Volvo 1998 Annual Report Download

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Annual Report 1998

Table of contents

  • Page 1
    Annual Report 1998

  • Page 2
    ...in AB Volvo on March 8, 1999. The sale improves Volvo Cars' future prospects and means that Volvo can establish a partially new, stronger Volvo totally focused on commercial products; incorporating trucks, buses, construction equipment, marine and industrial engines and aerospace components. Annual...

  • Page 3
    ... balance sheets Cash flow analysis Notes to the Consolidated Financial Statements Parent Company AB Volvo Proposed disposition of unappropriated earnings Auditors' report for AB Volvo Shareholder information Board of Directors and Auditors Group Executive Committee Eleven-year summary Addresses...

  • Page 4
    VOLVO SPRING 1999 Volvo's commercial products - a platform for future growth Volvo is committed to creating value for its shareholders by further developing its strong market positions within commercial products; trucks, buses, construction equipment, marine and industrial engines and aerospace ...

  • Page 5
    ... company Samsung's construction equipment operations Marine and Industrial Engines Volvo Penta is a leading manufacturer of complete drive systems for marine and industrial use. It has production facilities in Sweden and the United States. The greater part of its sales are made in Europe and North...

  • Page 6
    ... Volvo's commercial vehicle operations gain the full attention of management and improved financial conditions to pursue its strategy of securing a position as a world-leading supplier in a growing market for products and services for commercial transport. The sale marks the close of an era in Volvo...

  • Page 7
    ...by the shareholders and the employees on a partly new, stronger and, in the long-term, more profitable company. The Volvo Group now being formed is a more focused unit, which for many years has demonstrated its ability to successfully compete in the world market for commercial products and services...

  • Page 8
    ...OF DIRECTORS' REPORT AB Volvo sells Volvo Cars to Ford and concentrates its business to commercial products In January 1999 AB Volvo signed Heads of Agreement with Ford Motor Company to sell Volvo Cars to Ford. The sale, which is conditional upon the approval of Volvo's shareholders and pertinent...

  • Page 9
    ... full economic and management resources to its growth strategy in commercial products, the Board of AB Volvo concluded that a sale of 100% of Volvo Cars to a major automotive manufacturer was in the best interests of Volvo shareholders and employees, Volvo Group as well as of Volvo Cars. Ford is the...

  • Page 10
    ... the right to use the trademark for trucks, buses, construction equipment, industrial and marine engines, aerospace equipment and all other products (apart from those which Volvo Cars will have the right to use the trademark for). Volvo's pro forma balance sheet and key ratios The payment for the...

  • Page 11
    ... level. Increased integration and acquisitions in the field of commercial products The market's demand for complete transportation solutions, new technologies and uniform legal requirements results in increasing integration in the commercial vehicles industry. Concurrently, a heavy concentration is...

  • Page 12
    ... Construction Equipment and Marine and Industrial Engines continued in Europe and in North and South America. In addition, joint distribution organizations for commercial products in a number of markets in East Asia and Eastern Europe were formed. During 1998, it was decided that the sales-financing...

  • Page 13
    ...' and Construction Equipment's assembly plants with rear axles in the future. Changes in Volvo's industrial structure A number of other changes were made in the Group's structure in 1998 for the purpose of improving operating efficiency. Cars closed the final-assembly plant in Halifax, Canada in...

  • Page 14
    ... Commercial Products Trucks Buses Construction Equipment Marine and Industrial Engines Aero Other companies and eliminations Total 83.6 73.6 44.3 8.5 12.8 3.9 4.1 (1.1) 156.1 The number of Volvo trucks delivered increased by 21% to 83,280 (68,980), with the result that net sales for the business...

  • Page 15
    ... per share, SEK Operating income Operating income by business area SEK billion 1997 4.5 4.5 1.8 0.6 1.4 0.2 0.5 (0.6) 1998 3.8 5.6 3.1 0.4 1.5 0.1 0.5 (0.4) 1996 1997 1998 1996 Cars Commercial Products Trucks Buses Construction Equipment Marine and Industrial Engines Aero Other companies and...

