Volvo 2007 Annual Report Download - page 66
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Please find page 66 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.Construction Equipment
– now No.3 in the industry
2007 was another record year for Construction Equipment. Over
40 new machines were launched and the acquired companies
Ingersoll Rand’s road development division and Lingong added
another 80 products to the portfolio.
In parallel with record demand for its prod-
ucts, Volvo CE has continued to adopt a “cus-
tomer application” rather than “product line”
approach – leading to the development of
industry sector specifi c machines – notably
forestry, demolition, materials handling and oil
and gas. This not only makes it easier for cus-
tomers to specify the most appropriate prod-
ucts for their needs, it also affords Volvo CE
the opportunity to sell systems of products
that are designed to effi ciently work together
in specifi c applications.
Strategic acquisition opens up access
to rapidly growing highway sector
The road machinery segment received the
biggest boost in 2007, with the acquisition of
a new line of pavers, compactors and milling
machines. These products join Volvo CE exist-
ing segment offerings of motor graders, exca-
vators, loaders, haulers and compact equip-
ment.
In addition to “hard” machine sales, Volvo
CE has signifi cantly increased its “soft” offer-
ings, notably in customer support, fi nance and
rental. With a rapidly growing population of
machines in the fi eld, the importance of pro-
moting genuine Volvo parts and services
throughout the entire machine lifecycle is set
to increase markedly.
Growing total market
The global construction equipment market
saw yet another year of strong growth in 2007
– making it six years of non-stop increases in
customer demand. And what is more, it stands
every chance of continuing. Despite pockets
of weakness in some G7 countries, the global
economy as a whole remains in solid shape.
Industry trends
24 consecutive fi nancial quarters of increas-
ing customer demand put the industrial
capacity under strain. Infl ation in material
prices and component availability issues cou-
pled with factories working at full capacity
exacerbated the situation. Investments in new
capacity was outstripped by demand leading
to long lead times in certain product groups.
A combination of rising fuel prices and
more demanding engine emissions regula-
tions is continuing to place increased industry
focus on the cost of ownership rather than ini-
tial purchase price. While the future legislative
direction the industry will take remains unclear,
there is an openness to the use of new fuel
types (biofuels) and power systems (e.g.
hybrids).
Increased deliveries
During 2007 Volvo CE sold more than 64,000
machines, an increase of 72% compared with
2006. To help meet record customer demand,
Volvo CE has earmarked over SEK 1.5 billion
in capacity investments, including an invest-
ment of nearly SEK 1.1 billion in its Component
Division in Eskilstuna, Sweden.
Net sales as percentage
of Volvo Group sales Operating margin1,2, %Net sales1, 2, SEK bn Operating income1,2, SEK bn
0706050403
53.642.134.829.423.2
19%
0706050403
7.99.77.96.53.9
0706050403
4.24.12.81.90.9
1 Years 2004-2007 are reported in accordance with IFRS and 2003 in accordance with prevailing Swedish GAAP. See Note 1 and 3.
2 Years 2006-2007 are reported according to a new reporting structure. See Note 7.
Volvo CE’s launch of the E-Series articulated haulers
was just one of a number of important product
launches in 2007.
62 Business areas 2007