusted operating income for the group was SEK 11.7 billion, with an adjusted operating margin of 10.6%. In the third quarter, earnings were supported by the positive development of our service business and lower R&D expenses. The financial performance in the quarter was impacted by higher material costs and some additional manufacturing cost for trucks, mainly related to lower volumes and overcapacity in North and South America. The tariff cost increased in the third quarter, and that was as expected with a net impact for the group of SEK 500 million.

In the fourth quarter, we expect the tariff net cost to reach close to SEK 1 billion. The net R&D capitalization effect in the quarter was positive at SEK 1.2 billion with a year-over-year effect of SEK 1.3 billion. Guidance on net R&D capitalization for the full year '25 is positive at approximately SEK 4 billion, with a year-over-year effect of about SEK 3 billion. FX had a negative impact of SEK 1.6 billion in the quarter, driven by the strengthening of the SEK. And given the current trend of strengthening SEK, we expect the FX for transaction exposure to be negative with about SEK 4 billion for the full year, and we don't provide any guidance on the full FX effect.

In the third quarter, cash flow amounted to negative SEK 1.7 billion. Cash flow continued to be affected by the increased level of investments and the seasonal buildup of working capital that we always see in the third quarter. Return on capital employed trend declined to 25.2% on a rolling 12-month basis. The net financial position amounted to SEK 45.4 billion, which is slightly higher than the last quarter with a positive net contribution from divested operations.

The net sales for Group Trucks decreased by 2% currency adjusted, driven by lower volumes, partly offset by positive development of our service business. The lower adjusted operating income and adjusted operating margin were mainly driven by generally lower volumes, higher material costs and some additional costs related to overcapacity in North and South America. Tariff costs continue to build in the quarter, and the currency had a negative impact of SEK 1.1 billion in the quarter.

And then over to Construction Equipment. Net sales increased by 14% adjusted for currencies and the divestment of SDLG. Adjusted operating income reached SEK 2.2 billion with an operating margin of 14.4%, which was an increase in both income and margin comparing to last year. Product mix with less SDLG and positive development of the service business were the main drivers behind the improved performance. In the quarter, tariff costs were building up and had a negative impact on the financial performance. The volume were lower versus some quarter -- versus the same quarter last year, however, completely driven by the SDLG divestment. Currency had a negative impact of about SEK 300 million in the quarter.

And then over to Buses. FX adjusted net sales increased by 4%, driven by price realization on vehicles and positive development of our service business. Buses delivered a strong adjusted operating income of SEK 755 million and 12.6% in margin, and this was despite lower volumes. The result was supported by a divestment of property, continued price realization of both vehicles and parts as well as a good cost control on operating expenses. Currency had a negative impact of SEK 159 million in the quarter. And Penta delivered another record quarter with the best third quarter ever result actually. FX adjusted net sales increased by 13% to SEK 5 billion. Adjusted operating income amounted to SEK 934 million with an operating margin of 18.6%. And this was on the back of a strong volume development for both engines and services and despite unfavorable product mix. Currency had a negative impact of about SEK 185 million in the quarter.

And then last but not least, Financial Services. Adjusted for currency, the credit portfolio increased to SEK 259 billion with a rolling 12-month return on equity at 11.3%. Portfolio performance continues to be good with delinquencies and write-offs under control. The adjusted operating income amounted to SEK 1 billion, impacted by increased credit provisions, but supported by the portfolio growth. Currency had a negative impact of SEK 79 million compared to the same quarter last year. So with that, I'm leaving for Martin to summarize.

Thank you, Mats, for that walk through. Here we have the summary slide. I will be short, so we can open up for Q&A. But of course, I would like to summarize where we started. It has been a quarter with solid earnings despite the high uncertainty that we currently are facing in many markets. If we look through -- across our business areas, good results, Penta, as Mats was into VFS, very important, of course, that we have the situation under good control together with our customers and dealers. Construction Equipment, despite also, of course, the situation that we have in North America there as well, buses, et cetera. And also trucks. It's important to remember that if you look to the effect that we see on the truck side, it is, of course, very much affected by the fact that we have a North American situation that is, of course, in flux to a big extent.

Obviously, we're talking about the tariffs, we're talking about, I mean, the push also from our suppliers, rightly so since they are also affected by different type of effects. And at the same time, we have a wait-and-see mood amongst our customers, and thereby a lower demand level. But having said that, I think in quarters like that, continue to focus on what you can affect and really work hard on that. And the pillars that we are building in North America will serve us well. And when we look across the other regions, the quality in our truck business is still on a very good and solid level.

Services is worthwhile mentioning in times like that. We have been reiterating that this will continue. And 28% now in the quarter is showing that it's getting to a material proportion, obviously, for all different business areas. And we still have headroom for more, but it's also a sign that the vehicles and equipment are utilized in the marketplace. And that is, of course, a sign for the situation moving forward.

So -- and finally, maybe a comment on the order intake. I understand it will be questions on that, rightly so. But I think it is important also in this time to say, okay, what are we guiding for when it comes to the total market and not taking when you have this type of situation, a quarter and look and try to triangulate the trend based on that. When you look at our key regions, rather expected levels, Asia, Latin America also impacted by a further correction when it comes to the order slotting, which is absolutely the right decision to take in a situation like that, so you are not ending up with balances in your working capital or more importantly, in your inventory levels.

So looking forward to the Q&A. But before that, I have also an announcement to make, and that is the following: that we have the Capital Markets Day also planned now, and that will be on June 10 next year in Sunny Eskilstuna, Sweden. It is -- it will be in conjunction with the Volvo Days. It might be so that some of you have visited the Volvo Days that is a very popular activity amongst our customers when we are showcasing the latest and the greatest, of course, for VCE. But also for some of the other business areas, not at least trucks, as we found that to be a good timing opportunity. And formal invitation, et cetera, will follow, obviously, but make a note in the calendars, you are not missing this fantastic event. So by that, Johan, I think I'll leave you to guide us through the Q&A. Thank you.

Thank you, Martin. Yes. So make a note about June 10. We look forward to that.

So we have many people on the line waiting. So we do, as always, we stick to one question. We start in the room with a couple of questions first, and we'll start with Erik.

Erik Golrang, SEB. One question is always tricky. But I'll -- the balance sheet -- just a couple of questions there. We're approaching year-end and people are trying to figure out where you will propose your dividend for this year. Is it -- for the fourth quarter here, is there any reason to assume anything different than normal seasonality in working capital, the Swecon acquisition, is that expected still to close in the fourth quarter? And any other guide as to how we should think about dividends for the year?

No. We have the normal seasonality. And -- I mean, it's difficult to say exactly when a transaction will close, but it will likely be after the fourth quarter. So looking at more of a kind of a normal seasonality and a normal fourth quarter. And as you all know, we have the bulk of the kind of the cash flow throughout the year is actually coming in the fourth quarter. So I think the kind of the dividend discussion might be a little bit kind of premature from that perspective. But maybe a couple of things to add when it comes to the balance sheet and connected with the cash as well. And just to remind you of a couple of things that we have done structurally throughout this year then.

I mean, first of all, looking at the SDLG transaction. And you saw that in the kind of the increase sequentially on the net cash. So we have some kind of proceeds coming in. But also as important is actually a reduction of trapped cash. Because if you're looking at the annual report, I think we have the -- it's about -- if you're looking at end of '24, about SEK 10 billion in trapped cash, and that's reduced with SEK 5 billion now when it comes to -- as a kind of a consequence or a good outcome of the SDLG transactions. So we have reduced trapped cash.