  • Page 16
    BOARD OF D I R E CTO R S' R E P O RT Operating margin % Impact of foreign exchange rates on operating income excluding items affecting comparability Cars Commercial Products Trucks Buses Construction Equipment Marine and Industrial Engines Aero Total 1996 1.8 3.4 2.0 3.9 9.1 neg. 3.7 2.4 ...

  • Page 17
    Volvo Group consolidated balance sheets, December 31, SEK billion Assets Intangible assets Property, plant and equipment Assets under operating leases Shares and participations 1 Long-term sales-financing receivables Long-term interest bearing receivables Other long-term receivables Inventories ...

  • Page 18
    .... Change in net financial assets 1998 10.3 (10.4) (0.9) 1.5 0.5 SEK billion Cash flow from operations Capital expenditures Investments in leasing assets Disposals Long-term operational receivables, net Operating cash flow, Volvo Group excluding sales financing Dividend to AB Volvo's shareholders...

  • Page 19
    ... was paid to AB Volvo's shareholders during the year. Change in liquid funds 50 0 96 97 98 Definition in note 1 on page 57. Capital expenditures approved but not yet implemented at December 31, 1998, SEK billion Cars Trucks Buses Construction Equipment Marine and Industrial Engines Aero Other...

  • Page 20
    ...-cycle cost, in particular for Volvo vehicles used in commercial traffic. This can be achieved through new technology or the improvement of present technology, Heat Water cooling Fuel Air Output electric motor primarily in the field of engines and peripheral equipment but also through intensive...

  • Page 21
    Over the course of years Volvo has displayed a number of advanced concept vehicles and in 1999 it plans to introduce this technology for tests in buses and distribution vehicles that will be used in regular traffic for three years to provide practical experience. Safety BioRID Safety cannot be ...

  • Page 22
    ...). Bi-Fuel versions of the Volvo S70 and V70 have been sold commercially since 1995 and in the bus industry Volvo Buses holds a leading position with more than 100 vehicles sold in 1998. Trucks introduced a natural gas-powered truck during January 1999. Environmentally compatible product development...

  • Page 23
    ... oxides, heavy vehicles, USA and Europe g/kwh Construction equipment, United States Construction equipment, European Union Trucks and buses, United States Trucks and buses, European Union Euro 1 So-called producer liability for used passenger cars was introduced in Sweden as of January 1, 1998; the...

  • Page 24
    .... Work groups were formed to deal with specific matters such as those related to finance, information technology, sourcing, human resources, accounting and legal issues. Beginning January 1, 1999 Cars and the commercial products units have been able to use the euro as a transaction currency. Volvo...

  • Page 25
    ... to the year 2000 for computers, microprocessors and the software used in such equipment constitutes a global problem of major importance. As a result of the very widespread use of information technology, the changeover will affect most companies, including Volvo. The work conducted within Volvo to...

  • Page 26
    ...the suppliers' preparedness for the year 2000. Review of Volvo's suppliers is scheduled to be mainly completed at mid-year 1999. Each local Volvo unit has established contacts with suppliers of non-production-related materials, for example energy and production equipment, to ensure that supplies and...

  • Page 27
    ... of Volvo Construction Equipment. On October 15, 1998, Stefan Johnsson, age 39, former President of Volvo's in-house bank, Volvo Group Finance Sweden AB, was named new member of the Group Executive Committee, responsible for strategy and business development, and as Chief Financial Officer as...

  • Page 28
    ... diesel engines. Engine development is being focused on engines with lower fuel consumption. In addition, development work on a Volvo diesel engine is being intensified to meet the increasing demand for diesel-powered cars. Introduction of Volvo S80, based on a new industrial platform The Volvo S80...

  • Page 29
    ... process in Torslanda and Ghent, investments in the Olofström body plant and in tools in suppliers' plants. Significant investments were also made in the engine production in Skövde as a result of Cars' new engine concept for the Volvo S80. Construction of Volvo Safety Center 2000, a new, advanced...

  • Page 30
    ... service will be made available throughout Western Europe and in the United States. A special marketing concept, designed to strengthen Volvo's brand name and increase the volume of business, was developed for Hungary, the Czech Republic and Poland. Sales and market shares Cars' net sales in 1998...

