Ladies and gentlemen, a warm welcome to this press and analyst meeting covering the Q3 2022 by the Volvo Group. My name is Claes Eliasson. I'm the Senior Vice President, Media Relations, and today we will be listening to our CEO, Martin Lundstedt, and our CFO, Tina Hultkvist. With that, Martin, I think the audience is eager to hear you take us through the quarter. Go ahead. Thank you, Claes. Thank you for that. I have to start to say it's great to be back in Stockholm. It has been a couple of years now since we actually had a presentation here. It's somewhat a sign that things, or I should not say normalizing because they are not, but anyhow, it's good to be here. Also welcome from my side. Some comments before getting into the presentation here. In the Q3, as you have seen also in the report, the group continued to deliver strong performance, both from customer business but also financial perspectives. We are very proud that we continue to pave the way for the transition into fossil-free transportation, a milestone that we will come back to, and a big milestone, I think, for not only the Volvo Group but also for the industry. Maybe most significant, and I have to say, I've been long in this industry, and most significant for me that we are continued to live in extremely turbulent and uncertain times. In that perspective, how the Volvo Group actually has been able to continue all the colleagues and business partners to do an outstanding job to master these really stormy waters and to produce and deliver as many products as possible to satisfy the still high demand of our customers and to materialize also on the strong order book. That has and will continue to be the main priority right now. If we take a look then of the quarterly highlights, we start with a strong, top-line growth that we have seen, of course, a currency tailwind, but despite that, also very strong growth, up to SEK 115 billion, a 21% growth if we adjust for currency, despite the continuous challenges and low visibility in the supply chain, both as regards capacity but also pressure due to accelerated cost for different input materials, and not least, the energy, and in particular, the energy in Europe. The adjusted operating income amounted to a record high for a Q3, SEK 11.9 billion at a margin of 10.3%. Both for sales and operating income, it was the best ever quarter three as we continue to push boundaries to realize our strong order backlog and to build popularity amongst our customers. We also had, which is important in these times, a strong cash flow of almost SEK 15 billion, and all in all, it resulted in an improved return on capital employed that was north of 27% and an earnings per share that also increased with 22%. We continued to launch new sustainable solutions for the transport sector as we started serial production of the 44-ton heavy-duty range, or up to 44-ton heavy-duty range, for Volvo, and we will come back to that. That is a major milestone, of course. If we look to the volume development in the quarter, total truck deliveries increased with 21% to 53,300 units. That is also record volume for the Q3, which is both significant and astonishing, I have to say, given the uncertain times. Thanks to, and I'm almost getting emotional when I think about it, the relentless efforts in our sourcing and industrial system and with very, very close cooperation with all truck business areas that is required. I cannot enough underline this team effort in very, very turbulent times. Volvo Construction Equipment deliveries decreased with 7%, mainly on the back of lower deliveries in China. Also here, we see really heavy lifting to execute volumes in other regions. When it comes to the demand for electric vehicles and equipment, that continued to increase rapidly. If we look to the 12-month rolling order intake, it passed actually 4,000 units, so it's starting to be somewhat material now, but I think the acceleration is really good here. For the quarter, electric orders across all business areas were above 1,200 units, and delivery is above 500, so a strong momentum still and also good book-to-bill ratio. Service sales, service development, that is very close to my heart, as you know. We also had a strong service growth, at 24%, and we, if we adjust for currency, plus 10%. That is showing the continuous high activity level, first and foremost, among our customers, but also that the efforts to increase contract penetration is continuing and is paying off. That is, of course, important now when we are also building a strong population with the high deliveries. As we continue to work close with our customers to provide them with the best uptime and productivity, service sales 12-month rolling is now above SEK 100 billion, an impressive achievement by the organization. The good news is that we still see lots of potential to continue on that journey. When it comes to the truck news, we have taken significant step, as I said, on electrification during the quarter in September, week 37 to be precise. As the first global, and I should really say the first truck manufacturer, we started serious production of heavy electric trucks with the trucks up to 44 tons gross combination weight. That is covering the Volvo FH, the Volvo FM, and the Volvo FMX models. They were then added to our already broad range of medium and also heavy duty or semi-heavy-duty trucks. After this launch, Volvo Trucks electric portfolio could cover around 45% of all goods transported in Europe today. Let's have a look how it looked in Tuve when we started production. We have a small film here with Sandra, who is the head of Tuve operations. Welcome to Gothenburg, the hometown of Volvo Trucks. We've just started our serial production of our heavy duty electric trucks here at our factory in Tuve, a real milestone. The electric trucks are produced on the same line as our diesel trucks, but where the combustion engine usually goes, we fit components for the electric trucks instead. That means that we're using the same people, the same tools, and the same assembly line, and we can quickly scale up the production volumes to meet an increase in demand. We've been producing trucks here in Tuve for over 40 years, and now we're using that solid competence when integrating the electric trucks in our flexible production system. We are very excited that we're now increasing the speed when