Volvo 2000 Annual Report Download - page 39

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Volvo Penta provides power units for customers who produce leisure boats, workboats, power
generating equipment, forklifts etc. The products are sold through dealers in about 120 countries
and are well-known for their quality, reliability and good environmental performance.
During the year, the new 12-liter diesel engine, D12, for use in marine leisure and com-
mercial applications was launched. A new series of V8 gasoline engines was also introduced.
A taste of the future was offered when Volvo Penta showed the Concept Boat, which intro-
duces numerous safety and comfort features, using state-of-the-art electronics and telematics.
In 2000, an agreement was signed with Mitsubishi Heavy Industries Ltd for global distri-
bution of Volvo Penta branded diesel engines in the 25- to 65-liter range. With
the expanded range, an entire new group of customers in fishing, inland water-
ways, freight and other businesses can be served by Volvo Penta.
The engine range for power generation was extended downwards with the
introduction of two 5-liter as well as two 7-liter diesel-powered engines, which will give Volvo
Penta access to a new segment in the market.
Total market
Worldwide sales of marine engines recorded a solid increase in 2000, compared with 1999, due
mainly to a strong recovery in the European economy. In North America, sales continued to be
strong, but in the latter part of the year there were signs of a somewhat weaker demand for
marine engines. The demand for marine engines in Asia continued to be weak.
The world market for industrial engines continued to grow in North America and Asia dur-
ing 2000. However, the industrial engine market in Europe experienced a decline in demand
during the second half of the year.
Business environment
The basic demand for marine and industrial power systems is strong and growing, although with
some short-term uncertainties concerning primarily the North American market.
The bankruptcy of the OMC company (Outboard Marine Corporation) will have an effect
on competitive positions in the North American market. The sale of OMC’s boat-building busi-
ness to Genmar, an independent boatbuilder and a Volvo Penta customer, indicates that the
effect of the OMC bankruptcy on Volvo Penta sales volumes will be limited. Yanmar is expand-
ing its business from small to larger engines. During the year, Caterpillar introduced the marine
engine series – CAT 3000 Family – which also will increase the competition.
96 97 98 99 00
Net sales, SEK bn
3.9 4.5 4.9 5.8 6.6
96 97 98 99 00
Operating margin, %
(0.7) 4.1 1.9 5.5 7.3
96 97 98 99 00
Operating income, SEK M
(27) 181 95 314 484
▲
Net sales per market
Marine and Industrial Power Systems
SEK M 1998 1999 2000
Western Europe 2,725 2,986 3,204
Eastern Europe 23 26 30
North America 1,412 1,770 2,257
South America 153 134 160
Asia 476 692 794
Other markets 142 153 154
Total 4,931 5,761 6,599
Net sales as percentage
of Volvo Group sales
5 %
Strong marine program and new
products increased order bookings