  • Page 31
    ... the American company Paccar are larger than Volvo. During 1998, Volvo was the second-largest make of heavy trucks in Europe, while it ranked fifth in North America. Volvo is the sixthlargest producer of trucks in the medium-weight class, 7 to 16 tons, in Europe. Key ratios SEK M 1996 Net sales 44...

  • Page 32
    .... In Western Europe, 37,810 vehicles (31,040) were delivered and Volvo's share of the market for trucks in the heavy class amounted to 15.2% (15.3). In 1998, Volvo Truck's deliveries in North America amounted to 29,310 units (20,900), 40% more than in the preceding year partly due to Volvo VN's good...

  • Page 33
    ... and return on operating capital exceeded 25% (18). Operating margin in the fourth quarter 1998 was 6.0%. Combined, costs of SEK 394 M, pertaining to closing of production facilities in Irvine, Scotland and changes in Trucks' dealer structure as well as a gain on the sale and of the rear-axle plant...

  • Page 34
    ... in city traffic, was also introduced during the year. The Volvo B6BLE, a new midi-bus chassis with low entrance, was introduced. Volvo Buses has acquired a large number of new products as a result of the acquisitions in North America. These products are being marketed under their own brand names...

  • Page 35
    ...of the Samsung company in South Korea. With the acquisition, Volvo obtained a modern excavator product program, which is strategically important since excavators account for approximately 40% of total annual sales of construction equipment throughout the world. With the acquisition, Volvo is gaining...

  • Page 36
    ... and acquisitions, the number of units sold rose 7%. Europe, which continued to be the single largest market area, accounted for 51% (48) of total net sales. Net sales in North America were higher and Construction Equipment's share of the market amounted to 34% (35). In Volvo's other markets sales...

  • Page 37
    ... Detroit Diesel Corporation (DDC), an American company, covering distribution and servicing of Volvo Penta's diesel engines in North America was terminated during the year. As a result, Volvo Penta is expanding its distribution network for sales and service. Sales and production Net sales increased...

  • Page 38
    ...95 M (181). Operating margin amounted to 1.9% (4.1) and the return on operating capital decreased to 7% (14). Income was charged with increased costs for product development and marketing. Changes in distribution structure and administration in Europe and Asia, were decided during 1998, with the aim...

  • Page 39
    ... new concept for plants providing electricity and heat production was launched within Aero's Land & Marine Gas Turbine business area in which, similar to the aircraft maintenance concept, the customer is only charged for the time the equipment is used. Net sales increased again in 1998, due in part...

  • Page 40
    ... installment contracts, financial leasing, operational leasing and dealer financing. Insurance, service and maintenance contracts are also offered in most markets, separately or in combination with financing services. With the acquisition in 1998 of BRS Truck Rental and Hire, Volvo has significantly...

  • Page 41
    ... participations in AB Volvofinans. The income of Transbanco, which conducts sales financing of Volvo's trucks and buses in Brazil, improved during 1998. The number of new credit contracts signed was limited. Provision for risks Parts of the sales-finance operations give rise to specific credit and...

  • Page 42
    ... in 1998 of Volvo Trucks' new heavy truck family Volvo FM, similar training was carried out during the year. Training and integration in connection with acquisitions On May 7, 1998, Volvo Construction Equipment acquired Samsung Heavy Industries' construction equipment division in Changwon, South...

  • Page 43
    ... unit in Volvo Construction Equipment. Profit-related bonus and 60-year Fund Number of employees 100,000 70,330 72,900 79,820 75,000 50,000 25,000 0 96 97 98 The number of employees in the Volvo Group increased by 6,920 to 79,820 people during the year. Detailed information on Volvo...

  • Page 44
    PRODUCT R E N EWAL VOLVO F M Trucks' most important product introduction during the year was Volvo FM - a new series of heavy trucks, developed for more efficient regional transports and construction work. 42

  • Page 45
    EXPERIENCES During late summer, the introduction of the Volvo FM was experienced by 13,300 dealers and customers from all over the world. 43

  • Page 46
    ... the segment for large cars. Safe, exciting and attractive were some of the opinions from the thoroughly positive international media. FROM THE ENTIRE WORLD Dealers from around the world, employees and other Volvo interests were invited to the introduction of the Volvo S80 during summer 1998. 44

  • Page 47
    VOLVO S80 Volvo S80 is the world's first environmen- tally certified car, covering all phases of the vehicle from production to recycling. Volvo's strong position in the carsafety field was confirmed through such safety innovations as WHIPS, a new seat concept designed to prevent whiplash injuries...