Secondly, also the equity increase we have at VFS, I mean, that's really a bit kind of moving around money internally, so to speak. So we have increased equity on VFS from 8% to 10%. And -- and I mean from a risk perspective, kind of taking down the risk then with higher equity. And that is also SEK 5 billion that we have kind of reallocated internally.

And then lastly, if we're looking structurally on the -- on the -- maybe more on the working capital side, and then we have had a conscious discussion or a conscious decision where we have decreased the payment days also on the payable side. And I think that is probably an effect of SEK 1 billion to SEK 2 billion or something like that. So a couple of things that has from a kind of a structural point of view, changed a little bit on the balance sheet and more importantly, on the cash situation.

As we look on closing Q4?

Difficult to say, but I would probably forecast that one to be after the end of this year.

Agnieszka from Nordea.

So just looking at your margin trajectory from here, it seems like there will be some headwinds that you will meet in the coming quarters. One is tariffs, obviously, and you indicate that the net impact will constitute almost 1 percentage point of headwind to the margin when I calculate it. So -- and then also, you expect rather flattish or even contracting markets in '26. So in that environment, would you still expect your margin to improve? Or what kind of actions are you taking to protect margins? .

Thank you, Agnieszka. I mean, obviously -- I mean, we are not guiding for that. But I think more importantly, just as we have said, if you look at, so to speak, the margin quality and try to be as clear as I could. I mean -- but when you look, for example, and I start with on the Truck segment, it is, of course, most pressured right now in North America for the reasons that I alluded to. And as we move forward, obviously, depending on how stable, so to speak, the different type of announcements will be because it's a question of stability also. And as I also said, it can move in either direction to be frank.

In one way, for example, the uncertainty regarding the emission legislations have brought less prebuy than expected. In the long run, I should -- or even in the midterm run, I should argue that, that is something good about that because we know always when we have prebuys, we will have a hangover, et cetera. But it's more the uncertainty factor that is important. So the more clarity, the more in line with, so to speak, the demand in every single point we can be because that has been a little bit of a tricky parameter during this year that it has been coming in different phases, different type of -- and we feel that I've been over quite a lot now in the United States talking to customers and other partners.

And it is clearly that people are waiting and see a little bit. And that is also the reason why we are very clear and say, okay, we are guiding now for the first time for '26 for 250, but we are also clearly saying it's an elevated risk in that guidance in relation to a normal situation. So I think when I look at the quality of our commercial excellence or how we are commercially doing, how we are doing when it comes to our operations. And when I look at the key regions, take Latin America, for example, even if we have a drop in volume, we are following through in a good way, et cetera. So we have the ability internally. But when the external factors are a little bit too many moving, you are lagging a bit. But otherwise, I should not -- I don't feel, so to speak, any type of uncertainty about our own capability to manage it once we know what parameters that will be in place for maybe a little bit more than 1 or 2 weeks.

We turn to the telephone line and Akshat from JPMorgan.

One question on North America. A couple of parts to that, please. The first is Section 232, if you could just share some insights into your ongoing discussions with the U.S. administration as we wait for an update in the next 2 weeks. I think that would be very helpful. And the second 1 is if you could just touch upon your overall investments in Mexico and what could that mean for the business going forward?

Thank you for that. 232, I think it's fair to say that -- let's see. So we are, of course, preparing for the two scenarios there. I mean, depending on if it will be implemented, I mean it has been now announced in some channels that it would be from 1st November, we have a government lockdown, et cetera. So let's see what will happen here. We are well prepared for either/or scenario basically. Then if that is coming into play, it's well known that we have a 100% U.S. footprint for our North American trucks. But having said that, we are also prepared for other scenarios.

Then when it comes to Mexico, we have a structural undercapacity in North America for normal markets and also for upmarkets. We cannot live with that. So to add that capacity for our North and South American markets for Volvo, Mack is necessary. And obviously, we can balance that capacity for markets depending on how different type of trade deals will look like. So we continue to invest and anticipate to have a starting point of around 10,000 units and then with the ability to move north when that is needed.

Hampus, Handelsbanken.

One question from me. Could you maybe talk about your thinking on EPA 2027. Some of your competitors are looking to roll out equipment, maybe not tuned for EPA 2027 and not including the guarantee. And if that's the case, have you had clients already testing this equipment? And are you expecting to roll out the 2027?

But again, I think, obviously, the further it gets without exact clarity around this, I mean, the more you need to prepare, obviously, for -- that it will be put in place because if you are not prepared, we are prepared for that. So we have our engine range in good order for the current, of course, emissions, but also for the coming. Of course, we have been testing it with the customers. We have had a field test, and that will continue to roll because I'm reading it will happen sooner or later, basically or moving in that direction when it comes to this type of close by emission legislations. So then it's more a time phasing.

Then let's see. And I will not exactly disclose how we are thinking about, I mean, if that will be postponed. Obviously, there is an interest both from less -- there's always less complexity, the lower you get technology-wise and also coming with certain costs, et cetera. So we will fine-tune depending on how it will look like, but we are in good shape for that. But we are trying to have a conversation to say, tell us something. So we get clarity.

We turn to Klas Bergelind, Citigroup.

Klas at Citi. So first, I just want to come back to the trucks margin. Yes, the tariff impact will increase from here, but earnings are also benefiting from capitalized R&D, which is a tough comp into '26 as you now have passed the launch phase of the new trucks, and the way you're guiding for volumes don't suggest much growth. So will you start to take out more cost? Will you announce restructuring to get the margin higher? Because if volumes don't come back, the outlook for the truck margin, as I see it in the next couple of quarters, look quite weak.

And then very quickly on the European outlook, quite a big slowdown here looking at orders. Just trying to understand what happened here through the quarter, particularly in September, if there was any incremental weakness beyond normal seasonality?

Yes. So number one there on the truck margin, as I said, I mean, the name of the game here, Klas, is obviously, to get the stability in North America, regardless of the volumes. That is impacting now, and it's weighing heavily on the truck margin. That is clear for us, and exactly as Mats said also, when you look at the different parameters here. And of course, when we are getting, I mean, better line of sight there, and we have gradually got that also, and we have had our changeover, et cetera. That is the key area because if we look for the truck margins in other regions, it looks as expected, and it looks good. So -- but having said that, depending on the volume development.

Now we are guiding for Europe, coming to your 1.5 then or the follow-up comment there. We are guiding for 295,000 on the back of what we see in our order board and what we see in activity level also including quarter 3. So if we say 290,000 and 295,000, then that is what we are guiding for. And we have no ambitions to lose out on market share, if I put like that. So I think by that you can triangulate what our belief is.

Maybe one comment on the tariff. First of all, when it comes to cost, we're always addressing the cost. And I mean looking at the kind of the volumes and the adjusting, I would say quite...

That is visible.

Yes, it is. So that's -- I mean that is addressed continuously. But maybe a clarification when it comes to tariffs and the kind of being a little bit more kind of granular, but we have also -- it's also in the report. If you're looking at the SEK 500 million, I mean, we are clear that more than 50% of the majority of the tariffs are actually related to construction equipment and not trucks then. And we have the net impact we see now in the third quarter, the SEK 500 million. There, we also have a kind of one component coming from. If we're looking at mitigations of gross impact from tariffs, we have two mitigating items, so to speak. I mean, first of all, price mitigation, but secondly, also the kind of the accounting when the tariffs are flowing through the inventories and inventory valuations, we are helped by that in the third quarter.