it comes to offer the customer zero emission transports. Thank you, Sandra. I mean, how cool is that? This is actually history unfolding in front of our eyes. In addition to that, I mean, we also got an important order from Amazon. We will supply of this range now 20 heavy-duty electric trucks to them in Germany. These vehicles have a range of up to 300 km, but also with route planning together with them, it can cover up to 500 km during a normal workday if a top-up charge is added in connection to a scheduled break or a scheduled loading, unloading situation. So those are the application we will start to see here. Also in October, just after the quarter closing, Renault also announced Renault Trucks opened up for pre-order of its 44-ton electric heavy-duty range. Production of these vehicles is due to start at the end of next year in Boulogne-Billancourt, France. In August, we initiated also the process to establish a plant for battery production in Sweden. We do this to meet this growing demand for battery electric heavy duty vehicles and machines, as we just have discussed here. We will establish this large scale production plant for battery cells in Sweden for high performing batteries and battery cells, along with partners, and we will use fossil-free energy. This is an investment that will take place gradually as demand will continue to grow and will complement volumes from other partner facilities. When we look at the truck market forecast, on the back of the high transport activities that we still continue to see and also pent-up replacement needs, the demand for trucks continue to be strong. The industry remains driven still by supply rather than demand. We keep our 2022 market forecast unchanged both for Europe and North America, but it will ultimately also for this year depend on how much the industry as a whole can deliver. As a first and early forecast for 2023, we guide for a similar level as 2022, of 300,000 units in both Europe and North America. The market in Brazil is currently strong, especially driven by the agriculture segment and also pre-buy ahead of Euro VI regulation that will start in 2023. We expect the market to soften somewhat into 2023 with a level of 80,000 units. Demand for trucks in India after some weak years continues to grow. The forecast for this year is increased to 350,000 units and 400,000 units for next year. We reiterate the Chinese market for this year at 800,000 for medium and heavy duty and a moderate increase next year to 850,000 units. I also would like to be clear that the market forecast are based on current visibility, which is still low and with significant uncertainty. When we look at the truck orders in quarter three increased with 27% as we gradually have opened the order books, and we have seen strong momentum. You had already seen that for the American figures obviously. also as you can see in our report also that goes for Europe and not least, strong momentum for Volvo Trucks. Deliveries increased with 21%, as I've already said, and it was a Q3 record, both in production and delivery volumes, as we continue to push the boundaries to satisfy the need from customers. This has, of course, come along with extraordinary efforts and related costs, but it has been the right balance as we build position for the years to come and execute on the strong order book. As regards market shares, we start with Europe, where we had a strong development both for Volvo and Renault growing to 18.9% and 9.7% respectively. Strong development. The electric market share in Europe was strong with 30.9% for Volvo and almost 23% for Renault. In North America, Volvo is growing up to 10.3% while Mack is down to just below 6%. For Mack, we are currently more hit than the other brands since we have specific problems with a number of specific suppliers for the Mack brand here. In Brazil, we have a strong performance and growing the market share to 25%. In South Africa, coming down somewhat just above 20% but from high levels, whereas Australia is coming back now with a combined market share for Volvo and Mack again north of 20%. If we then move to construction equipment and some news here, the global rollout of electric sale of electric equipment continues. We are now also adding South Korea and China, and as you can see here, for example, with ECR25 and EC55 electric compact excavators, but also along with an extensive offering of charging solutions. We do see a continued good momentum in construction equipment's electric sales with order intake up 98% and deliveries up with 147%. When it comes to the market forecast for construction equipment, the construction activity has remained on good levels in many regions. We have already talked about China, obviously, and the correction there. In other regions, primarily driven by the ongoing infrastructure investments, and in the longer term, there is a need to continue to renew and expand an aging infrastructure. However, recent interest rate increases have made customers in some markets more cautious about the near future. The market forecast update is as follows. As you can see for North America and Europe, we guide for a similar pattern. We change a little bit the 2022 forecast. We lower by 5% points, so now we guide for a +5% as midpoint, and we guide for a flat market after that, both for Europe and North America in relation to 2022. South America, no change for this year, +10%, and a somewhat then decline for next year, -5% as midpoint. For China, to comment that also specifically, no change for this year, -35%, and a further decrease then, with -10% as midpoint for next year. Also here, of course, market forecast are based on current visibility that is low, with significant uncertainties. Order intakes. Net order intake declined by 32%. Main reason for this has been restrictive order slotting into our order books due to the very large order books that we have. You can see that I normally take North America as an example. We need to execute on the bubble here. From time to time, I get the question, I mean, how can you manage that? I think the good news is it's first in, first served, so it's of course a moving. When the order books are really long out in time, we need to be restrictive. But it's also somewhat more cautious customers in Europe that has impacted. The lower order intake is also an effect of the halted sales in Russia