  • Page 48
    PRODUCT R E N EWAL VOLVO 5000 AND VOLVO 7000 With the introduction of the Volvo 5000 and Volvo 7000 city buses, the share of complete buses including chassis and bodies from Volvo's own plants increases. 46

  • Page 49
    IN FOCUS When the new Volvo 5000 and Volvo 7000 city buses were being developed, the focus was on passenger comfort, the benefits to operators of rapid loading and unloading of passengers and on minimal environmental impact. 47

  • Page 50
    ... the spring Volvo introduced a new series of compact wheel loaders - the Volvo L30-L45 - which received the "Superior Swedish Design" award. The jury's citation: "A big push for the often awkward design of construction vehicles. Audacious and gentle in design, with lovely balance and thoroughly...

  • Page 51
    ... new, heavy wheel loader, Volvo L220D, was introduced. Designed mainly for rock and pile loading, the wheel loader is characterized by high productivity combined with low noise and exhaust emissions. SECURES THE POSITION As a result of its acquisition of Samsung's construction equipment business...

  • Page 52
    ... Fort Lauderdale Boat Show in Florida, one of the largest boat shows in the world, that attracted 150,000 visitors. During the exhibition, Volvo Penta introduced its new TAMD 74 EDC marine diesel engine, which is the most powerful engine in the important 7-liter class in the boat engine market. 50

  • Page 53
    ...SOLUTIONS Within Volvo Aero's Engine Services business area, a new concept was introduced in 1998 whereby the airline's maintenance costs are based on the number of hours the aircraft is used. SUCCESSFUL LAUNCH The Ariane 5 European launch vehicle is now ready for commercial use following the...

  • Page 54
    VOLVO G ROU P Consolidated income statements 1996 1997 SE K M 1998 Net sales Cost of sales Gross income ... similar credits Interest expenses and similar charges Other financial income and expenses Income after financial items Taxes Minority interests in net (income) loss Profit for the year Note ...

  • Page 55
    Consolidated balance sheets December 31,1996 December 31, 1997 SE K M December 31, 1998 Assets Non-current assets Intangible assets Tangible assets Property, plant and equipment Assets under operating leases Financial assets Shares and participations Long-term sales-financing receivables Other ...

  • Page 56
    ... plant and equipment etc: Capital expenditures for property, plant and equipment Investments in leasing vehicles Disposals Investments in shares, net Long-term receivables, net Acquired and divested operations Remaining after net investments Financing, dividends etc Increase in short-term bank loans...

  • Page 57
    ... Operating structure The Volvo Group's operations are organized in six productrelated business areas: Cars, Trucks, Buses, Construction Equipment, Marine and Industrial Engines, and Aero. In addition to the six business areas, there are certain operations consisting mainly of service companies that...

  • Page 58
    ...year-end are credited to, or charged against, income before taxes and minority interests in the year they arise. The more important exchange rates employed are shown above. Other financial instruments Interest and currency rate swaps are used to change the underlying loans structure and are reported...

  • Page 59
    ... in property, plant and equipment and leasing assets. Net financial assets (net debt) Cash and bank accounts, marketable securities and interest-bearing short- and long-term receivables reduced by short- and long-term interest-bearing liabilities. Net debt in Volvo's sales-financing companies is not...

  • Page 60
    ... for the marketing, sales and service of industrial and marine engines in Belgium, the Netherlands and Luxembourg. The AGES Group, ALP In 1996 Volvo Aero increased its ownership of the American company, The AGES Group, ALP (Air Ground Equipment Sales) from 5% to 25%. Early in 1997 the holding was...

  • Page 61
    ...Holding AB At year-end 1995 Volvo Car Corporation established a wholly owned subsidiary, Volvo Car Finance Holding AB, to coordinate the sales-financing operations within Volvo Car Corporation. The company is the parent company of some of Volvo Cars' sales-financing and insurance companies in Europe...