Looking into the fourth quarter, the only kind of mitigation when it comes to tariff will be on price then. So meaning that the SEK 1 billion then the net impact, that's with price mitigation. And again, the majority of the tariffs related to construction equipment. And then, I mean, this is then based on the information we have right now, and it is changing, as you know, kind of constantly then. But if we would have a kind of a Section 232 in place, that might be kind of giving further opportunities when it comes to price mitigation also on the truck side, on the tariff side. And so I think that is also worthwhile to remember when you're looking at the sequential development going forward.

Bjorn from Danske Bank.

Yes. One question, '25 quite messy, and it's not always about the volumes, et cetera. But -- can we get some color on -- if you can quantify how much of a headwind this volatility has been, especially then in North America?

Yes. I mean I don't know if we can -- will or can quantify. But as I said, I think if you look to, so to speak, where we are in the cycle and our expectations on our improved resilience to be frank, I mean I think we have been working very clearly and diligently with that. I mean, service, better volume flexibility, better ability to actually mitigate different parts of the cycle. I should argue that at this very point in time, of course, what is weighing very heavily for us is the North America turmoil and the ability to be at the curve. So even if I think we started quite early with our adjustments in spring and summer, mainly then for Volvo Trucks and also in the midst of the changeover, we have been a little bit behind the curve because we didn't see it come with that magnitude and maybe also the wait-and-see mood depending on some of the unclarity.

So I have to say that when I look at the year, because we have had corrections in Europe. We have had -- and that is coming now also gradually corrections in Latin America. But that is, so to speak, the more the normal pattern of correction of the cycle that we are following with margin quality as expected. It is more the North American case that is weighing heavily for us. I don't know if you would like to add something.

No, I think most important is that we are taking down the underabsorption sequentially now. I mean with activities we initiated in the second quarter, we saw impact in the third quarter, but still some kind of underabsorption impacts in South America and North America, but it's -- I mean, gradually getting better with the activities we have now. So we are addressing that kind of overcapacity.

And then you all know, of course, with the North American market, it is like that since we do not have any captive distribution in North America, you are even more, so to speak, dependent on being time phased correctly when market is going both up and down because, so to speak, the volume leverage on the new equipment, both up and down, if I put like that is relatively higher than in other markets. So when you have turmoil from uncertainty in North America, it's a little bit more burdensome temporarily. But I think it's also important in a situation that we are in now, as I said also in the introduction to take a step back and say, okay, will logistics be needed? Will transport be needed? Will infrastructure be needed in North America? Are we rather bullish about what is happening there when it comes to digital energy build-out, et cetera?

Stability will come back, have we built the pillars? So we are not coming too much into here. And now I think when we look at the period, we know what it is. We know how to work with it short term, and more importantly, we have built a very strong, so to speak, platform for the future in North America. I think it is also important to have in mind when it is quite a lot of moving parameters short term.

We turn to the telephone line. Daniela Costa from Goldman Sachs.

I have a question actually about Penta. You mentioned data centers in the report as part of sort of your strong result. Can you help us size the business and the growth of data centers within Penta right now? And what is the opportunity set going forward from you from this?

No, I mean, we don't kind of guide and give that kind of granularity into Penta. I mean it is a very, very important growth driver within Penta. But we are not that kind of granular when it comes to the different business lines though.

What I think is -- what I think about Penta that is very exciting is that we have talked about that for quite many years now that we have been building up, I mean, the second vertical, main vertical, I should say, of industrials. But industrials, you need more and more now to separate into several industrials in Penta with growth trajectory. One, of course, being industrial all-speed, that is our deliveries into many of the industrial equipment manufacturers, obviously, in mining and in forestry and then in ports and material handling, what have you, has been growing really well. Also part of the long-term growth that we see now also in services for Penta because there in relation to some of the marine segments the machinery is used heavily and thereby, it's a good service business.

The other sector that we have been into for a long time, but it has been more on the standby side is power generation, obviously. But power generation is growing broadly for us. And that's the reason why we also include Volvo Energy because it is the traditional power generation standby opportunities, not at least now for data center build-outs, et cetera, where we are good in North America, but it's also the general situation about I mean, grid capacity, resilience, et cetera. And thereby, it's a more broad landscape of the traditional hardcore power generation that we provide through gensets, but also in a broader architecture of solutions, including battery storage, et cetera, steering, cyber capabilities, et cetera, as I alluded to, so exciting. Put it like that.

Now, Mattias. Returning to Mattias from DNB Carnegie.

So I would like to ask a question about North America with your market share ambition and also looking at the two launches of the VNL and the Mack Pioneer, which I understand are quite sort of central to reaching that ambition. How is the strategy for those two models impacted by the currently very weak market environment? Is that creating opportunities for you? Or are you still seeing the intended market share trajectory that you're looking for? I know it's still early days, but could you talk a bit about sort of how the timing with the launches coinciding with a very weak market is impacting that strategy, if at all?

No, it's a great question. And I mean, of course, it is like that on one side, you can say that it is not bad to do maybe -- or not maybe, for sure, the biggest product overhaul that we have done for 3, 4 decades in North America, in a market that is slower, that is good because when you do that, and you are not doing a full clear cut also, I was -- we were over actually last week and I was in LVO with Mack. And we are running mixed production, mixed model production, et cetera. And then when you're introducing new models, then I have to say that when you are in the cycle you are now, and knowing also that historically, we have always been losing out when the market has been coming back and being at peak, et cetera.

Now we are building out capacity as well. That is good. It's also good that we can trim, and we can -- then obviously, you don't need to be overly nervous about your volumes right now because the market is what the market is. And since these products are creating substantial customer value in terms, not at least a fuel economy that we see clearly from customers, it's about 10%. And I mean 10% is USD 5,000, USD 6,000 yearly fuel bill. It's very important that you are not pricing away the value that you have been creating with building this up. And for Mack, in particular, this is more or less like reentering into almost like a greenfield situation when it comes to the long haul is the heavy long haulage and excitement is big, but we will take it step by step with the right type of commercial quality as well because the product is great.

So I think the name of the game, don't be overly nervous because the cycle -- the cycle is what the cycle is. And it goes up and it goes down. Now it's a little bit down. It's a number of other complexities added that we have alluded to, but these two products and what is about to come around the corner is just great.

Maybe one comment on the kind of the note that we are working what we can affect or impact really. And if you're looking at the Mack and the kind of the market share, development and just looking at the quarter, the...

It is not affected by the Pioneer.

It isn't. I mean the thing is that we are working with the supplier, and we see the improvements then that we talked quite a lot about last year that is kind of giving the Mack the ability to kind of deliver on the demand then. So that's one kind of self-help in that respect that is also very important to recognize.

So on that note, and we're coming up to the hour. So please make a note about June 10. And with that, I say thank you for coming today, and we see you at Q4.

Thank you very much.

Thank you.

Good morning, and welcome to this second quarter presentation. Today, we will cover the second quarter of the Volvo Group. And we will do as always, we'll listen to our CEO, Martin Lundstedt, followed by our CFO, Mats Backman, and then follow up with a Q&A session.

So without further ado, I hand over to you, Martin.

Thank you, Johan, for that introduction and also welcome from my side. And to start with, this second quarter has been characterized by a general stabilization in European markets and more of uncertainty and wait-and-see mode among customers in North America. We did see a solid performance with an adjusted operating margin of 11%.

