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14 Board of Directors’ Report
CASH-FLOW STATEMENT
Cash flow
Cash flow after net investments, excluding
Financial Services, amounted to SEK 26.4
billion. Operating cash flow (excluding the
effects of acquisitions and divestments)
was SEK 11.4 billion. The positive devel-
opment during 2004 was mostly related
to an increase in profitability. Working cap-
ital increased somewhat compared to last
year due to strong sales growth. However,
the negative effects of the growth were
reduced by increased working capital
turnover. The successful capital rationali-
zation project within the Volvo Group, that
was concluded during 2004, was the main
factor for this development. All business
areas have reported significant improve-
ments in capital efficiency as a result of
the program and focus on operating cap-
ital will continue.
Cash flow after net investments within
Financial Services was negative SEK 5.5
billion in 2004 (neg. 3.2), as a result of
continued growth in the credit portfolio.
Investments
Investments in fixed assets in 2004,
excluding Financial Services, amounted
to SEK 7.2 billion (5.8). Capital expend-
itures in Trucks, which amounted to
SEK4.7 billion (3.9), were made in tools
and equipment for the production of new
truck models. Investments were also
made to increase the number of work-
shops for the dealer network in Europe,
for a modification of the Hagerstown
plant in North America for manufacturing
of engines and transmissions and for the
move of the assembly line for the MD9
and MD11 engines from Skövde, Sweden,
to Lyon, France. The level of capital
expenditures remained at the same level
as last year in Buses at SEK 0.2 billion,
decreased in Volvo Penta from SEK 0.4
billion to SEK 0.3 billion and increased in
Volvo Aero from SEK 0.3 billion to SEK 0.5
billion and in Construction Equipment
from SEK 0.5 billion to SEK 0.7 billion.
Approved future capital expenditures
amounting to SEK 8.2 billion (6.4) relate
mainly to investments for the next gener-
ation of trucks.
Investments in leasing assets amounted
to SEK 0.3 billion (0.1). In Financial
Services investments in leasing assets
amounted to SEK 4.6 billion (5.2) and
pertained mainly to the operations in
North America and Western Europe.
Acquisitions and divestments
Net divestments in shares during 2004
amounted to a negative SEK 15.1 billion
(investment: 0.1). The divestment of the
Scania B shares amounted to SEK 14.9
billion and had a significant effect on the
cash flow.
Acquired and divested companies had
an insignificant effect on cash flow nega-
tive 0.1 (0.0).
Financing and dividend
Net borrowings decreased during 2004
by SEK 8.8 billion, of which new borrow-
ing during the year, mainly through the
issue of bonds, contributed SEK 19.1 bil-
lion. In 2003, net borrowings increased by
SEK 1.9 billion.