  • Page 62
    ... in the Volvo Group accounts with a certain time lag, normally one quarter. 1 In December 1998, the holding in ABB Olofström Automation AB was divested. 2 In December 1997 Volvo do Brasil acquired the outstanding shares of Transbanco Banco de Investimento SA. The company's balance sheet was...

  • Page 63
    ... Note 8 1998 Dividends received Pharmacia & Upjohn, Inc. SAS Sverige AB Renault SA Borgtornet AB Other Subtotal Gain on sales of securities Pharmacia & Upjohn, Inc. Stockholms Fondbörs AB Renault SA SAS Sverige AB Investment AB Bure Other Subtotal Total 1 Including write-down of shares. 327 91...

  • Page 64
    ... Up to and including September 1998 minority interests in profit (loss) also Note 11 included Hitachi Construction Machinery Company's participation in Euclid-Hitachi Heavy Equipment Inc (40%), and up to and including June 1997, General Motors' holding in Volvo Trucks North America Inc (13%). 62

  • Page 65
    ... Patents Aircraft engines costs Total intangible assets Buildings Land and land improvements Machinery and equipment 1 Construction in progress including advance payments Total buildings, machinery and equipment Assets under operating leases Total tangible assets Value in balance sheet 1998 2,974...

  • Page 66
    ... and share capital in Arabian Vehicles and Trucks in Saudi Arabia. The company will assemble Volvo trucks and the business will start in the second half of 1999. The AGES Group, ALP During 1996 Volvo Aero increased its holding in The AGES Group, ALP (Air Ground Equipment Sales), an American company...

  • Page 67
    ...13,967 14,956 9,297 293 24,546 The increase in 1998 is due to continuous expansion of the sales-financing business in Europe and North America, both regarding Cars and commercial products. Other long-term receivables 1996 1997 Note 15 1998 Loans Other receivables Total 3,157 4,268 7,425 2,269...

  • Page 68
    ... against corresponding loans and as a result did not affect total assets. Cash and bank accounts 1996 1997 Note 2,928 2,156 5,084 5,435 4,206 9,641 20 1998 Cash in banks Time deposits in banks Total 8,771 4,285 13,056 Shareholders' equity The share capital of the Parent Company is divided...

  • Page 69
    ... the consolidated or Parent Company balance sheets after proposed appropriations to restricted equity. Unrestricted equity in the Parent Company at December 31, 1998 amounted to 49,995. As of December 31, 1998, Volvo related foundation's holdings in Volvo were 1.3% of the share capital and 3.2% of...

  • Page 70
    ... liabilities The listing below shows the Group's non-current liabilities in which the largest loans are distributed by currency. Most are issued by Volvo Group Finance Sweden AB and Volvo Group Finance Europe BV. Information on loan Bond loans FRF 1995-1997/2000-2009, 3.93-7.632% DKK 1996-1998/2002...

  • Page 71
    ... 5,388 assets in subsidiaries are included in Other in the amount of - (- ; 1,750). Contingent liabilities 1996 1997 Note 368 316 1,873 515 3,116 6,188 628 22 1,531 123 3,102 5,406 27 1998 Discounted bills Guarantees: Bank loans and trade bills - associated companies Bank loans - customers and...

  • Page 72
    ...retirement age, the retiree will receive 70% of the qualifying salary. In February 1996, Skandia and Trygg-Hansa (insurance companies) offered approximately 100 senior executives in the Volvo Group an opportunity to acquire call options on AB Volvo's Series B shares. At the close of the subscription...

  • Page 73
    ... 1997 Number of employees of whom, women, % Number of employees 1998 of whom, women, % Average number of employees AB Volvo Sweden Subsidiaries Sweden Western Europe Eastern Europe North America South America Asia Other countries Automotive operations Operations being divested Group total Number...

  • Page 74
    ...Group's financial transactions are carried out through Volvo's in-house bank, Volvo Group Finance, which conducts its operations within established risk mandates and limits. Foreign exchange risks Volvo's currency risks are related to changes in contracted and projected flows of payments (commercial...

