Volvo 2007 Annual Report Download - page 45
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Please find page 45 of the 2007 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.organic growth and the acquisitions of Nissan
Diesel, Lingong and Ingersoll Rand’s division
for road development equipment. Sales in
North America were signifi cantly down in 2007,
primarily due to sharply lower sales of trucks.
Nissan Diesel contributed to net sales with
SEK 20,308 M during the period from April 1
– December 31, 2007. Ingersoll Rand’s road
development equipment contributed SEK
3,317 M during the period May 1 – December
31, 2007.
Operating income increased
In 2007, operating income for the Volvo
Group’s Industrial Operations amounted to
SEK 20,583 M, which was 10% higher than in
2006. The operating margin for the Industrial
Operations amounted to 7.4% (7.5). Operat-
ing income in 2006 was negatively affected
by an adjustment of goodwill in Mack Trucks
of SEK 1,712 M.
Demand for the Group’s products contin-
ued to be very good in Europe, South America
and large parts of Asia, which in combination
with very competitive products resulted in
continued favorable price realization. An
advantageous product and market mix, with
increased sales in Europe, made a positive
contribution to the Group’s earnings, and at
the same time the Volvo Group’s dealer oper-
ations and the products and services in the
aftermarket business continue to show
increased profi tability. The strong demand in
these markets has led to very high capacity
utilization in the European industrial system.
The ability to deliver rose during the year,
partly at the expense of higher production
costs through overtime work, extra shifts and
increased outsourcing activities.
In North America the operating income was
affected by continued low demand and low
deliveries of trucks as well as production dis-
turbances related to the introduction of a new
generation of engines and changes to the
industrial production system. Also during the
fourth quarter of 2007, there was an increase
in warranty provisions of SEK 370 M for some
Income Statement Volvo Group
Change
SEK M 2006 2007 in %
Net sales Volvo Group 258,835 285,405 10
Operating Income Volvo Group 20,399 22,231 9
Operating income Industrial operations 18,713 20,583 10
Operating income Customer Finance 1,686 1,649 (2)
Interest income and similar credits 666 952 43
Interest expense and similar credits (585) (1,122) 92
Other fi nancial income and costs (181) (504) 178
Income after fi nancial items 20,299 21,557 6
Income taxes (3,981) (6,529) 64
Income for the period 16,318 15,028 (8)
Income Statement Industrial operations
Change
SEK M 2006 2007 in %
Net sales 249,020 276,795 11
Cost of sales (192,400) (214,160) 11
Gross income 56,620 62,635 11
Gross margin, % 22.7 22.6
Research and development expenses (8,354) (11,059) 32
Selling expenses (19,999) (24,671) 23
Administrative expenses (6,481) (7,092) 9
Other operating income and expenses (3,275) 249
Income from investments in associated companies 61 428 613
Income from other investments 141 93 (34)
Operating income Industrial operations 18,713 20,583 10
Operating margin, % 7.5 7.4
Income Statement Customer Finance
Change
SEK M 2006 2007 in %
Finance and lease income 7,648 7,705 1
Finance and lease expenses (4,487) (4,535) 1
Gross income 3,161 3,170 0
Selling and administrative expenses (1,284) (1,437) 12
Credit provision expenses (190) (125) (34)
Other operating income and expenses (1) 41
Operating income 1,686 1,649 (2)
Income taxes (589) (502) (15)
Income for the period 1,097 1,147 5
Return on Equity, 12 month moving values, % 13.2 15.9
Research and development costs1
0706050403
11.18.47.67.66.8
3.93.43.33.83.9
Research and
development costs,
SEK bn
Research and
development
costs, % of net sales
1 Years 2004–2007are reported in accordance with IFRS and 2003 in accordance with
prevailing Swedish GAAP. See Note 1 and 3.
Board of Directors’ Report 2007 41