Volvo 2003 Annual Report Download - page 18

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16
Business Areas
Construction
Equipment
Volvo CE’s products, spare parts and servic-
es are offered worldwide in more than 200
countries. The products are used in a num-
ber of applications including general con-
struction, road construction and main-
tenance, forestry, demolition, waste handling
and mining.
Volvo CE has launched more than 40 new
products on the market over the past two
years. The product range comprises a com-
prehensive offering of excavators, wheel
loaders, articulated haulers, motor graders
and a range of compact wheel loaders, com-
pact excavators, backhoe loaders and skid-
steer loaders.
Services such as financing, leasing and
sales of used equipment are also offered. In
2002, Volvo CE launched a franchise initia-
tive for the rental market, Volvo CE Rents. At
December 31, 2003, Volvo CE Rents had 45
stores open, most of them in North America.
In May, Volvo CE strengthened its distri-
bution network in the US through the pur-
chase of the distribution business of L.B.
Smith, Inc. The intention is to spin off the
acquired operations.
To t al market
The total world market for heavy and com-
pact construction equipment, within Volvo
CE’s product range, increased by 11% dur-
ing 2003. In North America the market
increased by 15%, Western Europe was
down 1%, while other markets were up 19%,
primarily driven by strong development in
China, up 60%. Eastern Europe rose 48%
and Africa was up 32%.
The increase in the total market is mainly
driven by heavy construction equipment,
which rose 18% during the year. The North
American market for heavy equipment was
up 15% while the market in Europe was flat.
Other markets rose by 30%.
The world market for compact equipment
increased slightly in 2003, up 5% compared
with the preceding year. The market in North
America was up 15%, while markets in
Europe were down 1%. Other markets rose
by 6%.
Business environment
The number of aquisitions in the construction
equipment industry were slightly fewer in
2003, compared with 2002. Instead a high
number of joint-ventures or agreements took
place, such as Caterpillar that set up a
supply agreement with Blount International
to expand their forestry offering. Another
example was the deal where Daewoo Heavy
Industries & Machinery agreed to supply
heavy equipment for Terex in the US.
Companies such as Caterpillar, Komatsu and
Mitsubishi are also focusing on China, which
remains a huge market for construction
equipment.
Market share development
Volvo CE continues to gain market shares. In
most geographical and product areas the
market shares were higher compared with a
year earlier, mainly due to recently launched
products equipped with new fuel-efficient
and environmentally friendly Volvo engines.
The market in Europe continued to be the
largest single market, with 53% of sales,
while North America accounted for 23% of
sales, Asia represented 16% and the rest of
the world 8%.
99 00 01 03
18 .9 20.0 21.1 23.2
Net sales, SEK bn
99 00 01 03
1. 7 1. 6 0.9 0.9
Operating income*, SEK bn
99 00 01 03
9.1 8.0 4.2 3.9
Operating Margin*, %
Net sales as percentage of Volvo Group sales, %
*excluding restructuring costs
*excluding restructuring costs
02
21.0
02
0.4
02
1.9
13%