  • Page 75
    ... periods of financial assets and liabilities, Volvo reduces the effects of interest-rate changes. Interestrate swaps are used to shorten the interest-rate periods of the Group's long-term loans. Exchange-rate swaps make it possible to borrow in foreign currencies in different markets without...

  • Page 76
    ... instruments Credit risk in financial investments The liquidity in the Group is invested mainly in local cash pools or directly with Volvo Group Finance. This concentrates the credit risk to the Group's in-house bank. Volvo Group Finance invests the liquid funds in the money and capital markets. All...

  • Page 77
    ... (B) Tooling costs (C) Business combinations (D) Shares and participations (E) Interest costs (F) Leasing (G) Debt and equity securities (H) Items affecting comparability (I) Pensions and other post-employment benefits (J) Other Tax effect of above U.S. GAAP adjustments Net increase in shareholders...

  • Page 78
    ... of five years. In 1995 AB Volvo acquired the outstanding 50% of the shares of Volvo Construction Equipment Corporation (formerly VME) from Clark Equipment Company in the U.S. In connection with the acquisition, an excess value (goodwill) of SEK 2.8 billion was reported. The shareholding was written...

  • Page 79
    ... for the year Shareholders' equity 1998 1996 1997 1998 Goodwill Goodwill in accordance with Swedish GAAP, December 31 Items affecting reporting of goodwill: Volvo Trucks with regard to exchange of shares with Renault Acquisition of Volvo Construction Equipment Corporation Net change in accordance...

  • Page 80
    ... on salaries calculated at time of retirement. In addition under US GAAP, the surplus in pension foundations is accounted for. Post-retirement expenses in accordance with U.S. GAAP include: Defined benefit plans in Sweden and US Service cost Interest cost Expected return on plan assets Severance...

  • Page 81
    Sweden Pension benefits United States Pension benefits 1997 1998 Other benefits 1997 1998 Fair value of plan assets 1 Fair value of plan assets at beginning of year Lump sums not yet paid at beginning of year Market value adjustment Actual return on plan assets Employer contribution Foreign ...

  • Page 82
    ...SA de CV were acquired during the year for 764. Shares corresponding to 10.5% of Deutz AG were acquired for 670 and 9.97% in Henlys Group Plc for 376. Shareholder contributions which increased book values were made to Volvo Bus Corporation, 1,650, Volvo Group Finance Sweden AB, 1,550 and VNA Holding...

  • Page 83
    ...-term investments in Group companies Cash and bank accounts Total current assets Total assets Shareholders' equity and liabilities Shareholders' equity Share capital (441,520,885 shares, par value SEK 6) Legal reserve Total restricted equity Retained earnings Profit for the year Total unrestricted...

  • Page 84
    ...investments Financing, dividends, etc Increase (decrease) in short-term loans Increase (decrease) in long-term loans and provisions for pensions Increase in shareholders' equity as a result of conversions and new issue of shares Redemption of shares in AB Volvo Dividend paid to shareholders Increase...

  • Page 85
    ...Parent Company's sales, 623 (505; 545) were to Group companies, and purchases from Group companies amounted to 235 (183; 136). Employees The number of employees at year-end was 169 (181; 468). Wages, salaries and social costs amounted to 179 (284; 324). Information on the average number of employees...

  • Page 86
    ... 6 54 - 77 Value in balance sheet 1998 2 Book value in balance sheet 1998 3 Accumulated depreciation Depreciation 1 Sales/ scrapping Rights Total intangible assets Buildings Land and land assets Machinery and equipment Construction in progress Total tangible assets - - 2 - 100 - 102 - - 1 - 35...

  • Page 87
    ...Volvo Information Technology North America Inc was acquired from Volvo Information Technology AB for 5. The companies were then conveyed to VNA Holding Inc as a shareholder contribution and increased the book value in that company. Shareholder contributions were made to Volvo Group Finance Sweden AB...

  • Page 88
    ... of, and changes in, untaxed reserves: Tax allocation reserve Tax equalization reserve Exchange reserve Accumulated extra depreciation Machinery and equipment Total Value in balance sheet 1996 Value in Allocations balance sheet 1997 1997 Note 14 Value in Allocations balance sheet 1998 1998 - 354...