and high order intake in quarter three last year, so comparison figures. Order intake in Europe was 28% lower than last year when excluding Russia. When it comes to deliveries, it decreased by 7%, with a negative impact from lower volumes in China, and then partially mitigated by better deliveries in other markets. In Europe, in particular, deliveries were 3% higher than the prior year when excluding Russia. Volvo Buses that have been struggling with a low demand and very uncertain outlook, given all the restrictions, but order intake increased with 3%. Significant orders were received in Mexico, almost 400 units, Brazil, almost 200 units, and Australia, 130 units. Deliveries increased with 19%. As you can see on this photo or slide here, the new Volvo 9800 Euro 6 coach is well-received in Mexico. We have received major orders that we deliver in next year, and we have actually 57% market share year to date in the coach segment in Mexico with good profitability. On the Penta side, the order intake was on par with last year. High levels, high activity levels amongst our customers. Deliveries increased by 14%. Also for Penta, the quarter has continued to be a lot about prioritizing the realization of a strong order book with lots of extraordinary efforts and thereby also extra cost. A new range of variable speed generator sets for marine applications has also been launched during the quarter. When it comes to financial services, of course, a very important indicator about the general state of our industries and verticals. It was a strong quarter despite increased competitive landscape. We had record new business volumes for the Q3. New retail finance volumes up with 24%, or 12% currency adjusted, despite the loss of the Russian business and the slowdown in China. We had stable finance penetration levels despite this intense competition with decreased spreads. We also had a very good portfolio performance. It remains stable in most parts of the world due to the good customer activity levels, both for transportation and construction work. That concludes the business update, and I will hand over to Tina for the financial update. Thank you very much, Martin. Also from my side then, nice to see everyone again, good to be here. Let's move into. Yeah. Let's look at the sales for the group. We have sales in the quarter of SEK 115 billion, which is an increase of SEK 17 billion if we exclude currency impacts. We have a good volume growth in the quarter, but we also have good support from good service sales, both in trucks and in the bus business. On top of that, we also have good improvements in the price realization, which impacts the sales. All regions are contributing, but we have the main impact in North America, where the deliveries from trucks and VCE is increasing significantly from last year, due to the high business activities in Americas. On top of that, we have good support also from the currency impacts, and the main part of that is of course driven by the development we have in, on the dollar. Moving into the group performance, we have an operating income of SEK 11.9 billion in the quarter and a margin of 10.3%. Despite the supply chain disturbances that has continued throughout the quarter, we managed to get really high volumes out from the system and our plants. The good service sales that Martin and myself also talked about is also contributing to the financial performance. We have worked actively to increase the prices in the quarter, and we have managed to offset the extra cost that we have from inflation. We are continuing to invest in the current platform and in the coming platforms on the product side. The net impact from capitalized and amortized R&D, you can see on the slide here, it's positive in the quarter. We expect this to be roughly on the same level for next quarter. That means that on a full year level, we will have an impact, net impact from capitalized and amortized R&D of roughly SEK 2 billion for the full year. We have a bit of an increase on the operating expenses. A part of that, roughly half, is coming from currency impacts. Currencies is supporting the performance in the quarter of some SEK 2.4 billion. We guide usually on currency impacts and the transactional impact, and our guidance right now is that this will land on a level of roughly SEK 5 billion for the full year. Moving into cash flow. We have a strong cash flow in the quarter of almost SEK 15 billion. Cash flow is mainly driven by the result, but we have also, despite the supply chain disturbances, managed to release almost SEK 6 billion from working capital. Part of that is coming from the inventories, and inventories remains to be a very important area for us to focus on, especially considering the market outlook that we have for the coming year. We keep strengthening the financial position, and we leave the quarter with a net cash of almost SEK 60 billion. Moving into trucks. Good volumes in trucks in the quarter. Best Q3 ever in terms of deliveries, despite the supply disturbances that we've had. Sales is also supported by the good service growth and the increased prices that we have made in the quarter. Supply disturbances has continued in the quarter, and that has also impacted the industrial system where we are not running with full efficiencies as of now. With the rising energy prices that we've seen, especially from after summer holidays, we have seen an increasing need to support our suppliers financially. This has gradually been growing throughout the Q3, and we expect that to continue also in the coming quarters. At the same time, the commercial organization has done strong, really strong efforts to increase prices, and we have been able to offset the extra cost for inflation in the quarter. Investments in R&D is continuing in trucks in order to stay ahead of competition, and we also see a bit of increases on operating expenses, mainly, partly connected to the increased business activities and the volumes, and partly connected to the currency impacts. The truck market in China was strong last year. This year, the truck market is down by roughly two-thirds. That has had an impact on our joint venture in China, DFCV. All in all, we have a margin of 9.7% for trucks in the quarter. Moving into construction equipment, also VCE is impacted by the market drop in China. The construction market is down by roughly half