Volvo 2010 Annual Report Download - page 38

Ambitions 2010
• Secure market penetration and product adaptation in BRIC countries.
• Integrate Lingong with a joint business plan for a broader offer in
emerging markets.
• Prioritize hard and soft products for new markets and customer
segments.
• Increase the use of telematics in products.
• Optimize the industrial footprint to become more efficient in production
and development.
CONSTRUCTION EQUIPMENT
Good growth in sales
and profit
Construction Equipment
manufactures equipment for
construction applications
and related industries.
Olof Persson
President of Volvo
Construction Equip-
ment.
Number of employees
13,599
Position on world market
Volvo CE is the world’s largest manu-
facturer of articulated haulers and
one of the world’s largest manufac-
turers of wheel loaders, excavators,
road development machines and
compact construction equipment.
Brands
Volvo and SDLG (Lingong).
Volvo CE is one of the world’s leading manufacturers of articulated
haulers and one of the leading manufacturers of wheel loaders, exca-
vators, road construction equipment and compact machines.
Volvo CE’s products, spare parts and services are
available in more than 125 countries. The prod-
ucts are mainly used in such segments as gen-
eral construction, road construction and mainte-
nance, as well as in the refuse, mining and
forestry industries.
Recovery
Measured in units sold, the total world market for
heavy, compact and road machinery equipment
increased by 44%, compared to 2009. During
2010, the European markets rose 15%, while
North America rose 20%. Both Asia and Other
markets rose 60%. The strong growth in the
BRIC countries, Brazil, Russia, India and China,
propelled development to a large extent.
Increase in delivery and sales
During 2010, Volvo CE sold 66,000 machines,
compared with 38,800 machines in 2009. Net
sales amounted to SEK 53,810 M, an increase of
51%, compared with SEK 35,658 M in 2009.
Operating profit totaled SEK 6,180 M (loss:
4,005). The operating margin improved signifi-
cantly and amounted to 11.5%, compared with a
negative 11.2% in 2009. The improved operating
profit was attributable to increased sales, internal
cost-reduction measures, improved cost coverage
in the production system and higher productivity.
Secure development in the BRIC countries
During the year, several initiatives were imple-
mented to support development in the BRIC
countries (Brazil, Russia, India and China).
Investments to expand excavator manufactur-
ing were made in India and decided upon in Bra-
zil. The investments include assembly and manu-
facture of components for the models in the
domestic markets. In China, excavator capacity
was also increased by a decision to commence
manufacturing four new models of the SDLG
excavators.
In March, a decision was made to build a new
technology center in Jinan, China. The technol-
ogy center will focus on the development of prod-
ucts and components for equipment for the BRIC
countries and includes the Volvo and Lingong
brands.
Presence in the Russian market was strength-
ened further by an agreement with Ferronordic,
which is planning to expand its distribution net-
work with more affiliates to increase sales and
service.
Joint product plan
As the Chinese economy is growing, so is demand
for excavators. Supported by Volvo CE, Lingong
has now launched its own excavators. The
co operation between Volvo and Lingong has also
been strengthened by a joint product plan.
Key aftermarket
Service and aftermarket products play a key role
for Volvo CE as a supplier of turnkey solutions.
Service and aftermarket products accounted for
23% of the total earnings in 2010. For instance,
the sale of attachments increased from SEK
540M to SEK 1,270 M.
Increased usage of telematics
Through continuous equipment monitoring, Volvo
CE’s telematic system, CareTrack, is able to facil-
itate additional productivity and accessibility. By
using GPS or satellite technology, information
about the machines may be forwarded to any
possible location. Through error reports and
warnings, the system offers diagnostic assist-
ance, which, in turn, facilitates identifying and
repairing problems more rapidly. During 2010, a
decision was made that all newly produced large
machines (wheel loaders in excess of 10 tons,
haulers and excavators in excess of 12 tons, as
well as graders) will include a three-year Care-
Track service agreement as a standard feature.
Focus on efficiency in production
and development
To additionally streamline the industrial system,
three North American plants were reduced to one.
The plants in Asheville and Goderich were closed
and production relocated to the plant in Shippens-
BOARD OF DIRECTORS’ REPORT 2010
34