Volvo 2009 Annual Report Download - page 43

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Outcome 2009
Unprecedented drop in demand, both speed and level. •
Signicant production cuts and stafng reductions. •
Signicant operating loss as cost could not be reduced •
in the same pace as the drop in demand.
Inventories of new and used trucks was gradually •
reduced during the year.
First manufacturer to certify engines for the new •
emission regulation in USA implemented January 1,
2010.
Ambitions 2010
Capture growth in emerging markets. •
Increase industrial productivity in up-turn. •
Control costs.•
Successful introduction of new engine generations •
in the US and Japan.
Ambitions 2009
Adapt the industrial system to lower demand. •
Reduce selling and administration expenses.•
Continue to develop new service and aftermarket •
products.
Earnings
In 2009 net sales in the truck operations
declined by 32% to SEK 138,940 M (203,642).
The operating loss amounted to SEK 10,805
M (Income SEK 12,167 M), while the operating
margin was a negative 7.8% (Positive 6.0%).
The operating loss is mainly a consequence
of considerably lower sales of new trucks.
Operating prot was also impacted negatively
by low cost coverage as a result of the lower
volumes, write-downs on the inventories of
used trucks, increased provisions for residual
value commitments and layoff-related costs.
The efforts to reduce inventories were suc-
cessful. During the year, inventories of new
trucks decreased by 15,000 vehicles exclud-
ing VE Commercial Vehicles, and inventories
were in balance with demand at the end of the
year. Inventories of used trucks also decreased
during the year but were still too high at the
end of the year.
Volvo Trucks
The year 2009 was Volvo Trucks most chal-
lenging ever. The nancial crisis and the rapid
decline in demand for new trucks led to a high
pressure on the organization.
Through cost-cutting measures, the
breakeven-level has been lowered. At the
same time, investments in increased produc-
tivity and a competitive product program
continued.
Lower costs and reduced capital tied-up
Volvo Trucks have executed a number of
actions that resulted in the lowering of costs
and capital tied-up in the business. On the
cost side, the break even-level has been sig-
nicantly lowered, which unfortunately meant
a reduction in personnel. In order to reduce
inventories of new trucks and the tied-up cap-
ital, production rates in the factories were sub-
stantially decreased. The inventories of new
trucks were gradually lowered and were more
or less in balance with prevailing demand at
the end of the year.
Volvo Trucks’ wholly-owned sales and ser-
vice network in Europe is a cushion for the
business during recessions. While deliveries of
39