of what it was last year. On the other hand, the North America business for construction equipment is growing. We have worked intensively with price realization for VCE, and we have been able to offset the extra cost for inflation also in construction equipment in the quarter. VCE ends the quarter with a margin of 15.6%, supported by currencies. Moving into buses. Good sales growth in buses in the quarter. Sales is driven by more electric buses and also more complete buses from Mexico. We also see a good service growth, in buses, particularly in Americas, which is driven by the higher utilization of the fleet that we have there. This is a pattern that we have seen for the last quarters, and that is continuing. In buses, though, we have long lead times from the day when we take a contract with a customer until we actually produce and deliver the buses. That has meant that we have not been able to offset the extra cost for inflation for buses in this quarter. Despite the higher sales, buses is leaving the quarter with a margin of 2% supported by currencies. Moving into Volvo Penta. Volvo Penta has a strong demand from the customers, both on the engine side and on services. And we have good volume growth, sales that is up by 20% excluding currencies. Price increases are coming through, and we are in Penta able to offset the extra cost for inflation in the quarter. All in all, though, the supply chain disturbances, the investments that we do in transformation in Volvo Penta and a bit of increase in the operating expenses has impacted the financial performance. Volvo Penta leaves the quarter with a margin of 13.3%, supported by currencies. Moving into financial services, the customer financing operation continues to do well, and we continue to grow the credit portfolio. Our customers are continuing to do well. We have a healthy portfolio in VFS with low delinquencies and low write-offs in the quarter. On the other hand, we start to see a margin compression connected to the higher funding rates, and this has not been possible to offset in the market due to the high competition from the banks. This, together with some higher operating expenses in VFS, has impacted the profitability. All in all, though, we still have a good profitability in the customer financing operation with a return on equity a bit above 16% for the last year. By that, I think I stop the financial part of the presentation and welcome Martin back on stage. Thank you, Tina. We'll do finally a short summary then of the quarter. I think this has been a quarter with a lot of moving parameters, so that's the reason also I will spend a little bit more time on that, what has happened, both when it comes to the priorities and the results of quarter three. First and foremost, it starts with our customers out there, and their activity levels that continue to be high, which is then translated into a strong demand for machines, trucks, and services. Therefore, our clear main priority is to continue to materialize the strong order board that we have, to satisfy, of course, the customer needs, but also for us then to build an even stronger population in the rolling fleet for the future that will serve us well also in the coming years here. The outcome in financial and operating performance is Q3 records for sales and operating income for the group, as well as record production and delivery volumes, with increased market shares for trucks. The flip side, when you make that priority is a somewhat weaker margin, especially then on the truck side, but with strong operating cash flow and return on capital employed exceeding 27%, and also an increase of the earnings per share with 22%. This is also confirmed by the continuous strong order intake that is actually confirming the activity level among our customers. We also continue to lead the transformation, as you have seen both in the field and what we have talked about, with the start of serial production of heavy-duty trucks in Sweden. All in all, I'm very proud of what all employees, all colleagues, all business partners have done and how actually we have achieved the right balance in a very turbulent quarter. By that, Claes, I think we conclude the presentation and then we open up for questions, right? Thank you very much, Martin, and you're absolutely correct. That is what we are planning to do now. So in an ordinary manner, we will let you ask your questions, and if you could limit them to two, we would be very grateful. We actually have our first questioner. Hampus. Hampus, go ahead. Oh, sorry. Hampus Engellau, Handelsbanken. Two questions. I'll go on the FX. SEK 5 billion contribution guidance for the full year. Q3, 30% of global construction EBIT was FX. Should we expect a similar mix going into Q4? Second question is more on the order intake in North America. We had market being down 4% with fully booming September, and you were down 14%. Is this just an effect of being maybe late in totally opening up the order book while the others were a bit ahead of you guys? Those are my two questions. Thank you. Yeah. I think on the currencies, I think, we give you the guidance that we have there, and as long as the mix is continuing, I mean, for VC, it's also a consequence of the fact that we are growing in North America, so that is impacting. I think that, We should not talk about, of course, what the result will be, but I think that the trend is in sort of that direction, yes. When it comes to the order intake, I think when we look at the different brands in North America, obviously we if you start with Mack, we have a very long order book still, and that you can see also when you look at the curves actually how we are continuing to manage that carefully also. The same goes actually for Volvo Trucks North America. It's not the problem with the length and the quality of the order book. It's more about, I think, what are the different strategies for different brands given that continuous high demand that is out there. What we have seen when we have now gradually opened up, I mean, the customers are there to book. It's still about managing the lead times and because both for the uncertainty that we still have in the supply chain, and we have really stretched, as you have seen also with the market share development, but also given the uncertainty about the cost developments, so we have a serious discussion with our