Volvo 2010 Annual Report Download - page 21
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ult
in
us
s
Growth
The growth target is that net sales should increase
by a minimum of 10% annually. During 2000–
2010, the average growth rate was 7.4% annually.
Operating margin
The Volvo Group’s profitability target is that oper-
ating margin for the Industrial operations is to
exceed an average of 7% annually over a business
cycle. The average annual operating margin for the
Volvo Group’s Industrial Operations was 3.9%
from 2000 to 2010.
Capital structure
The capital structure target is set to a net debt
including provisions for post-employment bene-
fits for the Industrial operations of a maximum of
40% of shareholders’ equity under normal condi-
tions. As of December 31, 2010, the Volvo
Group’s Industrial operations had a net financial
debt position corresponding to 37.4% of share-
holders’ equity.
70.9
09
37.4
10
(29.2)
06
5.7
07
39.7
08
80
60
40
20
0
(20)
(40)
(7.8)
09
6.9
10
7.9
06
(10)
10
0
7.8
0708
5.2
(
28)
09
21
10
7
06
(
30)
0
10
07
6
08
10
The target for Customer Finance is a return on shareholders’ equity of 12–15% and an equity ratio
above 8.0%. At year end the equity ratio was 9.0%. The average annual return on shareholders’ equity
for 2006–2010 amounted to 7.2%.
Financial goals for Industrial Operations
Financial goals for Customer Finance Operations
Net sales growth, % Operating margin, % Net financial debt as percentage of
shareholders’ equity, %
The Volvo Group’s financial goals were established by the Board
in September 2006. The Board focuses on three goals comprising
growth, operating margin and capital structure for the Group’s
Industrial Operations.
FINANCIAL GOALS
Measured over a business cycle
Target: above 10% Target: above 7%
Target: below 40%
Return on shareholders’ equity, %
(6.2)
09
0.4
10
13.2
06
(10)
15
0
15.9
0708
12.6
10
5
(5)
Target: 12–15%
Net cash Net debt
17