Volvo 2011 Annual Report Download - page 58

BOARD OF DIRECTORS’ REPORT 2011
SIGNIFICANT EVENTS
DURING 2011
Some of the important events during 2011 was that Olof Persson assumed position as
new CEO, the Group received new financial targets and a new organization was adopted.
The first quarter
Olof Persson appointed new Volvo CEO
The Board of Directors of AB Volvo decided to
appoint Olof Persson, 46, then President of Volvo
Construction Equipment, as the new President
and Chief Executive Officer of Volvo. Olof Pers-
son assumed the position as President of AB
Volvo and CEO of the Volvo Group on Septem-
ber 1, 2011 when Leif Johansson retired.
Pat Olney new CEO of Volvo CE
Effective May 1, Pat Olney, 42, was appointed
new President and CEO of Volvo Construction
Equipment. Pat Olney has an extensive experi-
ence spanning 17 years in the construction
equipment industry, with 10 of these in senior
management roles within Volvo CE. He assumed
his new position on May 7, 2011.
Annual General Meeting of AB Volvo
The Annual General Meeting of AB Volvo held
on April 6, 2011 approved the Board of Direc-
tors’ motion that a dividend of SEK 2.50 per
share be paid to the company’s shareholders.
Peter Bijur, Jean-Baptiste Duzan, Leif
Johansson, Hanne de Mora, Anders Nyrén,
Louis Schweitzer, Ravi Venkatesan, Lars West-
erberg and Ying Yeh were reelected as mem-
bers of the AB Volvo Board. Leif Johansson was
reelected for the period extending to August 31,
2011, when he stepped down from his assign-
ment as President and Chief Executive Officer
of Volvo. In addition, Olof Persson was elected
to the Board for the period starting on September
1, 2011, when he took office as President and
Chief Executive Officer of Volvo. Louis Schweitzer
was reelected Chairman of the Board.
Jean-Baptiste Duzan, representing Renault
s.a.s, Carl-Olof By, representing AB Industri värden,
Håkan Sandberg, representing Svenska Han-
delsbanken, SHB Pension Fund, SHB Employee
Fund, SHB Pensionskassa and Oktogonen, and
Lars Förberg, representing Violet Partners LP,
and the Chairman of the Board were elected
members of the Election Committee. The Meet-
ing resolved that no fees would be payable to
the members of the Election Committee.
The Annual General Meeting adopted a pro-
posal from Renault S.A. and Industrivärden con-
cerning an addendum to AB Volvo’s Articles of
Association that will permit voluntary conversion
of Series A shares to Series B shares. The
amendment of the Articles of Association was
subject to approval by shareholders represent-
ing at least two thirds of the votes cast and the
voting rights represented at the Meeting.
Volvo CE invests in its North American
operations
Over the next couple of years, Volvo Construc-
tion Equipment plans to invest USD 100 M in its
Shippensburg, PA, USA manufacturing facility
and start production of wheel loaders, excava-
tors and articulated haulers in North America.
Also, Volvo CE’s North American sales head-
quarters and Volvo Rents will relocate from
Asheville, NC to Shippensburg, PA by September
2012.
The second quarter
UD Trucks launches new Condor
In July, UD Trucks launched its new Condor
medium-duty trucks, which have undergone a
full model change. The new models adopt a new
cab design that conveys the impression of a uni-
fied family identity with the Quon heavy-duty
truck series. They also feature various advanced
technologies accumulated on the company’s
heavy-duty trucks to deliver outstanding fuel
economy, improved environmental and aero-
dynamic performance and safety. The new
Condor models are powered by engines fitted
with a newly developed common rail system that
increases the maximum fuel injection pressure
for achieving high levels of power and torque in
a small displacement volume.
The third quarter
New financial targets
In September it was announced that the Board
of Directors of AB Volvo had decided to imple-
ment new financial targets for the Volvo Group
starting in 2012. The new targets have been
set in order to enable the growth and profitabil-
ity of the various operations to be measured
and benchmarked annually against relevant
competitors.
The financial targets for the Group are as
follows:
• The annual organic sales growth for the truck,
bus and construction equipment operations,
as well as Volvo Penta, shall be equal to or
exceed a weighted-average for comparable
competitors.
• Each year, the operating margin for the truck,
bus and construction equipment operations,
as well as Volvo Penta, shall be ranked among
the top two companies when benchmarked
against relevant competitors.
• For Customer Finance Operations, the exist-
ing targets of 12-15% return of equity (ROE)
and an equity ratio exceeding 8% stand firm.
Volvo Aero has an ROE target of 15–25%.
When calculating the ROE, Volvo Aero will be
assigned the same equity ratio as that for the
Group’s Industrial Operations.
• The capital structure target is set to a net
debt, including provisions for post-employ-
ment benefits, for the Industrial Operations of
a maximum of 40% of shareholders’ equity
under normal conditions.
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