Volvo 2004 Annual Report Download - page 29

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27
These actions had a considerable impact
on the total market for excavators.
Other areas impacting general business
conditions for the industry in 2004 were
currency development, with a weakening
US dollar, and cost increases and supply
shortages of raw material such as steel
and rubber.
Market share development
Volvo CE continued to gain market shares
during 2004. In most geographical and
product areas the market shares were
higher compared with a year earlier. This
was mainly due to recently launched pro-
ducts equipped with new fuel-efficient
and more environmentally adapted Volvo
engines and improved distribution.
Financial performance
Volvo CE’s net sales amounted to SEK
28,685 M (23,154), up 28% adjusted for
currency effects. The increase was mainly
attributable to all-time-high volumes as a
result of the expanded product range,
improved distribution and dealer develop-
ment, improved market shares and gener-
ally favorable market conditions.
Operating income in 2004 increased
73% to SEK 1,572 M (908) and the
operating margin was 5.5% (3.9). The
improved earnings were primarily related
to increased volumes, which were strong-
ly offset by negative currency effects and
increased costs for raw materials.
Production and investments
During 2004, the decision was taken to
add capacity and start production of
crawler excavators, mainly for Europe, in
Volvo CE’s factory in Konz, Germany. This
means that Volvo CE will produce crawler
excavators in Korea, China and Germany.
Measures were also taken to increase
capacity in the existing articulated hauler
factory in Braås, Sweden.
Ambitions for 2005
Volvo CE’s ambitions for 2005 is to con-
tinue to capitalize on the investments in
the new products launched over the last
couple of years and to continue to grow
and develop the aftermarket and service
business.
The dealer development program will
continue on a global basis. The rental
initiative is planned to expand further, and
additional stores are to be opened in
most geographical areas where Volvo CE
operates. On the sales and marketing
side, Volvo CE expects to participate in
the business growth in Russia and India,
to further capitalize on the integrated Bilia
Net sales per market
SEKM 2002 2003 2004
Western Europe 10,383 11,576 12,443
Eastern Europe 454 772 1,010
North America 5,667 5,428 7,926
South America 709 636 922
Asia 3,048 3,707 4,961
Other markets 751 1,035 1,423
Total 21,012 23,154 28,685
distribution network and to benefit from
the significant progress made in the
development of the North American
distribution structure.
The new Tier-3 engines that will be
required for certain products in the US in
2005 will be equipped with V-ACT, Volvo
Advanced Combustion Technology.
New products, targeting new seg-
ments and customers in the construction
equipment market, will also be launched
during 2005.