The societal transformation, not at least in Europe, to zero-emission solutions is slower than anticipated, and therefore, also one-off costs have had a negative impact on the reported operating income. Across the group, we have continued to prioritize a high quality in the business by focusing on our customer deliveries and service operation. We did see good service activity levels, but also volume flexibility in the industrial system, tight cost control, combined with commercial discipline and price management.

We've had a good traction to adapt cost while we, at the same time, are maintaining high priority on innovation and technology. But also in these areas, we are now gradually adjusting for the right timing in relation to the speed of the transformation.

Specifically for volume flexibility, we are in good balance for almost all markets. The only exceptions are Group Trucks in North America and partly South America, where we continue to have more costs related to specific situations. Firstly, there is a wait-and-see mood among customers in North America to place orders given the current uncertainties. We are, therefore, continuing to adjust production levels for Group Trucks in North America to minimize the under-absorption in production going forward. And that work is ongoing in good pace here. That goes also that we have done for South America.

Secondly, the continuous ramp-up of the all-new on-road ranges for both Volvo and Mack, where extra resources still have been needed. That said, the ramp-up costs have continued to improve during the course of the second quarter, as we also did see in quarter 1. But even if the situation in Group Trucks, North America, affected the Global Trucks margin negatively yet another quarter, we have high ambitions for North America and our customers over there. And it's important that we continue to build a strong platform for the future.

Another good proof point in that regard was the launch of Mack's all new Anthem regional haul models following already introduced at the quarter 3 and quarter 4 last year, Volvo VNL, and also this year, the Volvo VNR and the Mack Pioneer. So moving forward in these turbulent times for global trade, we focus on activities that we can influence ourselves. Here and now, we'll continue to build on our strong regional value chains combined with global capabilities to mitigate the effects from tariffs and other uncertainties.

And in times of uncertainty, it is also essential to take a step back, and it's motivating to know that transport logistics will remain exciting growth opportunities -- to opportunities for many years to come. In addition, we start also to see and feel how the emerging investments in defense and infrastructure, for example, in Europe, will further enhance growth opportunities. So as we conclude the second quarter of 2025 with strong resilience and solid margins, a big thanks to customers, business partners and of course, to colleagues.

If we then summarize the quarter in figures, net sales declined to SEK 123 billion on the back of lower truck volumes. It was a year-over-year drop of 12% and minus 5% when adjusting for currency. Regardless, we delivered a solid result with an adjusted operating margin -- operating income of SEK 13.5 billion and an operating margin of 11%. Cash flow amounted to SEK 2.9 billion, which resulted in a net cash position in industrial operations of SEK 43.1 billion.

Return on capital employed in industrial operations was at 25.7% rolling 12, and earnings per share was SEK 3.64. In the quarter, we also accounted for 2 one-timers, which are excluded from the adjusted operating income. Firstly, as a result of the slower than previously anticipated societal transformation to zero-emission vehicles, operating income includes impairment of battery-electric assets and renegotiated battery volume commitments to Samsung with a total negative effect of close to SEK 4.5 billion.

Secondly, the creation of Coretura, the software-defined vehicle platform joint venture, along with Daimler, resulted in a positive effect close to SEK 1 billion. So all in all, we summarize another solid result and quarter in turbulent times.

When it comes to volume development, truck deliveries declined by 10% in the quarter with lower volumes in North and South America, while deliveries of heavy-duty trucks in Europe were on the same level as last year. For Construction Equipment, deliveries increased by 11%. For the Volvo brand, it was flat year-over-year, while SDLG increased by 22%.

When it comes to electrification, with different uncertainties related to the electrification, underlying demand has been slowing down, and the switch over to zero-emission transport is still driven by early adopters. Still, orders for fully electric vehicles increased with 59% with increases across the business areas, and in particular, for SDLG machines in China, but also truck orders increased with 53%. Deliveries increased with 26% and a mixed picture, minus 7% on trucks, while Construction Equipment was up 82%, driven primarily by SDLG.

In summary, despite the slowdown, we continue to push, which is, for example, reflected in our high market shares for medium- and heavy-duty trucks with almost 60% market share in the European market for the quarter, however -- and for the first 5 months. However, as we and the industry have the products and solutions ready, it is more than overdue now for policymakers and other key stakeholders to push for other enabling conditions such as charging infrastructure and actions to stimulate demand.

When it comes to vehicle and machine sales development on the back of lower volumes, overall sales of vehicles and machines declined 6% adjusted for currency. Truck sales declined 9% with mainly North and South America down. Construction Equipment sales were up 2%, and sales for buses were also up, but with 1%. Volvo Penta sales were strong and up 18%, driven mainly by genset engines in the Industrial segment.

The Service business amounted to SEK 126 billion 12 months rolling, that was flat adjusted for currency. But when also adjusting for the Arquus divestment, service sales did grow with 2%. And that is, of course, a sign of strength. All businesses are essentially flat to positive, while Penta is impacted by lower service sales in the Marine Leisure segment in the United States. The outcome for Services is showing that our efforts in this area are paying off and provide, and more importantly, will further provide increased resilience in uncertain times. So all in all, a good and strong result from Services.

It was with great sadness that we on May 18 announced the passing of our CPO and dear colleague and friend, Andrea Fuder, following a short illness. Andrea successfully led the global purchasing team through numerous challenges during her tenure. She was instrumental in driving the group's transition and increased resilience. Andrea is deeply missed, but her legacy will continue to be strong. Thank you, Andrea.

During the quarter, Volvo Group and Daimler Truck launched the new company Coretura, setting a new industry standard for software-defined vehicles. Another positive news is that Volvo Group's engine plant in Skövde, Sweden, has been awarded up to EUR 49 million from the European Union Innovation Fund to support the CarbonSmart Factory project that we are currently doing in Skövde. This initiative aims to advance Volvo's transformation through net-zero innovation and clean technology.

Moving then into truck news, Mack Trucks continued their model changeover with the launch of their new regional haul truck, the all-new Mack Anthem. There are truly exciting times for Mack with the first new Mack Pioneer launched in April and now the all-new Mack Anthem. This provides a very strong lineup in the on-road segments, and Mack Trucks is geared up for profitable growth, not in least in segments where we see clear growth opportunities.

Volvo Autonomous Solutions has reached a major milestone in mining efficiency and productivity, successfully hauling over 1 million tonnes of limestone autonomously for customer Brønnøy Kalk in Norway. And this achievement underscores the transformative impact of autonomous technology also in the mining and quarry segments alongside also the hub-to-hub segments.

When it comes to market forecast for Europe, our forecast for 2025 is unchanged at 290,000 units. Utilization of trucks in -- is on good levels, and the market is still replacement driven. Forecast also unchanged for North America at 275,000 units. The total market in 2025 will be supported by deliveries from dealer inventory that we see across brands while production levels are more muted, and we have gradually adjusted.

In Brazil, forecast unchanged at 85,000 on the back of good activity level in both Agriculture and Mining segments while increased interest rates dampened demand in other segments. The Indian heavy-duty and medium-duty market is expected to reach 360,000 units, and that is 20,000 lower than previous forecast. And we maintained the forecast of 710,000 units for the Chinese market for medium and heavy-duty trucks.

The overall book-to-bill for medium and heavy-duty trucks amounted to 89% in the quarter and 100% 12-month rolling. The European book-to-bill reached 94% with a strong production push in quarter 2 to cope with a good order levels in previous quarters. European demand is overall stable, and we are now booking orders for quarter 4 as quarter 3 is essentially full for the European industrial systems, serving both Europe and international markets.

