Volvo 2004 Annual Report Download - page 5

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3
Volvo Financial Services reports con-
tinued profitability without compromising
its strict credit policy, which is pleasing.
Overall, it is clear that the Group’s
intensive product-renewal efforts and the
integration of new units have resulted in
structurally higher margins.
Many excellent efforts have been
made during 2004, not least in our
business units, which strive to integrate
activities, such as engine manufacturing,
product development, parts distribution
and IT systems for the whole Group in
order to strengthen the competitiveness
of our product offering. This will also be
noticeable through upgraded product
ranges, strengthened distribution and
customer service, as well as enhanced
economies of scale throughout the value
chain.
The Board of Directors has proposed
that the dividend is increased from SEK 8
to SEK 12.50 for 2004. We also note
that, since the new strategy was imple-
mented in 1998, the Volvo Group has dis-
tributed approximately SEK 41 billion to
the shareholders in the form of dividends
and share repurchase. During this period,
the Group has grown and has now
achieved similar sales levels as it had
before the divestment of Volvo Cars.
The Group has entered 2005 at a high
pace. We expect continued high demand
in Europe, in which the market for heavy
trucks, boosted by favorable growth in
Eastern Europe, could increase up to 5
percent. In North America, we anticipate
that the heavy trucks market will grow by
15-20 percent.
The Volvo Group’s level of capacity
utilization is expected to remain high and
over time we can increase capacity fur-
ther to meet demand. In many instances,
it is the suppliers’ capacity that prevents
an increase in production rather than the
Group’s own capacity. Cost increases are
also being noticed and, accordingly, the
Group adjusts its pricing to offset such
increases.
At the same time, we are in an inten-
sive phase for the launch of new
products. This will give us the opportunity
to further strengthen our product offering
but also encompasses the challenges
associated with all kinds of launches. I
feel, however, that the overall situation is
positive.
We look forward to a challenging and
interesting continuation of 2005, with
major opportunities to further strengthen
our positions in the markets.
Leif Johansson
President and CEO