Volvo 2005 Annual Report Download - page 71

Volvo Group 2005 67
market for industrial engines was significantly
lower than in the preceding year as a result of
the sharp decline in the Chinese market. A
recovery in global demand for industrial
engines was noted, however, toward the end
of the year.
Customer-adapted production and
logistics solutions
Total volumes in the marine industry are con-
siderably lower than in, for example, the auto-
motive industry. Boat production has not yet
undergone restructuring or standardization to
the same degree as the production of pas-
senger cars and trucks, however, the trend in
the leisure boat industry has gained pace in
recent years. Volvo Penta’s operations have
recently become increasingly integrated with
boat builders’ operations, particularly through
specially adapted production and logistics
solutions.
Due to the new Volvo Penta IPS power sys-
tem, it is now possible to significantly rational-
ize boat production – a key success factor in
the launch of the system.
In its Industrial and Marine Commercial seg-
ments, Volvo Penta endeavors to achieve the
same type of integration with the manufac-
turer of the end-produc t, by promoting produc-
tion efficiency.
Strengthened position in diesel
engines for leisure boats
Volvo Penta’s diesel engine business in Marine
Leisure continued to grow in 2005. The add-
ition of several new customers among boat
builders in Europe and North America has
strengthened Volvo Penta’s position as a
world-leading supplier of diesel engines for
leisure boats.
In recent years in the US, Volvo Penta has
strengthened its position significantly as a
supplier of gasoline engines to independent
boat builders. This trend continued in 2005.
Volvo Penta’s sterndrive gasoline engines
attracted special attention during the year for
their high quality.
Continued good profitability
Sales rose by 8% to a total of SEK 9,776 M,
compared with SEK 9,057 M in the preceding
year, due mainly to the strong performance of
the Marine Leisure segment. Volvo Penta
maintained its high profitability during 2005
and at the same time implemented aggressive
investments in product development and
substantial marketing efforts to capitalize on
the new and competitive product portfolio.
Operating income remained at the same level
as in 2004, SEK 943 M (940). The operating
margin amounted to 9.6% (10.4).
High capacity utilization
Capacity utilization at Volvo Penta plants was
high during the year. In the second half of the
year, measures were taken to reduce the
number of temporary personnel at the diesel
engine plant in Vara, Sweden, and the gasoline
engine plant in Lexington, Tennessee, in the
US – to ensure the ongoing favorable balance
between production pace and demand.
At Volvo’s joint engine plant in Skövde,
Sweden, Volvo Penta helped improve capacity
utilization through sales of 12- and 16-liter
engines.
Volvo Penta offers complete drive
systems and service for leisure
boats, workboats and industrial
applications such as diesel-powered generat-
ing equipment. Volvo Penta operates in three
areas of activity: Marine Leisure, Marine
Commercial and Industrial. By supplying tech-
nologically superior products focused on per-
formance, operational reliability and environ-
mental characteristics, and by being sensitive
to customer demands for effective service
solutions, Volvo Penta has developed a global
leadership and one of the industry’s strongest
brands. With more than 5,000 dealers in some
130 countries, Volvo Penta has a uniquely
strong global presence.
Success for the new Volvo Penta
IPS drive system
The award-winning new drive system for boats
– the Volvo Penta IPS (Inboard Performance
System) – replaces traditional shaft installa-
tions for boats in the 35 to 50-foot class. The
Volvo Penta IPS provides dramatic improve-
ments in top speed, acceleration and comfort.
The new joystick function enables Volvo Penta
IPS boats to maneuver and dock in a secure
manner, even in confined harbors. In the leis-
ure boat industry several new boat models
based on the Volvo Penta IPS were launched
during the year. Toward year-end 2005, the
new drive system was launched for boats in
commercial operation as well.
Volvo Penta introduced a new 16-liter diesel
engine, which is the most important engine
segment for the commercial marine busi-
ness.
Strong market for large marine engines
The total market for large marine engines
remained strong – however, demand for small
engines subsided, due to lower demand for
leisure boats in small-size classes. The world
Net sales per market
SEK M 2004 2005
Europe 4,907 5,102
North America 2,500 2,832
South America 142 208
Asia 1,324 1,427
Other markets 184 207
Total 9,057 9,776