Volvo 2011 Annual Report Download - page 7

world’s largest manufacturers of commercial vehicles
with strong positions in mature markets and with an
increasingly important presence in growth markets. As a
step in further streamlining the Volvo Group towards
commercial vehicles, during the year we initiated a pro-
cess aimed at divesting Volvo Aero.
Financially strong Group
Driven by improved profitability and the good cash flow,
the net financial debt in the industrial operation was
down to 25% of shareholders’ equity at year-end, which
means that the Group is financially strong in an environ-
ment that in the beginning of 2012 is characterized by
turmoil in the financial markets and uncertain macro-
economic trends.
The Board of Directors proposes a dividend of SEK
3.00 per share for 2011, up SEK 0.50 per share com-
pared with the preceding year.
Reorganization to increase sales and profitability
We have a new vision – to become the world leader in
sustainable transport solutions. We shall fulfill this by
creating value for our customers and by pioneering the
development in our industries. We have new financial tar-
gets, a new organization and a number of new manage-
ment teams in place. On January 1, 2012, we introduced
the new organization which was put in place to better
capitalize on the global potential in our products and
brands and to improve the Group’s efficiency.
With the recent very positive trends in the Group’s
development, we are in a favorable position. However,
this does not mean that everything will run on rails. A
great deal of work remains. We have now taken the first
steps on a journey which will be full of challenges, but I
am convinced that there is potential to increase sales and
improve profitability over time. This is a journey that I am
very much looking forward to.
Olof Persson
President and CEO
Volvo Construction Equipment (Volvo CE) has also
strengthened its positions in several growth markets
worldwide. In China our brands Volvo and SDLG gained
the position as market leader within wheel loaders and
excavators. SDLG recently launched new models of exca-
vators, so we have hopes that the success in this giant
market will continue.
I would also like to mention our hybrid buses that are
attracting an increasing amount of interest around the
world.
Increased profitability
Good market conditions in the main and increasing market
shares driven by competitive products translated into us
delivering some 238,000 trucks during 2011 – an increase
of 32% compared to the preceding year. Net sales in the
truck operations surpassed SEK 200 billion and profit-
ability improved to an operating margin of 9.1%.
Volvo CE increased its deliveries by almost 30% to the
new record level of 84,000 machines. The year was
intense with the launch of many new products and a con-
tinued expansion in growth markets. Despite a strong
headwind from the weak dollar, Volvo CE delivered an
operating income of SEK 6.7 billion and an operating
margin of 10.2%.
From a historic perspective, Volvo Buses had a good
year, both in terms of volumes and profitability. This was
achieved by successful efforts to grow in emerging mar-
kets, which offset the continued weak markets in Europe
and the U.S. Operating income increased to SEK 1 billion
and operating margin improved to 4.6%, which is below the
Group average but good when compared to competitors.
Volvo Penta was impacted by a continued weak market
for marine engines and towards the end of the year also
for industrial engines, but despite this, achieved an oper-
ating income of almost SEK 800 M with an operating
margin of 8.8%.
For our Customer Finance Operations, the trend pointed
in the right direction, with portfolio growth and lower
credit losses.
Volvo Aero also had to struggle with a significant
headwind from currency. Despite this, Volvo Aero’s oper-
ating margin amounted to 5.2%.
During my predecessor Leif Johansson’s 14 years as
CEO, the Volvo Group established itself as one of the
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