customers. I mean, all our customers have faces. We know them. We need to live with what we are concluding for a long time together, so that is the balance. Thank you very much, guys. Let's take Bjorn from Danske. Thank you. Yes, first question on the battery plans, investments. A lot of uncertainty on how much you will spend. Can you say something on the headwinds on dividend capacity from those investments? Second question also on batteries. If you can say something on the returns on those investments. I mean, is this some CapEx, or should we expect lowered returns on capital, or how should we think there? First and foremost, when it comes to the expansion then of cell capacity, I think it's important to remember that regardless if you do it yourself or with partners, you have to pay it because there will be dedicated lines. Either you take it on, I mean, operating expenses, or you take it as CapEx or a mix between the two. We have preferred to take it as a mix between the two. We think that is wise because then we will also secure the capacity, since we also have a leading position when it comes to electrification. This will be gradual over many years, and knowing the size of the group, et cetera, and knowing also the approximate investments that has been announced in other similar projects, I think it's not that difficult to do the calculation on how big the risk it will be of significant headwind. That I cannot see from my perspective, because we are standing firm with our financial targets and also what we talked about during the Capital Markets Day, meaning that financial targets but with significant growth opportunities. That is, so to speak, the story moving forward, and that is, I think, also responding to the second question. Excellent. Shall we see if we have someone on the phone as well? Operator, do we have someone there? Yes, we do. Ladies and gentlemen, as a reminder, if you'd like to ask a telephone question, please press star followed by one on your touch tone telephone. The first telephone question today is from Nancy Nie from Goldman Sachs. Please go ahead. Hi, good morning. It's actually Daniela here. Thanks for taking my question. I'll ask two as well. The first one I just wanted to understand on the margin development on trucks, on the year-on-year margin development. Understand sort of some of your comments on headwinds, but it looks like looking at deliveries and sales that you're doing better on the pricing. We're hearing a lot about easing on supply chains, raw material costs falling. The key point that seems new is the commentary about supporting your suppliers. Can you give us a little bit more detail on that? And is that the main cause of the year-on-year drop, if you could help us there? The second point that I wanted to ask was regarding, as a follow-up actually on the prior question on dividends and cash. I think in the past you very helpfully had guided us to, I think it was around an operational cash need of about SEK 30 billion staying in the company. As you were very cash generative this quarter. You normally are very cash generative in Q4 as well. Does the environment change in any ways? How do you think about that cash that you need to keep versus what you see as excess cash to potentially distribute to shareholders? Thank you. I don't know, Tina, if you would like to start. Yeah. Maybe I Yeah. Maybe I should start with the margin on trucks and what is the impact there. What I mentioned there on the support to the suppliers, that's something that we've seen gradually throughout the Q3, and that is of course a part of the extra costs that we are having that will continue going forward. We also have extra cost in production connected to what Martin was talking about regarding that the extra marginal trucks that we are doing are quite expensive. We have found that to be the right balance in order to support our customers, to stay in the relationship with the customers, and also to build the fleet out there and really to earn the money on the service business going forward. There is a balance to strike, and this is what we have chosen to do, and we think that is the right way in order to keep the relationship with the customers. All of you know, of course, I mean, if you look at the P&L of a truck, of a single truck over the life cycle, even if the marginal, I mean, the last 5%-6%, of trucks now are coming with a, so to speak, low gross margin, theoretically, it's a really good deal, also for us. More importantly also, it's a really good deal for the customers. I mean, not doing that priority when we actually can stretch the system is not the right decision to take in a situation like that, to Tina's point. Maybe just to add, of course, we have a mix effect also. When you look at, I mean, the product mix on trucks, and when you look at the mix between hardware and services. Because even if we have been growing services really well during the quarter, you don't do it with the same magnitude as if you can accelerate hardware as we have been able to do now. There are a number of parameters. I think the main message is that the gross income margin still has a high quality, well understood, well-managed, and it's all about how you put the priorities. The priorities has been on the absolute level of volume serving customers, on the absolute level on operating income, because that is the value creation and the cash flow. A very decisive prioritization. When it comes to our financial position, obviously, I mean, as always, this is a discussion that first will take place in the board and then eventually being contemplated as a proposal to our shareholders. I think it has been clear to everyone that the group is clear about the fact that strong financial position, good financial maneuverability is needed in order to lead the transformation. We are also being clear about the fact that we should be an attractive case to our investors. If we look back, I think we have been very consistent in that story. At this moment in time, I think everyone is really grateful also that you have industrial companies with a strong financial position. I think that is serving everyone well, not least the shareholders. Good. Yeah. You were good there? Let's take one in the room or two. Perfect. Thank you. Agnieszka Vilela at Nordea. We've learned through this report that you have this kind of new pressures