  • Page 89
    ... all AB Volvo's pension obligations at year-end 1998 amounted to 610 , which has been secured in part through Provision for pensions and in part through funds in pension foundations. The Company's share of reported capital in the pension foundations amounted to 333. Assets in the pension foundations...

  • Page 90
    ...ö, Sweden Harvest Technology Partners LP, New York, United States SveviaFin SpA, Rome, Italy Arabian Vehicle and Trucks Industry Ltd, Jeddah, Saudi Arabia VKR-Kiinteistöt Oy Ab, Vanda, Finland Expar Incorporated, Elk Grove, United States First Rent A Car AB, Stockholm, Sweden Transport Financial...

  • Page 91
    ... shares and participations in Group companies Volvo Personvagnar Holding AB, Göteborg, Sweden Volvo Personvagnar AB, Göteborg, Sweden Volvo Personvagnar Komponenter, Göteborg, Sweden Volvo Personbilar Sverige AB, Göteborg, Sweden Volvo Personvagnar Norden AB, Göteborg, Sweden Volvo Car Finance...

  • Page 92
    ... Corporation (Kabushiki Kaisha), Tokyo, Japan Volvo Aero AB, Trollhättan, Sweden Volvo Aero Engine Services AB, Stockholm, Sweden Volvo Aero Turbines AB, Malmö, Sweden VNA Holding Inc, Greensboro, United States Volvo Trucks North America, Inc, Greensboro, United States Volvo Construction Equipment...

  • Page 93
    ... Volvo Cars and other Volvo Group companies. Key ratios 1998 SEK billion Volvo Group Volvo Cars Net sales Operating income 1 Operating margin, % 1 212.9 9.0 4.2 103.8 3.8 3.7 1 Excluding items affecting comparability. Volvo Group pro forma balance sheet SE K billion Pro forma Volvo Group...

  • Page 94
    ...to restricted equity. AB Volvo Retained earnings brought forward Profit for the year 1998 Total SEK M 25,951 24,044 49,995 The Board of Directors and the President propose that the above sum be disposed of as follows: SEK M To the shareholders, a dividend of SEK 6.00 per share Retained earnings to...

  • Page 95
    AU DITORS' REPORT FOR AB VOLVO We have audited the Annual Report, the consolidated financial statements, the accounts on pages 6-92 and the administration of the Board of Directors and the President of AB Volvo for 1998. These accounts and the administration of the Company are the responsibility ...

  • Page 96
    ...listed on the Stockholm Stock Exchange, the share capital had increased to SEK 13 M, and the number of shares to 260,000. At year-end 1998 the share capital of AB Volvo amounted to SEK 2,649 M, represented by 441,520,885 shares, distributed among approximately 210,600 shareholders. The share capital...

  • Page 97
    ... at year-end. 8 Plus one share of Swedish Match per Volvo share, price of SEK 21.74 (weighted average first ten trading days following listing). 9 Proposed by the Board of Directors. 10 Source: NASDAQ - Amex Online The largest shareholders in AB Volvo, December 31, 1998 Number of shares % of...

  • Page 98
    ... Officer of the Volvo Group. Member of Volvo Board since 1997. FINN JOHNSSON Born 1946, Master of Business Administration. Board Chairman: MVI Ltd. Board member: Perstorps AB, Skanska AB and Thomas Concrete Group. President of Mölnlycke Health Care AB. Member of Volvo Board since 1998. Holdings...

  • Page 99
    ... of Laws. Board Chairman: National Pension Insurance Fund, Fourth Fund Managing Board, Lennart Wallenstam Byggnads AB and Chalmers University of Technology Foundation. Board member: Svenska Mässan. Member of Volvo Board 1986-1994 and since 1994. Holdings: 215 Volvo Series B shares. Board members...

  • Page 100
    .... Holdings: 44 Volvo Series A shares. STEFAN JOHNSSON Born 1959. Master of Business Administration. Senior Vice President, AB Volvo. Member of Group Executive Committee since 1998, responsible for economy, finance, strategic matters and business development. President of Volvo Group Finance, Sweden...

