Volvo 2012 Annual Report Download - page 15

Financial targets from 2012
INDUSTRIAL OPERATIONS
7.3
11
12.5
12
12.6
08
( 10)
0
( 6.2)
09
0.4
10
15
10
5
( 5)
Target: 12 − 15%
Return on shareholders' equity, %
CUSTOMER FINANCE OPERATIONS
Target and outcome
The target for Customer Finance is a return on
shareholders’ equity of 12–15% and an equity
ratio above 8%. The return on shareholders'
equity for 2012 amounted to 12.5%. At year
end 2012 the equity ratio was 8.1%.
Target Comparison group Preliminary outcome*
The annual organic sales growth for the truck
and bus operations shall be equal to or exceed
a weighted-average for comparable competitors.
Each year, the operating margin for the truck
and bus operations shall be ranked among the
top two companies when benchmarked against
relevant competitors.
Daimler, Iveco, MAN, Navistar, Paccar, Scania
and Sinotruk.*
* Navistar's figures are based on rolling four quarters as of
the third quarter of 2012 and Sinotruk's figures are based
on rolling four quarters as of the second quarter of 2012.
The organic sales decreased by 3.2% for the
Volvo Group's truck and bus operations and
was below the weighted average of –1.0% for
the competitors.
The operating margin of 4.3% for the Volvo
Group's truck and bus operations was ranked
number four in comparison with the competitors.
Construction Equipment and Volvo Penta
Target Comparison group Preliminary outcome
The annual organic sales growth for the con-
struction equipment operations and Volvo Penta,
shall be equal to or exceed a weighted-average
for comparable competitors.
Each year, the operating margin for the con-
struction equipment operations and Volvo Penta,
shall be ranked among the top two companies
when benchmarked against relevant competitors.
Brunswick, Caterpillar, CNH, Cummins, Deere,
Hitachi, Komatsu and Terex.
The organic sales decreased by 2.9% for the
Volvo Group's construction equipment opera-
tions and Volvo Penta and was below the
weighted average of 2.3% for the competitors.
The operating margin of 8.3% for the Volvo
Group's construction equipment operations
and Volvo Penta was ranked number five in
comparison with the competitors.
Trucks and Buses
25.2
11
29.3
12
39.7
08
0
−((
( 20)
( 40)
70.9
09
37.4
10
40
20
80
60
Net cash Net debt
Target: below 40%
Net financial debt as a percentage
of shareholders' equity, %
Target and outcome
The financial net debt, including provisions for
post-employment benefits, for the Industrial Oper-
ations shall be a maximum of 40% of sharehold-
ers’ equity under normal conditions. At the end of
2012, the financial net debt amounted to 29.3%
of shareholders' equity.
As of January 1, 2013, new accounting rules
for employee benefits was effective. As a conse-
quence, AB Volvo’s Board of Directors has
decided to exclude pension obligations from the
Industrial Operations
target. According to the new target, the Industrial
Operations’ net financial debt, excluding pension obli-
gations, shall be a maximum of 35% of shareholders'
equity under normal conditions. The new target of
35% corresponds to the previous financial target of
40% in which pension obligations were included.
Starting in 2012 new financial targets for the Volvo Group were
implemented. The new targets have been set in order to enable the
growth and profitability of the various operations to be measured and
benchmarked annually against competitors. This creates a clear pic-
ture of how the operations are developing compared to the industry.
Information on how the comparison with competitors is made is avail-
able under the heading Investors on www.volvogroup.com.
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