when it comes to the cost side, you're supporting your suppliers. I just wonder, given the fact that you have taken so many orders in the quarter, did you take that cost situation into account when you set the prices? Do you believe that you can kind of balance it off when you deliver these trucks? Well, we always think about the cost side when we work with the prices. Mm. We have been quite successful raising prices and increasing prices in the last quarters. Is the case also for Q3. We will continue working actively with that, of course, and it's always a balancing act between what we see on the cost side and what we need to do in order to offset that. What we have done historically, we will continue doing, of course, to do our utmost to offset what we see. Maybe follow up on that. Do you see any kind of cost headwinds easing already, when it comes to commodity prices or freight costs? There is a bit of a lead time also in the commodity prices and how they are moving, so that's one part of it. The commodity prices are a little bit going down, but on the other hand, we see the other cost increases that we mentioned from the suppliers, which is increasing. How that balance out, all in all, I mean, the net impact of that, it's very difficult to try to foresee and how the timing of that is coming in. It's very difficult to forecast exactly how that comes in, but we see both those trends coming on. I think also just to add to what Tina said, I think we have a very robust methodology. Then it can always be a little bit about time phasing. We have seen that, and not only during, between different quarters, but also between different months, actually, because it has been so quick development, both up and down, but mainly up now lately. But of course, we will start to see effect when we look at both logistics and raw material. To Tina's point, following a robust methodology, how we work with our price realization together with the cost increases. Thank you. All right. Thank you. Operator, do we have any more questions from the telephone line? Yes, we have quite a few. The next question is from the line of Mattias Holmberg from DNB Markets. Please go ahead. Hi, everyone. Thank you for the time. I have two questions. I'll take them at once. Last year, we saw quite large truck order cancellations in the North American market. I understand it was due to oversubscriptions, more in the context for your peers rather than the Volvo Group. When I look at production schedules, it once again seems like it's quite big oversubscriptions for Q4 in North America. My question is, do you see any risks of cancellations to orders or orders being pushed into 2023? Or would this rather be a risk for other players in the industry? My second question is what's relating to the battery factory in Sweden. Would want to hear if you could elaborate a bit on what geographic coverage you expect from this one and what your plan is on battery supply for geographies that are out of scope to be covered by the factory in Sweden, please. Thanks. Yeah. I mean, I start with North America, if I understood it correctly, I mean, if we see any risk for cancellation and the quality of our order book and the activity level and so on. We were actually over, a couple of us, last week, and very strong activity level. We had also, of course, business reviews, and we feel that what we have in the order book and also what we see in order intake is very robust, actually. That is also, of course, we have a rather sizable, as you know, used truck retail arm also with Arrow. So we have a good view also what is happening there. We have seen some sort of decline, natural because it has been extremely high pricing on the used side, as you know. Generally speaking, we feel it's a robust situation, well-managed. If anything, that's also as you did see on the Mack Trucks order intake, little bit hampered by the fact that we cannot just continue to push out the order book in time. On the cab manufacturing in Mariestad, Skaraborg, it will be primarily for Europe, and we will of course have also regional footprints for other geographies, and that we will continue. As you have seen, we have already announced a number of partnerships where we are combining our own capacities also with partnership capacities, and that will be the strategy moving forward as well. For several reasons, it will be regional value chains. As you know, there are a number of both regulations and trade optimizations around that, but also for us it's about logistics optimization, and it's about also really building green value chains for that specific part. It's primarily for Europe, but also of course for European production, meaning serving other markets as well. All right. Thank you. Just if I could clarify the first question, if you see any risks for over subscriptions in the bid slots? You mean hedging basically? Speculations or? Y-yeah. No. Because if you look at also our dealer pipelines, et cetera, are still on extremely low levels. No, for the time being. Thanks for that clarification. Okay. Thank you. Operator, could we have the next one, please? Next telephone question is from the line of Klas Bergelind from Citi. Please go ahead. Thank you. Hi, Martin and Tina. Klas at Citi. I just want to start first on the truck margin, but looking beyond the current cost inflation as most of this is temporary, and zoom in on the likely drop through when volumes eventually come down. You have a lot of inefficiencies that will reverse under weaker demand backdrop. To me, it looks like the first 10% down on volume will see pretty stable margin as these headwinds reverses. Would be great to get your thoughts here, Martin. Lots of headwinds, but this under absorption effect can become pretty big tailwind when things are easing. Thanks. No, I think you are absolutely right, obviously, when you're, as we said, first and foremost, you have a natural mix effect between products and services. Since you're always optimizing for volumes in the two mainstreams there, that will in itself have, so to speak, an opportunity into it, if I put it like that. The second piece is obviously, as you say, that is clear, and that is the reason why we are clear about it. If we should have gone for margin optimization, we should not have produced to the level that we did, then we should have produced X percentage less. If that should