Softer order levels in North America in the quarter led to a book-to-bill of 63%, as I said, also the wait-and-see mood, but continuous adjustments are gradually being done to balance between order production, inventory levels and to take out the under-absorption.

For South America, Africa, Oceania and Asia, the book-to-bill ratios had, had a healthy balance during the quarter. For market shares in Europe, Volvo and Renault Trucks continue to deliver strong market shares year-to-date in May with Volvo at 19.8% and Renault Trucks at 10.5%, giving north of 30% combined market share. On the Battery side, giving a total share, and despite more OEMs are now delivering battery-electric solutions, Volvo and Renault Trucks delivered a strong 57.4% market share combined.

In North America, Mack Trucks continued to deliver market share gains on their improved supply chain, and they are now at 7.2% year-to-date May, and Volvo Trucks have stabilized their changeover process into the new models and reached 7.6% year-to-date May.

In Brazil, Volvo remains solid and market leader in Brazil with 23.3%. And Australia is transitioning from Euro 5 to Euro 6, and for now, Volvo and Mack are at 21% combined. We see that other actors are still selling Euro 5 from inventory, but expect a better second half in terms of market share when the whole market has transitioned into Euro 6.

Volvo CE have, during the quarter, taken a number of significant steps in different fields. Number one, Volvo CE invests in crawler excavator production capabilities in South Korea to start with, where we have our center for heavy excavators, but also building new capabilities in Sweden and in the United States. We are thereby coming closer to customers, shortening our response and lead times to customer demand, and we are improving the resilience through a stronger regional value chain setup.

During the quarter, Volvo Construction Equipment has also come to an agreement with Lantmännen to acquire Swecon's business, i.e., dealer operations in Sweden, Germany and the Baltics. And the acquisition moves Volvo CE closer to their customer in several of our key markets, thereby strengthening the service business and further enabling total solution sales. Closing of the transaction is anticipated in the second half of 2025.

And also, during the quarter, VCE signed a contract to sell its 70% ownership stake in China-based SDLG to a fund predominantly owned by the current minority owner, Lingong Group. Going forward, Volvo CE will be targeting focused customer segments in China and enhance our strong footprint in utilization of the Chinese supplier ecosystem for China, but also to some extent for the rest of the world.

When it comes to the market environment, rather undramatic in relation to previous forecast, Europe, flat development versus 2024, that is an unchanged forecast; North America, minus 10% as midpoint, also unchanged in relation to previous. We also guide for South America and Asia, excluding China, flat development versus '24. Also that is unchanged. And the only change we are doing is that government stimulus in China towards real estate driving demand primarily of compact machines and thereby increasing with 5 percentage points to a plus 10% midpoint market in relation to 2024.

Overall, Volvo Construction is in balance when it comes to its book-to-bill, 19% in quarter 2 and 102% in 12-month rolling. The European book-to-bill reached 100% in the quarter as European dealers are also gradually building up their inventories, especially excavators with long lead times. That is a sign also of a comeback here. The North American book-to-bill reached 95% in the quarter and 85% 12-month rolling. And the North American market is still in a destocking mode in the anticipation of a softer 20%, 25% -- 2025 than previous year, and that is a minus 10% midpoint that we have guided for. South America, Africa, Oceania and Asia maintained a healthy balance in the quarter.

Moving into Volvo Buses. Prevost buses in North America delivered the first bus to New York city's Metropolitan Transport Authority out of its plant in Saint-Claire, Canada. This marked the start of delivery of the largest contract in Prevost's history, including the firm order of 250 buses signed in December '23 for deliveries in '25 and '26. Volvo Buses also started the production of its first electric bi-articulated bus chassis. The Curitiba plant in Brazil will from now on be capable of exporting the electric chassis to BRT system, bus rapid transit systems, worldwide.

Book-to-bill reached 64% in the quarter, but this is more of a timing matter rather than a sign of slower markets as Volvo buses had a very strong order level in quarter 1 and have good order coverage for the full-year 2025. The 12-month book-to-bill is 97%.

Volvo Penta, a very strong quarter and continues to push the boundaries of sustainable innovation. Now also in the Marine, IPS systems are available with fully electric propulsion. The aim is to electrify all 5 drivelines in the Volvo Penta IPS range, targeting power output from 220-kilowatt up to 1.1 megawatt per driveline.

Book-to-bill continued to improve to 77% in quarter 1 and to 107% 12-month rolling. The good demand in the Industrial segment continues and especially for power generation. But now we also see that the Marine business, and especially the commercial side, is starting to regain momentum.

And Financial Services, the portfolio performance continues to be good with customer delinquencies trending at average business cycle levels. Credit provisions increased slightly year-over-year with a reserve ratio at 1.33%. Write-offs were stable compared to last year.

During the quarter, the credit portfolio for Financial Services continued to grow, plus 5% adjusted for FX and the new business volume reached SEK 27.8 billion, which is a record for the second quarter, equaling a 9% increase year-over-year adjusted for currency. And the 12-month rolling penetration reached 31% in quarter 2, up by 3 percentage points versus last year.

So by that, Johan, I leave the word to you.

Thank you, Martin, for your business update. We will now start to dig into the financial performance, and I leave the word to you, Mats.

Thank you, Johan. So let's look into the second quarter financials in a little bit more detail and starting off with the group net sales. Net sales decreased by 5% on a currency-adjusted basis compared to last year. Vehicle sales dropped by 6%, mainly due to lower volumes in trucks. Service sales increased by 2% adjusted for currency and the Arquus divestment.

European volumes declined, but to a lower extent than in previous quarter with sales coming down 5% adjusted for currency, and the decline is due to lower volumes in trucks, while the other BAs saw an increase in the revenues.

In North America, sales experienced a significant decrease of 10% FX adjusted, mainly due to lower demand and market activity for trucks and construction equipment. In South America, net sales decreased by 9% FX adjusted comparing to last year, and this was mainly driven by trucks.

In Asia, performance was positive, and the net sales increased by 7% adjusted for currency, mainly driven by trucks and construction equipment. Other regions experienced declining sales in trucks and growing sales in Construction Equipment. Overall, FX was negative with more than SEK 10 billion due to a general appreciation of the Swedish krona against other currencies.

The main driver is the U.S. dollar depreciating almost 10% versus SEK with a negative FX impact on sales of SEK 3.4 billion. The depreciation of the Brazilian real and the euro also had a negative impact on net sales. The adjusted operating income for the group was SEK 13.5 billion with an adjusted operating margin of 11%.

In Q2, earnings were supported by lower operational expenses and the positive development of our Service business. The financial performance was significantly impacted by the volume reduction in trucks and by unfavorable brand market and product mix in Construction Equipment.

At group level, tariff absorption started to build in the quarter, but still with a limited impact on the results. Trucks faced under-absorption from lower demand in North America and South America. The net R&D capitalization effect in the quarter was positive at SEK 700 million with a year-over-year effect of SEK 800 million.

Guidance on net R&D capitalization for the full-year '25 is positive at approximately SEK 3.5 billion with a year-over-year effect of about SEK 2.5 billion. FX had a negative impact of SEK 2.3 billion in the quarter, driven by the strengthening of the SEK. And given the current trend of strengthening SEK, we expect the FX for transaction exposure to a negative with about SEK 4 billion for the full year. And we don't provide any guidance on the full FX effect on earnings.