  • Page 101
    ...) Balance sheets 1 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 SE K M 1998 Assets Intangible non-current assets Tangible non-current assets Financial non-current assets Non-current assets Inventories Current receivables Marketable securities Cash and bank accounts Current assets Assets 297...

  • Page 102
    ... bank loans and other loans Increase (decrease) in long-term loans and provisions for pensions (Increase) decrease in restricted deposits in Bank of Sweden Increase (decrease) in minority interests Dividends paid to AB Volvo shareholders Dividends paid to minority shareholders Redemption of shares...

  • Page 103
    ...I N E SS AR EA STATI STI CS Number of employees at year-end 1988 1989 1990 1991 1992 1993 1994 1995 1996 Number 1997 1998 Cars Trucks Buses Construction Equipment Marine and Industrial Engines Aero Other Automotive operations Operations being divested, etc Volvo Group, total 34,280 21,460 2,800...

  • Page 104
    ... sales for the Construction Equipment business area in the years 1991 through 1995, calculated using the average exchange rate for the US dollar in each year, amounted to SEK 8,273 M, SEK 7,890 M, SEK 9,665 M, SEK 12,084 M and SEK 13,684 M. Effective in 1997, the Volvo Group's accounting per market...

  • Page 105
    ... the years 1991 through 1995 amounted to (2.3), (5.5), 5.2, 13.4 and 12.3 respectively. Return on operating capital, excluding items affecting comparability 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 % 1998 Cars Trucks Buses Construction Equipment Marine and Industrial Engines Aero 1 >25...

  • Page 106
    ... 1996 SE K M 1997 1998 Cars Trucks Buses Construction Equipment Marine and Industrial Engines Aero Other and corporate capital expenditures Automotive operations Operations being divested Volvo Group, total Assets under operational leasing 1 1 Until 1996 including company vehicles. 2,140 932 92...

  • Page 107
    ... 905 6,491 2,585 216 8,142 58 8,200 3,851 1 Until 1996 including company vehicles. Employees 1988 1989 1990 1991 1992 1993 1994 1995 1996 Number 1997 1998 Sweden Europe, excluding Sweden North America South America Asia Other markets Volvo Group, total 54,970 14,530 5,680 1,890 850 690 78,610...

  • Page 108
    ... Trucks Total Europe Western Europe Eastern Europe North America South America Asia Other markets Total Buses Total Europe Western Europe Eastern Europe North America South America Asia Other markets Total 5,120 5,550 Effective in 1997, the Volvo Group's accounting per market area reflects new...

  • Page 109
    ... 1996 Number 1997 1998 Volvo Bus Corporation, Borås Plant, Sweden 2,800 Volvo Truck & Bus Assembly, Great Britain 1,330 Volvo do Brasil, Brazil Volvo del Peru SA, Peru Prévost Car Inc, Canada Mexicana de Autobuses (MASA) 1 Nova BUS, Canada Mexicana de Autobuses (MASA), Mexico Volvo Australia Pty...

  • Page 110
    ... Sverige AB Paseo de la Castellana 130 ES-28046 Madrid, Spain Tel: +34 1 566 61 00 Volvo Auto Polska SP.Z.O.O. SE-405 08 Göteborg, Sweden Tel: +46 31-66 60 00 Volvo Truck Parts Corporation P O Box 26115, Greensboro, NC 27402-6115, United States Tel: +1 336 393 2000 Volvo Trucks Canada Postfach...

  • Page 111
    ... 28 28 Compact and Service Equipment Business Area address, see Volvo Automobiles France SA Volvo Penta Italia SpA SE-461 81 Trollhättan, Sweden Tel: +46 520-940 00 Volvo Group North America, Inc Volvo Construction Equipment East Asia (Pte) Ltd Volvo Aero Corporation 22 Gul Crescent Singapore...

  • Page 112
    ... current time series reflecting the Volvo Group's financial development, market information and share data are published regularly on the Internet. www.volvo.com Shareholder and Investor Services AB Volvo (publ) SE-405 08 Göteborg, Sweden Telephone +46-31 59 00 00 www.volvo.com AB Volvo, Group...