have been the end game, it was not the end game for us. The end game was to push the boundaries when it comes to production and delivery volumes, because that is the right decision to take now to materialize the order board. We took a deliberate stance that will have a dilution temporarily for the margin. In our book, that's the right balance for the customers, for the shareholders, and for them, please. Yeah. Makes sense. My second one is a follow-up to the question before on upcoming investments. A lot of things going on. We have cell manufacturing, assembly of battery packs. We have the China manufacturing. We have infrastructure charging. We have ongoing investments into cellcentric and so forth, and now R&D is trending higher. I don't think it will give us an all-in investment number, Martin, but maybe you can comment on the timing. When will cell manufacturing kick off? And then in particular, zooming in on your China localization effort, whether that will start consuming CapEx already in 2023. Thank you. Yeah. I mean, first and foremost, I think partly and very important, well, part of your question was very important, and that, exactly, to mention how we are actually working with these different initiatives is a lot about partnership, right? That is to actually drive the agenda, but at the same time, also make sure that we are sharing these efforts, both from a pure CapEx, but more also from a resource allocation, but also from a speed of execution, actually. Because, I mean, what we are now doing is that we're moving from a brown fossil-based platform up to a green one, and that in certain aspects need also a coordinated effort. I think we have found a very good way of actually working with this mosaic of different initiatives. Having said that, on the cell manufacturing, that will be, as we have said, a stepwise investment over a decade or so, meaning that if you look at the total numbers, that will not be. Of course, it will be material because it's a big bet and a necessary bet, as we have done on ICE powertrain components, both internally and externally, where we in all main components have dedicated lines. So that is similar. But also when it comes to the China footprint, we are continuing. All the different prerequisites are not fully in place, so we will see when and how that will actually be executed. I think the main story, as we've said, is that we have reiterated our financial targets, and we have said that this transformation is giving a growth opportunity that will be accelerated in relation to the historical growth or higher growth than we have seen historically. That is including actually how we think about CapEx, and how we think about R&D. We feel that we have a great story to execute upon. Yeah. No, it's in line with our view that this is gonna be spread over time, so that's good. I was just thinking whether any of these categories will be a little bit more front-end loaded. Given that China is now coming back, and it's such a great opportunity on premium heavy duty, whether that will be more front-end loaded over the investment horizon. That was really my question. Sorry. Yeah. No, no. Again, I mean, we are not disclosing the exact numbers on that, but I think those are big investments, as we said. They should be manageable in what we have said about our financial targets and our growth ambitions. Thank you. All right. Thank you very much, Klas. Could we please have the next one? Next telephone question is from the line of Tom Narayan from RBC. Please go ahead. Hi. Yes, Tom Narayan, RBC. Thanks for taking the questions. My first one's on the 2023 market outlook for trucks. So just curious if you could comment on age of fleet, if you had any metrics there. It seems the biggest driver seems to be, you know, the pent-up demand, obviously. Just curious how you put together that guidance and, you know, what kind of recession are you baking in for Europe, for example? My second question, and I know we've already gone over this quite a bit, on the cost issues on trucks. You know, there were the four of them, I understand, you know, material, R&D, freight. The selling expense, I just wanna understand, is this just related to the higher orders? You know, in which case it's kind of a good thing, you know. Just trying to understand the sustainability of some of these cost items. Thanks. Should I start? As we see it, I mean, now it has been a couple of years, actually, where supply has decided the market and not demand. I will not go through in detail how we assemble the different data for different markets, actually. I think that we have a pretty robust way of doing this. Remembering it's still our early guidance for 2023. We acknowledge exactly what you said, Tom, high uncertainty, how will it look like when it comes to the general economy, et cetera. Given the fact that we have had this supply constrained market for some years, when we look at the age of the fleet or the aging of the fleet, when we talk to the customers, when we look at our connected data, et cetera, that is supporting a rather big part of this. So, the majority of, I mean, the volume build up, not least in Europe, is based on replacement and not when it comes to expansion. We see that when it comes to fuel consumption, when it comes to power maintenance cost, et cetera, that is important and big deal for the customers to get these trucks out. Yeah, that is basically how we think about it for the different regions and how we build it up. That is both a bottom-up analysis and a top-down and a lot of different type of triangulation, I can tell. This is the forecast. Coming back, let's see if this works better then. Coming back to the cost side in Group Trucks and the selling expenses. Of course, a part of the increase that we see is connected to the higher business activities that are ongoing. It's quite substantially higher than if we compare to where we were last year. Of course, the selling expenses and the commercial areas, they are spread in all regions and markets in the world. That, of course, has a quite substantial exposure to currency impact. That's the second part in the selling expenses. Business activities and currencies are the drivers behind. Okay. Thank you. Thank you. Let's take another one. Yeah, go ahead. Next telephone question is from Michael Jacks, Bank of America. Please go ahead. Hi. Good morning, Martin