Volvo 1997 Annual Report Download - page 12

10
Board of Directors’ report
The financial year 1997
During 1997 Volvo pursued the streamlining strategy that was adopted in 1994.
Interests outside the automotive industry were divested. All resources were con-
centrated on developing Group operations related to transport vehicles, on
strengthening the integration of the Group’s different business areas and on for-
mulating objectives and growth strategies.
Divestments of shareholdings
Shareholdings in Pripps Ringnes (49%), Renault (11%), SAS Sverige (5%) and
Fabege (8%) were divested during the year. The total sales amounted to SEK
10.9 billion, including SEK 4.5 billion for the Pripps Ringnes shares and SEK 5.9
billion for the holding in Renault. Thus shareholdings totaling SEK 40 billion
have been divested since the spring of 1994. At year-end 1997, the remaining
shareholdings outside the automotive business consisted of a 3.9% interest in the
Pharmacia & Upjohn Inc. pharmaceutical company.
Industrial acquisitions in Buses and Construction Equipment
A number of industrial acquisitions were made within Volvo in 1997. Volvo
Construction Equipment acquired all of the shares of Champion Road Machinery
Ltd and Volvo Aero increased its holding in The AGES Group ALP, from 25%
to 60%. At the end of the year Volvo Buses announced its acquisition of the
shares of Carrus Oy, the Finnish bus body manufacturer, and an agreement to
acquire Nova BUS, a North American manufacturer of city buses. Carrus O y is
consolidated as of 1998. A letter of intent was signed in early 1998 with Sam-
sung Heavy Industries Co. Ltd. in which Volvo Construction Equipment plans
to acquire Samsung´s construction equipment operations.
Program s in growth m arkets
Volvo India Private Ltd. constitutes the base for Volvo’s operations in India.
Construction of the truck plant in Bangalore, which is also creating opportunities
to assemble bus chassis locally, was begun in April 1997.
In China, Volvo Trucks is establishing cooperation with China National Heavy
Truck Corp. Jointly, the companies will carry out a feasibility study aimed at
establishing a production company in Jinan, Shangdong Province. During the
Autumn 1997 Volvo also signed a letter of intent with the Russian Department
of Transportation in which Volvo declared its intention to increase its industrial
and commercial presence in Russia. In January 1998, Volvo decided to start pro-
duction of buses in Omsk. The plant is initially being dimensioned to produce
250 buses a year.
Expansion of sales financing
At year-end 1997 total assets in the sales financing operations amounted to
SEK 46.9 billion, compared with SEK 22.7 billion a year earlier. The greatest
expansion of operations during the year occurred in Europe and North America,
Eastern Europe today is attracting vehicle m anufacturers and suppliers from all parts of
the world. In this situation, Volvo’s operations in Poland constitute a base for the future.
The picture is from Truck s’ plant in Wroclaw, which in a short period has achieved high
quality ratings for its trucks. Since 1994 production has increased m ore than 150%, to
1,285 trucks in 1997.
During the year Volvo
Construction Equipm ent,
in close cooperation with
Volvo Trucks, established
a m arketing organization
in Poland in order to co-
ordinate m arketing activi-
ties in the construction
and service sector.