Volvo 2000 Annual Report Download - page 37

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35
decreased slightly. This overall increase in sales was driven mainly by the positive development
in the excavator business, as well as the increasing market for compact equipment.
The market in Western Europe continued to be the largest single market, accounting for
approximately 51% of sales. North America accounted for nearly 30% of sales and Asia and
the rest of the world for the remaining 19%.
Operating income
Operating income amounted to SEK 1,594 M (1,709), despite the downturn in the market
and price pressure on heavy equipment in North America and Europe. Operating income
included a refund from SPP of SEK 147 M. The operating margin reached 8.0%, a competi-
tive level within the industry.
Production and investments
In 2000, a number of new products were successfully launched, including two new articulat-
ed haulers, A35D and A40D, and a new generation of wheel loaders. In
the field of excavators, a range of new models was introduced. Other
products launched recently include additions to the existing range of
compact excavators, compact wheel loaders and motor graders. The
new products were received very favorably by dealers, customers and
the trade press.
Last year saw the start of production of compact excavators and the assembly of articulat-
ed haulers in South Korea. During the autumn, Volvo CE decided to begin producing con-
struction equipment in Volvo’s bus plant in Poland. In addition to the industrial advantages,
the venture strengthens the company’s presence in the increasingly important markets in
Eastern Europe. To date, a small number of articulated haulers have been assembled there.
New investments were made in e-commerce technology. The company invested USD 5 M
in IronPlanet Inc., a leading U.S.-based e-auction company for used construction equipment.
The investment will act as an additional component of the future e-commerce strategy.
Ambitions for 2001
It is anticipated that the decline in the world market will continue in 2001. Volvo CE’s ambi-
tion is to increase its market shares, and to focus on the softening market demand, with cost
reductions in all areas. In the U.S., where the company currently has 30% of its sales, a restruc-
turing program has been launched. This program is being implemented and will continue dur-
ing 2001. At the marketing level, the company has taken steps to reinforce the relationship
with dealers under a program called “Partners for Profit.”
Strategic development
Volvo CE has grown considerably in recent years and the ambition is to continue growing both
organically and through acquisitions, with a continued focus on profitable growth.
At the marketing level, the company has taken steps to reinforce the Volvo brand.
Range of new products
launched successfully in 2000