and Tina team. Thanks for the presentation. I have a question on costs as well. I know we've covered this extensively already. I guess my question is more that the gross margin deterioration is. It's much smaller than the deterioration that we've seen at an operating margin level. This seems to be most visible in the Construction Equipment, where if you were to strip out the Forex tailwind, the margin seems to have deteriorated much more. Just if you could possibly give us a sense in terms of why the selling costs or R&D impact would have a higher impact, relatively speaking, in the Construction Equipment division. I'll start there. Thanks. I can start, and then you can add on, Martin. I think also in VC, of course, the currency impacts is a main part of the explanation. Big operation in other countries, of course, outside of Sweden, that has a big impact on selling expenses, also the general activity levels. We are also investing quite a lot in product platforms and transformation activities, electric vehicles and so on in the construction equipment, and that is somewhat increasing. That is a big part also on the drop between gross income and the operating margin. No, I think it's a great outline. Did you have a second question as well? Yeah. Thanks. Maybe just a follow-up on that one quickly. Just in terms of the overall level of the OpEx and R&D spend in construction equipment, should we expect that to continue for the coming quarters? I think currencies, we should not say so much about what will happen with that, going forward. We will be there of course, with whatever currency impacts that we will have, but the investments will continue, of course. We are keeping investing in the construction equipment. On the R&D side, yes, we will keep investing in new products also in that portfolio. Just to add to what Tina says from a business perspective, I think we have done and the Volvo Construction Equipment team have done a fantastic job to really lift that company in all different aspects. I mean, even with currency tailwind now 15.6% in the quarter, and of course, we should invest in R&D. Of course, we should invest in innovation when we have this platform. Of course, we should do that for the future. So yes, absolutely. That will be great. Understood. Thanks, Martin. Thanks, Tina. Maybe one final question just on construction equipment. Are you seeing any signs of improvement in customer activity levels in China yet? Shall I take it, or? Yep. No. I mean, of course there is certain activity, otherwise the market should have dropped even more. I think it's too early to say, as you know, also the congress and conference is ongoing now, and let's see what will happen after that. I think again, the organization has done a good job to make the necessary reductions. We are following it very closely. As we also said in our guidance, I mean, flattish market, we are guiding with the current knowledge and for trucks and a further decrease as we see it, less so than for next year in relation to this year. That is our current expectation. We know that there can be changes depending also on how the cooperation between the state and the corporate sector is working in China. Thanks, Martin. Maybe just bringing this together. Sorry, one final question, if I may. That's number four now. I know. I'm sorry. Maybe just in terms of you mentioned in the report you've seen a mild slowdown impact in construction equipment in Europe. In the event that mild slowdown becomes a more severe slowdown, how quickly could you cut back on those costs that we mentioned in my second question? That will be my final question, and thank you. No. Both for construction equipment, for the other business areas, of course, key priority for us is continue to have a high flexibility in all different cost disciplines, because we are humble. We know that cyclicality is strong from time to time, and we need to have that high flexibility. We have a contingency for that. Okay. We don't want to overstay our welcome, but I think we have time for one more question there anyway. The next question is from the line of Miguel Borrega from BNP Paribas Exane. Please go ahead. Hi, good morning, everyone. Thanks for taking my questions. I have two. The first one just on the truck margin. I just wanted to understand the volatility in Q3 relative to the H1. Was there anything abnormally high in the H1, perhaps a pension release from higher interest rates? Because actually services weighted more as a percentage of revenues than engines in Q3 relative to Q2. Then I know that you don't give any guidance for margins, but where do you see this normalizing? Are we talking about the 10%? Is this the level you see more normal, or do you aspire to maintain the 12%? Would you like to start? Sorry, I can start. I mean, what has been new since what we saw in the beginning of the year is, of course, the extra cost to support our suppliers. I think that's one thing to stress further. Also, the extra cost in production connected to what we call the marginal trucks. That has also been sort of increasing as we have been moving along throughout the quarter or throughout the year. I think that's two main explanations. Maybe you want to add something also, Martin. No. Then obviously, I mean, when you say volatility, it depends on how you look upon it. I mean, we have a vacation quarter also. That is always, I mean, a little back and forth that you need to take into account. As I said, I think that might be one of the key messages when we look at the composition of the gross margin. I feel that we have, so to speak, a good balance in that, given the decisions that we have been taking. We don't see a portent from a very extraordinary situation now with cost pressure coming from energy prices, et cetera, for our suppliers. We have been able to push that through in a positive way. That we have taken decision to further stretch the system. I mean, to get out 50,000+ units in a quarter three here does not come without really hard efforts and also deliberate decision with extra costs. that is how I see it. I mean, you should not overstate the volatility in my book. Okay. I think that concludes this. Meeting. Thank you very much. Jan, you're with 26th next time, right? Absolutely. Hope to see you again by then. Over and out. Thank you very much. Thank you very much. Thank you. Take care. Thanks.