Volvo 2008 Annual Report Download - page 96

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Notes to consolidated fi nancial statements
92
THE VOLVO GROUP
Financial information 2008
Note 7 Segment reporting
Reporting by business segment
The Volvo Group’s operations are organized in nine business areas:
Volvo Trucks, Renault Trucks, Mack Trucks, Trucks Asia, Buses, Con-
struction Equipment, Volvo Penta, Volvo Aero and Customer Finance.
In addition to the nine business areas, there are other operations con-
sisting mainly of business units that are designed to support the busi-
ness areas’ operations. The business units include Volvo Powertrain,
Volvo 3P, Volvo IT, Volvo Logistics and Volvo Parts. As the four truck
brands share product development, production and other activities in
business units such as Volvo 3P and Volvo Powertrain and also share
certain infrastructure in distribution such as dealers, the four truck
brands are reported as one business segment. The Volvo Group is
thus reported divided in six segments where net sales and operating
income are reported for each product area.
Each business area, except for Customer Finance, has total respon-
sibility for its operating income, operating capital and operating cash
fl ow. Volvo Financial Services within Customer Finance has responsi-
bility for its net income and total balance sheet within certain restric-
tions and principles that are established centrally. The supervision and
coordination of treasury and tax matters is organized centrally to
obtain the benefi ts of a Group-wide approach. The legal structure of
the Volvo Group is based on optimal handling of treasury, tax and
administrative matters and, accordingly, differs from the operating
structure.
The business units are designated to support the business areas and
are therefore not reportable business segments. As from January 1,
2007, the results from the synergies created in the business units are
transferred back to the various product areas. The allocation is based
on the degree to which individual product areas have utilized the ser-
vices of the business units. The heading Other contains mainly earnings
linked to corporate functions including the Group’s treasury operations.
The Group’s real estate, held in Volvo Real Estate, is reported under
industrial operations, and earnings are transferred back to the business
areas.