Volvo 2009 Annual Report Download - page 32

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BOARD OF DIRECTORS’ REPORT 2009
Capitalized development
costs, SEK bn
Capital expenditures,
% of net sales
09080706
2.62.12.12.93.0
5.04.33.63.94.3
7.710.58.06.86.9
Property, plant and
equipment, SEK bn
05
Cash-flow from
operating activities
divided by net
investments in fixed
assets and leasing
assets.
0908070605
(16)78265235173
Financial items and paid income taxes had a
SEK 4.7 billion negative effect on cash ow,
mainly through payments of interests and
income tax.
Operating cash flow within Financial Ser-
vices was a positive SEK 15.1 billion in 2009
(negative SEK 11.3 billion) as a result of the
decreased credit portfolio.
Investments
The industrial operations’ investments in xed
assets and capitalized research and develop-
ment during 2009 amounted to SEK 10.3 bil-
lion (12.6).
Capital expenditures in Trucks amounted to
SEK 7.4 billion (8.3). The capital expenditures
within Trucks consist of the ongoing invest-
ments in cab plants: assembly in Umeå, Sweden
and assembly and painting in Blainville, France,
aiming to increase capacity, flexibility and pro-
ductivity. The ongoing investment program
aiming to increase capacity and efciency in
the plants in Skövde and Köping (Sweden)
where engines and gearboxes are produced,
has also continued. Investments with the pur-
pose of improving the efciency in the indus-
trial structure are ongoing in Tuve, Sweden
and Ageo, Japan. Product-related investments
during the year mainly refer to Euro V and EPA
2010 emission standards as well as other
renewals in the product program. During 2009
investments continued in the dealer network
and workshops, mainly in Europe, however on
a lower level than the previous year.
Capital investments for Construction Equip-
ment decreased to SEK 1.0 billion from SEK
2.0 billion the previous year. The main part was
made in Eskilstuna, Sweden, aiming to increase
efciency and capacity within the axle and
transmission production. They also include the
expansion of the Lingong excavator factory in
Linyi, China, as well as the expansion of the
Shippensburg plant for production of motor
graders in the U.S. Product-related invest-
ments during the year refer mainly to the new
emission regulations Tier4i.
Investments in Buses were SEK 0.4 billion
(0.2). They were mainly related to a new pro-
duction facility for Nova Bus in Plattsburgh,
New York, USA. Product-related investments
during the year related mainly to the emission
standards according to Euro V. Buses have
also invested to increase efciency in produc-
tion facilities and products.
The level of investments in Volvo Penta
were SEK 0.3 billion (0.4) and consist mainly
of product-related investments in the new D3
engine and IPS2, investments in the new logis-
tics system as well as tooling and other devel-
opment activities.
Investments within Volvo Aero during 2009
were SEK 0.6 billion (0.9). The majority of the
investments refer to the involvement in the
new engine programs, PW1000G and Trent
XWB, in cooperation with Pratt & Whitney and
Rolls-Royce. The investments also refer to the
nalization of a number of investments in Volvo
Aero’s production facilities in order to secure
the capacity required for the GEnx program
carried out in cooperation with General
Electrics.
Investments in leasing assets amounted to
SEK 0.2 billion (0.4).
For 2010 investments in property, plant and
equipment are forecasted to be about SEK 6
billion, which is lower than 2009. The Volvo
Group continuously reviews and prioritizes
among the ongoing and future investments
within the organization to secure adaptations
of the investments to current market situation.
Capital expenditures, Industrial operations Self-financing ratio, Industrial operations, %
Cash-flow statement
– reduced working capital
could not balance the operating loss
Operating cash flow in the Industrial Operations decreased to a negative SEK 11.4 billion
(negative SEK 2.7 billion). The decreased cash ow was mainly due to the lower earnings, that
was not offset by the decrease in working capital due to less capital tied up in inventories.
28