Operating income in the second quarter was affected by 2 one-time items with a negative net effect of SEK 3.5 billion. Firstly, a negative effect of SEK 4.5 billion related to the slower than previously anticipated transformation to zero-emission vehicles. This includes compensation payments for renegotiated battery volume commitment of SEK 2.9 billion with a negative cash flow impact of SEK 1.9 billion in the second quarter. The SEK 4.5 billion also includes an impairment of battery-electric assets of SEK 1.6 billion. Secondly, a positive effect of SEK 1 billion related to gain from divesting 50% of the shares in Coretura to Daimler Truck where of SEK 500 million impact on cash.

In the second quarter, operating cash flow was impacted by high level of investments and the one-time items. Operating cash flow amounted to SEK 2.9 billion. While inventory and receivables went slightly up, the good earnings and favorable development of payables were the main contributor to the positive operating cash flow.

Return on capital employed trend declined to 25.7% on a rolling 12-month basis. And the net financial position was impacted by the large dividend distributed in April, but remained solid at SEK 43.1 billion, supported by the positive operating cash flow generation.

The decreased FX adjusted net sales for Group Trucks of 7% was driven by lower volumes and slightly negative price effect on new vehicles. The lower adjusted operating income and adjusted operating margin were mainly driven by generally lower volumes, higher material costs and some additional costs related to overcapacity in North and South America. Tariffs absorption started to build in the quarter, but so far with limited impact on the results.

Earnings resilience was maintained through good operational cost control and stronger service business. FX was a major contributor to the performance decline with a negative SEK 1.4 billion in the quarter.

For Construction Equipment, FX adjusted net sales increased by 1%. Adjusted operating income decreased by SEK 900 million to SEK 3 billion. Material cost was positive in the quarter, but the negative mix from higher volumes in China continued during the second quarter. Tariffs absorption started to build in the quarter, but so far with limited impact on the results. The adjusted operating income margin reached 13.1%, and FX was also significantly negative at SEK 534 million.

For Buses, FX adjusted net sales increased by 1%, driven by price realization of vehicles and the service sales. Adjusted operating income decreased slightly, but remained solid at SEK 474 million, and this was despite lower volumes. The result was supported by price realization on both vehicles and parts. The adjusted operating income margin decreased to 7.9% and currency impact was negative at SEK 113 million.

For Volvo Penta, FX adjusted net sales increased by 12% to SEK 5.5 billion. Adjusted operating income was SEK 1.1 billion, and this was actually an all-time high for a second quarter, and this was on the back of strong volume development. The adjusted operating margin reached 20.7%, also an all-time high for the second quarter, and this was despite the negative FX impact in the quarter at SEK 237 million.

And then Financial Services, adjusted for currency, the credit portfolio increased by 5% to SEK 264 billion with a rolling 12-month return on equity at 11.7%. Portfolio performance continues to be good with delinquencies and write-offs under control. The adjusted operating income amounted to SEK 980 million, impacted by the increased credit provisions, but supported by the portfolio growth. Currency had a negative impact of SEK 124 million compared to the second quarter of 2024.

So with that, I'm leaving for Martin to summarize.

Yes. Thank you. Thank you, Mats. Turning to you, Martin. How would you wrap up and summarize the quarter?

No, I think we can keep it very short. I mean, despite uncertainties and turbulent times, despite then as a consequence of that, also lower truck deliveries, it has been a quarter with solid earnings and solid resilience. So we continue to maneuver from a position of strength here.

Very good. Right. We're moving into the Q&A session, and we will do as always. We ask you to stick to your most important questions because there are many banks on the line. So we make sure that we cover all the questions that needs to be clarified from them.

And without further ado, we turn to Nordea and Agnieszka.

Perfect. So I have 2 questions. First one, looking at the North American trucks or the development for you, you were down by 16% year-on-year in the quarter and better than the overall market, minus 40%. So it suggests that you are maybe taking some market share. Could you give us some color on this development? Are the tariffs playing in here with you being maybe in a bit better position than your competitors? Or is it related to the product launches?

Yes. Thank you, Agnieszka. I think first and foremost, we see that also in orders that we are taking, so to speak, share here. But what we can also say is, of course, that we had a slower start in the beginning of the year since we have had a significant changeover of model range for Volvo to start with, with both the all-new VNL and all-new VNR, and now, we are gradually, so to speak, coming through that.

We have a great product range now ready for the market. At the same time, we were also rather early out starting to adjust because we did see that the market should correct both of cyclical reasons, but then of increased uncertainty. And thereby, we have also had the situation with inventory levels under control, et cetera.

And on the other side also, for Mack then, we have seen when the delivery, so to speak, issues that we have had for Mack has faded away that we also have been gaining market share. So now we'll continue to make sure that we are very close to the market adjusting accordingly, that we also continue to keep price and commercial discipline because we have great products out in the marketplace here and continue to build on that.

On the tariff side, I should argue it's too early to see the total effects of that yet since you have, for example, the USMCA situation still in play, et cetera. But generally speaking, I feel moving forward that we have a strong and solid platform to build for the future here.

Perfect. And then the second one, you are exiting the kind of mass market C-segment in China with the divestment of the SDLG brand. Can you tell us what is your strategy for the truck business in China and your strategy for the JV with Dongfeng? And also, could you give us an update on the Chinese competition within trucks in China and outside of China?

Yes, big question, obviously, with a lot of different flavors to that. And to start with the mass market, you are correct, we have come to the conclusion in order to really create value, we should also focus on selected segments in China that we also, to be frank, are doing in the rest of the world when it comes to construction equipment, and thereby, after many successful years together in the JV where we have also harvested, so to speak, synergies and knowledge, we have come to the own conclusion, it was time to go separate ways here, one more mass market focus and one more focused focus.

And when it comes to the Truck side, of course, we see as the market will evolve that TCO-driven, life cycle-driven executions and solutions will be our key play. And when it comes to Dongfeng, we are focusing now on continuing to build robustness and resilience together with our partner of DFG in that market.

Then when it comes to the competition, of course, we see that in different parts of the world. We see that primarily in the value segment, and we see that primarily in the emerging markets. But also in that area, we feel that our focus on, so to speak, TCO and life cycle-driven segments, that has been our core play, will continue to be the main opportunity for Volvo going forward.

We are turning to SEB and Erik Golrang.

Two questions then. First one on tariffs. You said costs related to them started to build in the second quarter, but so far, a limited impact. If you think about the net effect from tariffs here and countermeasures, is that increasing on the negative side as we go into Q3 and Q4?

Yes. Of course, we have lead time in that respect. So I mean, the tariff -- the impact from tariff on the results will gradually increase coming quarters then, but it was a limited effect now in the second quarter. So it will increase in terms of impact on the results going forward.

But, of course, also on the gross side, Erik. So, I mean, then it will be a continuous also work, obviously, to make a conversation because this is both an absolute game what are the tariffs and how does it look, but it's also a relative game, how will that play out in relation to the competition and the marketplace as such. So let's see how we can time phase also, so to speak, the gross and the compensation.

Okay. And then the second question on the cash position given the decline year-on-year. I understand you won't talk about dividends at this stage. But when you think about reasons to keep a strong balance sheet, the way you've had in the -- for some time now, have they changed materially or expected to change materially when we leave this year compared to when we left last year?

