Volvo 2008 Annual Report Download - page 31

subsidiaries in Iraq under the Oil-for-Food Pro-
gram. The settlements included a total of
approximately SEK 117 M in fi nes, disgorge-
ment of past profi ts and interest. The effect of
the fi nancial settlements on the operating
income for the fi rst quarter was approximately
SEK 60 M.
Annual General Meeting of AB Volvo
At the Annual General Meeting of AB Volvo
held on April 9, 2008, the Board’s proposal
was approved to pay an ordinary dividend to
the shareholders of SEK 5.50 per share.
Peter Bijur, Tom Hedelius, Leif Johansson,
Finn Johnsson, Philippe Klein, Louis Schweit-
zer, Ying Yeh and Lars Westerberg were re-
elected members of the Board of AB Volvo
and Ravi Venkatesan was newly elected. Finn
Johnsson was elected Board Chairman. Per-
Olof Eriksson was not available for re-election.
The Board’s Chairman Finn Johnsson, Carl-
Olof By, representing AB Industrivärden, Lars
Förberg, representing Violet Partners LP,
Anders Oscarsson, representing SEB funds/
Trygg Försäkring and Thierry Moulonguet, rep-
resenting Renault s.a.s. were elected mem-
bers of the Election Committee. The Meeting
resolved to adopt new guidelines for remu-
neration to senior executives. In addition, the
Meeting resolved to adopt a new share-based
incentive program during the second quarter
of 2008 for senior executives in the Volvo
Group. So that Volvo shall be able to meet its
commitment in accordance with the program,
with limited cash fl ow effect, the Meeting fur-
ther resolved that Volvo may transfer own
shares (treasury stock) to the participants in
the program.
Europe's fi rst hybrid
refuse truck presented
In April 2008, Volvo Trucks took an important
step towards commercialization of the fuel-
saving hybrid technology for heavy vehicles by
presenting two hybrid refuse trucks that will be
tested in regular daily operations in Sweden by
refuse collection fi rms Renova and Ragn-Sells.
The hybrid refuse trucks are expected to use
15–20% less fuel and thus cut carbon dioxide
emissions by a corresponding amount. What is
more, one of the trucks is equipped with an
extra battery pack that drives the refuse com-
pactor, and this is charged via the main elec-
trical system when the truck is parked over-
night. Its total reduction in carbon dioxide
emissions is expected to be up to 30%, giving
this approach a better eco-effect than for
instance a truck powered by natural gas. Elec-
tric power has the added advantage of being
entirely exhaust-free and emitting low noise.
The second quarter
Final agreement with
Indian vehicle manufac-
turer Eicher Motors
In May, the Volvo Group signed a fi nal agree-
ment with the Indian vehicle manufacturer
Eicher Motors covering establishment of a
new Indian joint-venture company. As
announced previously, the joint venture, VE
Commercial Vehicles Ltd., comprises Eicher
Motors’ entire truck and bus operations and its
components business as well as operations
within technical consulting. The Volvo Group
will transfer its Indian truck sales operations
and service network for trucks and buses.
Volvo has a direct ownership of 45.6% of the
joint-venture company. Volvo also acquired
8.1% of Eicher Motors Limited from the major-
ity owner and consequently gained a direct
and indirect ownership interest of 50% in VE
Commercial Vehicles. Volvo’s 50% interest in
the joint-venture company was consolidated
during the third quarter 2008.
Volvo Group entered into a SEK 6.2
billion loan agreement
In July, Volvo Treasury AB, a subsidiary in the
Volvo Group, successfully entered into a SEK
6.2 billion (YEN 110 billion) cross-border syn-
dicated loan agreement. Volvo Treasury
decided to use syndicated lending from Japan-
ese fi nancial institutions to diversify its fund-
ing source.
Volvo Aero entered
into two major engine
programs
In July, it was announced that Volvo Aero had
entered into an agreement with aircraft engine
manufacturer Pratt & Whitney to join P&W’s
Geared Turbofan engine program. Volvo Aero
will be responsible for three major components
in the aircraft engines for both the Mitsubishi
Regional Jet (MRJ) and the Bombardier
CSeries. For Volvo Aero the agreement is
expected to result in sales of SEK 50 billion
over 40 years, the company’s largest involve-
ment in a commercial engine program ever.
Also in July, it was announced that Volvo
Aero and Rolls-Royce had entered into a risk
and revenue sharing agreement for the Trent
XWB engine for the Airbus A350XWB aircraft,
under which Volvo Aero will develop and manu-
facture the intermediate compressor case, a
key engine component. Volvo Aero estimates
the value of the contract to be approximately
SEK 40 billion over 40 years.
The third quarter
Volvo CE moves motor
grader business as part
of North American
consolidation plan
Volvo Construction Equip-
ment (Volvo CE) will move its North American
27
Board of Directors’ Report 2008