Volvo 2008 Annual Report Download - page 47

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Cash-fl ow statement
Operating cash fl ow in the Industrial Operations decreased to a negative SEK
2.7 billion (positive 15.2). The decreased cash fl ow was mainly due to higher
working capital and lower earnings.
Cash fl ow
During 2008, the Industrial operations’ oper-
ating cash fl ow amounted to negative SEK 2.7
billion compared to positive SEK 15.2 billion
2007. The negative development during 2008
was mainly related to the lower operating
income, increased investments in fi xed assets
and an increase of the working capital. The
increase is mainly an effect of lower pace in
production and higher levels of inventories. In
order to reduce the capital tied-up in inventory,
a number of shutdown days in production were
carried out during the end of year. Measures
aimed at selling primarily trucks and construc-
tion equipment in inventory were prioritized.
These measures have continued during the
beginning of 2009.
Investments
The industrial operations’ investments in fi xed
assets including capitalized development
costs during 2008 amounted to SEK 12.6 bil-
lion (10.1).
Capital expenditures in Trucks amounted to
SEK 8.3 billion (5.3). The capital expenditures
within Trucks consist of investments in cab
plants, assembly in Umeå, Sweden, as well
assembly and painting in Blainville, France,
aiming for increased capacity, productivity and
fl exibility. There are also signifi cant invest-
ments in manufacturing of engines and gear-
boxes, mainly in Köping and Skövde, Sweden,
in order to meet long term capacity needs. The
new assembly facility for trucks in Russia has
been completed during the year and the
expansion of dealer network and workshops,
mainly in Europe, has continued during 2008.
Product related investments refer to Euro V
and US10 emission standards as well as the
introduction of the new range of Volvo trucks
and other renewals in the product program.
Capital investments for Construction Equip-
ment decreased to SEK 2.0 billion from SEK
2.6 billion previous year. The main part of the
investments refers to productivity and capacity
increases in manufacturing for the articulated
haulers and excavator business as well as
within the axle and transmission production. It
also includes a new paint shop for the cab pro-
duction in Hallsberg, Sweden. Product related
investments during the year refer mainly to the
new L45F and L50F wheel loaders as well as
the expansion of the C-series and short swing
excavator range.
The investments made within Volvo Aero
was reduced to SEK 0.9 billion from SEK 1.0
billion last year. The main part of the invest-
ments refers to phase two of the new GEnx
engine in cooperation with General Electric
together with investments in production facili-
ties in order to secure the capacity required for
the GEnx program.
The investments in Buses were SEK 0.2 bil-
lion (0.3) and relate mainly to various product
related investments as US07 engine installation
in the Volvo 9700 Coach for the US market.
The level of investments in Volvo Penta
remained at a level of SEK 0.4 billion and con-
sist mainly of capacity increasing investments
in the Vara plant in Sweden and product
project related investments in tooling and
other development activities.
For 2009 the forecast for investments in
property, plant and equipment amount to SEK
7–8 billion, which is a decrease compared to
2008. However, in the process of planning the
investments for the coming years the Group is,
due to the current market situation, also re-
prioritizing and reviewing already approved
investments.
Investments in leasing assets amounted to
SEK 0.4 billion (0.2).
Capital expenditures, Industrial operations Self-fi nancing ratio, Industrial operations, %
Capitalized development costs, SEK bn
Capital expenditures, % of net sales
08070605
2.12.12.93.01.7
4.33.63.94.33.6
10.58.06.86.95.5
Property, plant and equipment,
SEK bn
04
Cash-flow from
operating activities
divided by net
investments in fixed
assets and leasing
assets.
0807060504
78265235173268
43
Board of Directors’ Report 2008