Volvo 1999 Annual Report Download - page 5

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3
The number of trucks and construction equipment units sold set records, and total
Group net sales rose by nine percent.
Profitability also increased. The Group’s operating margin increased from 4.5 to 5.2
percent, which shows that our improvement efforts are yielding results.
First with a global platform
In addition to producing good results, the business areas have also taken a number of
significant steps as global companies.
With the launching of the NH program in South America in 1999, Volvo Trucks
completed its global platform for heavy trucks.
Volvo Trucks, with the FH concept as a base, thus has strong positions in our three
largest markets: Western Europe, North America and South America. The concept is a
highly successful one. The new FH12 truck was named “Truck of the Year 2000” in
Europe. The North American version, Volvo VN, has set a new standard and received
very high marks from our customers. Based on this success, Volvo Trucks has increased
its operations in North America. Production capacity was raised during the year and
service was made more readily available through the acquisition of an interest in Petro
Stopping Centers, a truck-stop service chain.
Volvo Trucks’ strong improvement in operating income was due primarily to
increased sales in Western Europe and North America. A favorable trend of prices in
North America was also a contributing factor.
Good trend in South Korea
In the construction equipment field, as a result of its acquisition in South Korea in
1998 Volvo Construction Equipment (Volvo CE) now has a competitive excavator
program. This has strengthened the Company’s product line, not only in Asia but in
other parts of the world as well.
Effects of the action program undertaken in connection with the acquisition were
felt during 1999 and helped to make operations profitable at midyear, which was
earlier than planned. Articulated haulers are also now being produced in South Korea,
and preparations are being made for the production of other types of Volvo equipment.
The operations in South Korea are a good example of our program to develop prof-
itable growth, what we in Volvo call “product-cycle management” – the broadening
and renewal of product programs.
Volvo CE reported its best operating income to date and increased its operating
margin to nine percent. This is evidence of strength, since profitability in the industry
as a whole declined.
MARCH APRIL
The sale of Volvo
Cars to Ford was
com pleted.
Volvo Aero
increased its
holding in The
AGES Group and
Norsk Jetmotor.
Volvo Aero
concluded an
agreem ent with
Boeing and
acquired Jet
Support
Corporation.
Volvo
increased its
holding in
Scania to 20%.
Volvo Group excluding divested operations.
150
100
50
0
1997 1998 1999
Net sales SEK bn
Excluding Cars and items affecting comparability.
6
4
2
0
1997 1998 1999
Operating income SEK bn
Excluding Cars and items affecting comparability.
6
4
2
0
1997 1998 1999
Operating margin %