No. I mean the strategy when it comes to the balance sheet and capital allocation, I mean, it's the same. And we need a robust kind of balance sheet going forward as well given the cyclicality and the other reasons I've been talking about previously as well. But maybe if you're looking at the kind of the cash position as it stands right now, the SEK 43.1 billion that I talked about, if you're looking at the kind of the year-over-year effect on that one, we have a couple of kind of more of a one-off items if I can put it like that. And in terms of that, we have increased equity on the VFS side from 8% to 10%, and that's about SEK 5 billion on the cash.

And then we also have a currency effect of between SEK 2 billion and SEK 3 billion also. So we have some discrete items then. But then I think it's more important to focus on the underlying cash flow. And then looking at the cash flow for the second quarter, around SEK 3 billion, but you also need to remember that we had an impact of about SEK 2 billion then coming from the one-off items. So around SEK 5 billion then if you're adding that one back. And so that's the kind of the more of the underlying kind of cash flow looking at the quarter.

And if you're comparing year-over-year, yes, we have higher investments this year, but it is for a kind of a certain reason and from a strategic point of view with the investments we are making in the manufacturing system that is more kind of temporary now when we're looking at '25 and to some extent into '26 as well. But again, the fairly good cash flow, fairly good control when it comes to the working capital. And I mean, you know the seasonality when it comes to the cash flow in the company that we are kind of back-end loaded throughout the year on the cash flow side.

And I think, just to add, and Mats, you have already alluded to it, of course, we have been very clear over many years that I mean a strong balance sheet maneuvering from a position of strength, and the strong balance sheet is also belonging to the shareholders. We should have the maneuverability for innovation, technology opportunities. And we should also be an attractive case when it comes to, of course, so to speak, returning funds to our shareholders. I think we have a strong track record in that. We will continue to make sure that we have the right balance and with the right priorities in the interest of our shareholders here.

We are moving to Danske Bank and Björn Enarson.

Talk a little bit about delivery mix on the Truck side. You had a little bit of a weaker mix in Q1 in terms of deliveries in Europe and perhaps more of a normal delivery mix in Q2 in Europe. So on Truck order intake, is -- are there any comments to say on mix looking into Q3 and also Q4 for the European part of the Truck business?

I mean, in terms of customer mix, looking at the second quarter, we still have the kind of the -- you can say, the negative customer mix with a higher share of fleet compared to retail if you're looking back in '24. So that effect is there in terms of a negative mix effect on the customer side. But that, I would say, will kind of gradually normalize going forward, but we still have that effect.

And on North America production pace, you are about to take down production a little bit more. Can you give some color on where production will end up?

I mean, if we generally speak about it, of course, there is still a lot of uncertainty. So you need to have a high level of flexibility. We have done this now in a number of steps, starting with the Volvo system of 2 reasons. First, that we had a certain overcapacity to cope with the changeover, and then, we did see that we had an actual, so to speak, overcapacity related to the market development. Then we had a better order coverage and still have a better order coverage for Mack, but as the general sentiment has been, I mean, colored by a higher level of uncertainty, we are also adjusting in that regard.

And we feel now, as we are coming through here quarter 2 and beginning of quarter 2 -- 3, that we are in good balance. And as was said earlier in one of the questions here also, we feel that our order intake is gradually coming back now also because we have, of course, had a rather weak market share during this changeover period and also the situation that we've had with the delivery problems for Mack.

But it has been a lot of focus, maintain, so to speak, the focus of the changeover, make sure that we are adjusting to the actual demand. And then let's see what the uncertainty will bring in now because it's both the EPA '27, and it has been the uncertainty generally speaking around tariffs and the general economic sentiment. But of course, moving forward, we are ready for -- continue to adjust if necessary. And what is important is that we have such a strong lineup now, so it's important also that we continue with our commercial and price discipline here.

With that, we turn to UBS and Hemal Bhundia.

So you mentioned about the impact of tariffs increasing, if I heard correctly, but should we expect these tariffs and material costs to be offset by pricing in the coming quarters? And then on that topic, in terms of pricing dynamics for trucks in North America, has this become more difficult in recent months? And is there any updates you can provide on ongoing topics in North America such as Section 232?

On the tariff side, and like Martin said, I mean, we are also working on the kind of the pricing or getting kind of compensated from the tariff effects, but you can expect some increase in kind of net effects from tariffs going forward. And, of course, we also have -- it's also kind of a more of a kind of a lead time or a timing effect on the tariffs, I mean, given the kind of the supply buildup we have done in terms of lead times. But also from a pure kind of accounting point of view, when you are looking at the cost like this, this is also kind of going through the inventory valuation and throughout the system so to speak. So you have kind of a natural timing effect built into it. But it will increase in terms of a net impact on the P&L then, but still with very limited effect.

We move to Citigroup and Klas Bergelind.

First on Trucks North America, you're keeping the 275,000 guide there. Just want to understand if this is just reflecting your changed view on more destocking ahead, I mean, with a bigger gap potentially between retail and build rates or if you had seen anything in your discussions with your customers, any green shoots at all? I mean looking at the order rates monthly, they are at a very low level at the moment. So I'm just keen to understand the reason for keeping 275,000.

No, but I think you are correct, Klas, that the main reason as we see it is, I mean, where we're in registration so far, and also, so to speak, the destocking in the general marketplace. What we see and what we are doing now when we are adjusting our production level, the production level, as we speak, is not supporting that, but it's the destocking that is the delta as we see it.

Having said that, from a Volvo Group perspective, we see that we have inventory levels on rather healthy levels, but we are talking about the total market. And then we have come to the conclusion of 275,000. Then, obviously, with the uncertainty in the North American market as we speak, that specific figures is maybe containing the highest level of uncertainty. And again, that's the reason why it's so important to keep flexibility, being disciplined on the inventory levels, not hope for the best, but really adjust and work with the tools that you have. But that is correct analysis.

Okay. No, that's great to hear. And my second one is on price cost. Coming back to tariffs, Mats, you obviously said that limited impact so far. The impact will increase in the coming quarters, and you will obviously try and compensate. But can you help us out of the SEK 4.8 billion gross income decline because you're highlighting on the slides that there was a negative tariff cost in gross income how much was it, just so we have sort of a base to work from as we move through the quarters?

No, I wouldn't kind of quantify it exactly. But as you kind of -- as you know, when we are looking at the slides, I mean, it was ranked as the kind of the third item, meaning that it's the kind of the smallest one on the slide. So it's not that from that perspective, kind of material comparing with the volume effects and the mix effects and so forth. So limited effect in the quarter, but it will gradually kind of increase then, but from a low level up.

Got it. Very quick final one on Europe. You are -- obviously, you have increased your production levels. We are hearing of others taking down production a bit here because of some softness in Europe, not only linked to Brazil. You're fully booked to the third quarter in Europe. You're taking orders for the fourth quarter. So I guess no change plans, you don't see anything in terms of incremental weakness looking at Europe and the discussions with the carriers?

No. I think, I mean, we feel that the figures that we have, both the order coverage as such is robust, also in the discussion with our customers. And this is, of course, the European Industrial Systems, so Europe as the core market, but also in the international markets. And it's also valid to say, and I think that is promising for the future, is also that we have been gradually now gaining market shares, maintaining also the commercial discipline. The FH Aero is a success. And thereby, we feel now that the production levels that we have moved up to will have further, so to speak, effect moving into the rest of the year here. So doing this upward adjustment that we have done, and now step-by-step, so to speak, work on that level with stability will be a good level for us moving forward. And the order coverage is solid.

