Volvo 2001 Annual Report Download - page 22

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Volvo Cars, amounting to SEK 520 M.
Operating margin during 2001 was a nega-
tive 0.4%, compared with 5.5% in 2000.
Restructuring costs
In 2001, restructuring costs of SEK 3,862 M
were charged to operating income, of which
SEK 3,106 M for Global Trucks, SEK 392 M
for Buses and SEK 364 M for Construction
Equipment.
Restructuring costs within Global Trucks
included costs for the integration of Mack
and Renault Trucks in order to secure coor-
dination gains made possible through the
acquisition. The integration measures
included reduction of the North American
production capacity through closure of
Mack’s Winnsboro plant and transfer of pro-
duction to Volvo’s New River Valley plant.
Integration measures further included
restructuring of the global distribution sys-
tem and production structure. In addition to
the integration, restructuring measures
included significant personel reductions due
to the prevailing business conditions, espe-
cially in North America.
Restucturing costs in Buses were attribut-
able to the shut down of the Nova Bus plant
for city buses in Roswell, US. In Construction
Equipment, restructuring measures per-
tained to the Asheville operations (US) and
an overall redundancy program.
Impact of exchange rates on
operating income
The effect of changes in currency exchange
rates on operating income in 2001 compared
with 2000 was favorable by approximately
SEK 520 M.
The Swedish krona weakened during
2001 against the major part of Volvo’s
inflow currencies, with positive effects on
operating income. The US dollar, euro and
British pound had the greatest impact.
Changes in spot-market rates for other cur-
rencies had minor effects. The total effect of
changed spot-market rates was positive,
approximately SEK 1,970 M.
The effect on income of forward and
option contracts amounted to a loss of SEK
2,044 M (2000: loss of SEK 700 M), which
resulted in a negative impact of SEK 1,344 M
for 2001, compared with 2000.
Changes in spot rates in connection with
the translation of income in foreign sub-
sidiaries and the revaluation of balance sheet
items in foreign currencies had a negative
impact of SEK 110 M.
Net interest expense/income
Net interest expense for the year amounted
to SEK 1,000 M (257). The higher net inter-
est expense was mainly due to the weaker
financial position, see page 19, partly offset
by increased yield on net financial assets and
lower funding costs in Brazil.
Taxe s
During 2001, a tax income of SEK 326 M
was reported compared with a tax expense
of SEK 1,510 M for the corresponding peri-
od in the preceding year. The tax income
relates mainly to an increase in deferred tax
assets due to current year losses.
Minority
Minority interests in the Volvo Group con-
sisted mainly of the Henlys Group’s holding
(49%) in Prévost Holding BV up to the third
quarter 2001. As of October 1, 2001, Henlys
ownership interest was increased to 50% and
Prévost Holding BV is from this date con-
solidated by the proportionate method.
Other minority interests were attributable to
Volvo Aero Services LP (14%, previously the
AGES Group) and Volvo Aero Norge AS
(22%).
Net income/loss
Net loss amounted to SEK 1,467 M (net
income of 4,709) and the return on share-
holders’ equity was negative of 1.7% (posi-
tive 5.0%).
Operating net flow per currency,
excluding divested operations
SEKM 1999 2000 2001
USD 6,400 7,000 8,100
EUR 7,900 7,500 8,000
GBP 4,200 4,000 4,200
Other currencies 3,800 800 3,800
Total 22,300 19,300 24,100
Impact of exchange rates
on operating income
Compared with preceding year, SEK bn
Net sales 7.7
Cost of sales (5.0)
Research and development expenses 0.0
Selling and administrative expenses (0.9)
Other operating income and expenses (1.3)
Income from investments in shares 0.0
Total effect of changes in exchange
rates on operating income 0.5
Group sales are reported at average spot prices and the
effects of currency hedges are reported among “Other oper-
ating income and expenses.”
THE VOLVO GROUP YEAR 2001