Volvo 1997 Annual Report Download - page 33

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31
Increased sales in Europe
Volvo Penta’s net sales increased from SEK 3,885 M in 1996 to SEK 4,466 M in
1997. Sales of marine engines for both recreational craft and commercial vessels
were especially strong in Europe. Sales of industrial engines rose as a result of
continuing strong demand for engines used in generator sets. Substantial de-
liveries of diesel engines were made to Saudi Arabia, for use in pumping equip-
ment in irrigation installations.
Significantly improved operating results
As a result of the increased sales, the positive effects of foreign exchange move-
ments and a more efficient sales organization, the operating loss of SEK 27 M in
1996 was converted to operating income of SEK 181 M in 1997. The operating
margin developed positively and amounted to 4.1%, compared with a negative
margin in 1996. The return on operating capital was 14% (negative return in
1996).
Several new m arine engines
During the year Volvo Penta introduced the KAD32, KAD43 and KAD44 EDC
(Electronic Diesel Control) diesel engines with power ranging from 170 to 260 hp.
A compact 7-liter engine, the 430-hp TAMD73 EDC, was also presented. The
first integrated water jet system, the initial result of Volvo Penta’s joint venture
with Kamewa, attracted great interest when it was introduced in Amsterdam.
Volvo Penta can now offer the market five different integrated water jet systems
for diesel engines in the range from 230 to 800 hp. The systems are used
primarily in rescue and patrol boats that require high maneuverability. Ecoship
1997, a new concept in the development of ships that is designed to minimize
the impact on the environment and improve transport economy, was presented
with Volvo Penta as the principal partner in association with specialized Swedish
companies.
Industrial engines are
used for m any different
purposes: irrigation plants
or, as in this case, in gen-
erator plants for ski-lifts.
Sales of industrial engines
increased in 1997 as a
result of strong dem and
for generator equipm ent.
Industrial and marine eng-
ines for comm ercial appli-
cations are the segm ents
in which Volvo Penta will
continue to grow.