We move to Hampus Engellau with Handelsbanken.

Two questions from me, continue, I guess, on the demand side. First question is related to U.S. and more on a network basis. If you could maybe give us some -- shed some light on your talks with customers in terms of what are they saying and how much is hesitant on uncertainty and how that is playing against the replacement cycle and trade cycle for these guys?

Second question is maybe coming back to Europe, where Klas talked, and if you could talk a little bit about more regionally how the demand is developing for you guys? Where are you gaining share? And also, I guess, if you're taking orders for Q4, we're getting close to, such as to the next year, if you maybe could indicate what type of a pricing we should be looking at for 2026 models? Is it the normal 1%, 2% range?

Thank you, Hampus. No, I think a big part of the discussions that we have, both with our team, our dealers and our customers in North America is about hesitation. So I mean, if you -- not at least when you are a fleet or you're adhered to a fleet, both midsized and the big ones, you can also manage this for a couple of quarters, wait-and-see mode, as we have said during the presentation. So I think that is, to a big extent, the factor.

Then you still have the uncertainty about -- I mean, the pre-buy effect of EPA '27, how should we think about , et cetera. So again, if anything, of course, we are on a very low level now with a high level of uncertainty. For us, of course, it has been a double, so to speak, challenge with the changeover and also adjusting volumes. But on the other side, you can say, maybe it's a good time also to do this big changeover being prepared also for the market because, of course, the underlying mid- and long-term demand will still remain here.

When it comes to Europe, we have continued to see strong development for us in Southern Europe, in Western Europe. And when I mean Western and Southern Europe is U.K., Spain, France, Italy, et cetera. And also Northern Europe has been holding up. And then we have had, I mean, depending a little bit on how the fleet season goes also in Eastern Europe. But generally speaking, I think a good development for us across the board here and a really good work done.

Mats has been into it before. Of course, that we did see order intake at the end of last year to be somewhat weaker when it comes to pricing. It was a mix, but of course, a little bit also of the cycle type of effect. And gradually, we have been seeing that both from a mix effect, but also from a pricing to come back. So there we expect that, that situation of improvement will remain basically. I don't know if you would like to add something, Mats.

No. Well said.

We move to London, Goldman Sachs, and Daniela.

I just have one question, and I wanted to ask you to give us maybe a little bit more of a background on the strategic decisions you've been making on construction equipment. The China market has been tough for a while, is actually now slightly recovering, but you're sizing down there and you're buying a dealer into Europe. Can you talk us a little bit through the timing and why? And how should we think about this on the context of a broader -- on the broader context of construction equipment within the group?

Thank you, Daniela. If I start with China and SDLG, as I alluded to partly during one of the answers here, number one, it is that we have had almost 2 decades of a successful partnership here. We should have that as a starting point. That has meant also acquisition of a lot of knowledge in different areas for the Volvo Group when it comes to our supply chain ecosystem, when it comes to several segments, when it comes to cooperation, et cetera.

Now when we move forward and look at the capital allocation and how we should play to win, we are more focused on specific segments, both when it comes to industrial verticals, but also when it comes to machines and solutions, where we see that a value pool for a company and a brand like Volvo will play out the most.

So partly leading, as Agnieszka asked about, the mass market, the small to medium sized, and we have the strong brand and position in China. So as that market will continue to mature, we will keep our technology and industrial capability for the Volvo brand in China. But if you look at other markets, that is very much where we also play in construction equipment around the globe, that is on the medium and primarily on the heavy duty side of construction equipment.

Then when it comes to our integration forward, that has several, we see that when we do that both on the Truck and the Construction Equipment side, we are building loyalty, we are building closer context for more in-depth solution together with our customers. And we are building resilience over time. And now, when we got the opportunity also to acquire this operation in our core markets of Sweden, the Baltics and Germany, complementing also the deal structures that we have in Finland and Norway and Denmark and Poland and others, it will further, so to speak, strengthen the ability for us to develop more in-depth solutions with our customers in the advanced segments as well as building resilience for the group.

And we see, as I said, also the Construction Equipment will have an increased role in the buildup of infrastructure and defense in Europe. And in that regard is also very, very important to sit on the customer interface. So this is a strategic rationale that we are looking forward to materialize.

Should we expect more dealership acquisitions like this in general for construction equipment or this is a very isolated case?

But I think you should think about it, Daniela, as I mean, step by step. And, of course, if opportunities arise that we see has or fitting into our strategic rationale, we will always consider that. You have seen that also on the Truck side, where we have taken steps that is building a very strong, so to speak, resilience for us over time, a good customer interface, and most importantly, we have had such a material size of the retail business in our own hands for a while now. So we are also confident that we can manage and develop that in a very professional manner. So let's see what the future will hold.

We move over to Jefferies and Michael Aspinall.

One quick one for me. Maybe on -- back on tariffs, can you just talk to your ability to pass on tariffs inside Trucks versus Construction Equipment just in the context of how the supply chains have a little bit of a different setup?

No. I mean, I wouldn't say that it's a kind of a huge difference between the different business areas. But I think it's also kind of premature to have a kind of a final statement about the ability to kind of pass it to customers. I mean, we need to see how this will play out. I would say, so far, we have been quite successful in pushing the effects from the tariffs. But I mean, who knows how this will look by the end of the day because, I mean, we don't really know how this will kind of play out in terms of the different tariffs. So I think it's premature. But I mean, so far, so good when it comes to kind of compensating. But still coming back to that, we will see a net effect negative from tariffs.

Fair enough. One quick one, if I can. European truck orders in the medium and heavy-duty side slowed a little bit in 2Q versus 1Q, 4Q. Was that just that 1Q, 4Q was very, very strong?

Yes, I should say that. And as you see year-over-year, there also we had actually, if I remember it correctly now, plus 8%. I think it was on the heavy and medium-duty side on Europe. So I should rather look at that than compare sequentially given the strength that we did see as a catch up also in the order intake.

We move over to Kepler Cheuvreux with Mats Liss.

Yes. Thank you for taking a couple of questions here. First, I mean, you have this one-off related to the battery demand, well, easing off. And is this sort of a one-off? Or should we expect this to be something that gradually if current demand doesn't sort of recover or increase for battery EV vehicles?

Thank you, Mats. This is, of course, a very important question. And this is, as always, our best estimate of a one-off, i.e., that we have adapted for what we see into the future. We have learned, of course, a lot during the last couple of years now when it comes to demand and how we are formulating our contract commitments, asset buildup, et cetera. So this is currently our best estimate of one-off in terms of then having a robust situation for the future.

Good. And then just coming back to the changes there in construction equipment. I mean, you divested SDLG, you acquired Swecon. What impact will this have on your margins going forward?

Yes. I mean, as we have been very clear on when it comes to the mix effect with SDLG, I mean it's a dilution from SDLG today. So that will have a kind of a positive effect when we are taking out that revenues down.

And then just finally, about if I'm allowed, to what amount do you increase the production capacity in Europe trucks?

I mean, we are not guiding exactly how we are increasing that, but we have said that we have been increasing in step now during the spring, and we will continue to see effects of that increase now moving forward here. So that is what we say. But we are guiding for the total market, 290,000, and we have seen also a good development of our market share.

Very good. We conclude there. So with that, we thank you for everyone listening to this call today. The material is available on the web. So with that, we thank you for participating. Wishing you a great summer. Thank you, and goodbye.

Goodbye.