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29
Business environment
In the marine leisure business, Volvo
Penta is an independent supplier of drive
systems. This means that Volvo Penta
does not manufacture boats and, accord-
ingly, does not compete with its cus-
tomers. Volvo Penta builds long-term
partnerships with boat builders worldwide
and focuses its resources on develop-
ment, sales and services of engines and
drive systems.
The same strategy applies in the
Industrial business segment. Business in
this segment is dominated by sales of
engines for diesel-powered generators,
usually referred to as gensets. Volvo
Penta does not manufacture complete
gensets, but delivers the engines to com-
panies specializing in such production. In
this manner, Volvo Penta has partnered
successfully with genset producers
around the world.
The position as an independent engine
supplier is one of the cornerstones in the
strategy that has contributed to Volvo
Penta’s successes in recent years. This is
also a key element in future growth ambi-
tions, within Marine Leisure as well as the
Industrial business segment.
Market share development
The positive reception by the market of
Volvo Penta’s new generation of diesel
engines has contributed to continued
strong positions among the world’s major
boat builders. This trend was particularly
notable in North America, where Volvo
Penta has strengthened its position con-
tinuously for a number of years. This trend
applies to diesel as well as gasoline
engines.
The global industrial engine business
continued to develop positively, primarily
with regard to engines for diesel-powered
gensets, particularly as a result of
continued growth in the Chinese market.
China was Volvo Penta’s single largest
market for industrial engines in 2004.
Financial performance
Sales rose 19% to SEK 9,057 M, com-
pared with SEK 7,596 M in the preceding
year, due to strong growth in all of Volvo
Penta’s business segments. Operating
income increased from SEK 695 M to
SEK 937 M, an increase of 35% com-
pared with a year earlier. The operating
margin was 10.3% (9.1). Both sales and
operating income were all-time-highs for
Volvo Penta.
Production and investments
Volvo Penta’s plants operated at full
capacity during the year and capacity
increases were successively implement-
ed in all plants, including the diesel
engine plants in Vara, Sweden, and Wuxi,
China, as well as the gasoline engine
plant in Lexington, Tennessee, USA. The
plant in Vara has conducted parallel pro-
duction of the existing engine series as
well as the new-generation D4/D6. Volvo
Penta has also contributed to the high
capacity utilization in Volvo’s joint engine
plant Skövde, Sweden, primarily as a
result of the strong sales of industrial
engines.
Ambitions for 2005
Volvo Penta has implemented extensive
product introductions in recent years. In
2005, major resources will be applied to
securing continued success for these
new products in the market, particularly
the Volvo Penta IPS drive system. The
strong focus in recent years on cost
control and cash flow as well as on align-
ing the production and logistics systems
to prevailing market positions will be
sustained.
Net sales per market
SEKM 2002 2003 2004
Western Europe 3,846 4,081 4,723
Eastern Europe 99 108 184
North America 2,261 2,109 2,500
South America 127 146 142
Asia 1,141 947 1,324
Other markets 195 205 184
Total 7,669 7,596 9,057