Volvo 2012 Annual Report Download - page 68

BOARD OF DIRECTORS’ REPORT 2012 GROUP PERFORMANCE
VOLVO PENTA
Good profitability
despite weak
demand
he Industrial business segment is
the part of Volvo Penta’s operation
that generates the largest volumes
based on the Volvo Group’s diesel
platforms. Volvo Penta’s product range in the
Industrial segment comprises high-technological
diesel engines for industrial applications, for
example, power generation, cranes, mining vehi-
cles and container handling equipment. With
unique performance, operating and environ-
mental features, Volvo Penta’s industrial engines
create strengthened competitiveness for such
world-leading customers as Sandvik, Cargotec
and SDMO. By utilizing the strength of the Volvo
Group’s combined service offering, Volvo Penta
is also able to offer efficient support in the form
of global service and aftermarket services.
Within the Marine Commercial business seg-
ment, Volvo Penta delivers diesel engines for
use under the toughest possible offshore condi-
tions. Coast guards and sea-rescue organiza-
tions, ferry companies, port authorities and ship-
yards worldwide install Volvo Penta’s reliable
engines in boats for sea rescue, patrol, passen-
ger transport, security and maintaining offshore
wind turbines.
Within the Marine Leisure business segment,
Volvo Penta delivers diesel engines, gasoline
engines and complete drive systems for most of
the leading boat brands in the industry, for
example, Fairline, Sunseeker and Princess of
the UK, Jeanneau/Beneteau of France, Bavaria
of Germany and Intermarine of Brazil.
Using innovative, technical solutions for
boats, Volvo Penta creates significant advan-
tages for customers in the form of lower fuel
consumption, simpler maneuvering and reduced
installation time. With joystick maneuvering,
sophisticated communication and navigation
equipment and fully integrated drive system,
Volvo Penta is quickly moving toward delivering
complete boat-driver environments, with a strong
focus on comfort and user-friendliness.
Volvo Penta’s marine customers have access
to one of the world’s strongest offering of after-
market services and a global service and dealer-
ship organization with approximately 4,000
dealerships worldwide.
Total market
The total market for industrial engines primarily
in Europe, but also North America, was weak
during the year due to the continued decline in
the global economy. The major manufacturers of
equipment and industrial vehicles were forced to
successively reduce production as a result of
weaker demand. A slightly stronger trend in
China and the rest of Asia during the first half of
the year weakened toward the end of the year
due to the global financial turmoil.
The total market for marine diesel engines
was largely unchanged, compared with the weak
trend in recent years. European boat sales were
negatively impacted by austerity packages and
financial restrictions in mainly Southern Europe.
In Italy, traditionally Volvo Penta’s largest marine
market, sales in many boat segments are currently
about 70–80% lower than a few years ago.
In North America, sales of marine diesel
engines and gasoline engines rose during the
year as a result of the continued increased
demand for leisure boats in the US, but volumes
still remained low compared with the peak years.
Earnings trend
Total sales amounted to SEK 7,631 M, com-
pared with SEK 8,458 M in 2011. Operating
income amounted to SEK 541 M, compared with
SEK 825M in the preceding year. The operating
margin was 7.1% (9.8). Earnings were negatively
impacted mainly by lower sales and an unfavor-
able product mix.
New products
Using aggressive investments in product devel-
opment, Volvo Penta has created a modern and
highly competitive product program for industrial
engines in recent years. With the SCR technology,
well-proven by the Volvo Group, the industrial pro-
gram meets the emission legislations for coming
years, while Volvo Penta is able to offer high fuel
efficiency and installation benefits.
During the year, Volvo Penta’s Tier4i-approved
13-liter engine received important North American
mining certifications. These mining certificates
take into account the amount of emissions from the
engine and make calculations based on the venti-
lation rate. The lower the ventilation rate, the more
cost-efficient mining operations can be conducted
and here, Volvo Penta’s SCR technology has
demonstrated major competitive advantages.
On the marine side, Volvo Penta launched
the V8-380 for leisure boats during the year.
This state-of-the-art gasoline engine at 380
horsepower has been awarded and attracted
major attention within the marine industry, not
least thanks to good environmental features
and performance.
Volvo Penta provides engines and
power systems for leisure and com-
mercial boats, as well as for industrial
applications such as power generation
and container trucks.
Number of employees
1,400
Position on world market
Volvo Penta is the world’s largest
producer of diesel engines for leisure
boats and a leading, independent
producer of industrial engines.
T
Volvo Penta contributes
significant synergies and
economies of scale to the
Volvo Group’s total diesel
engine manufacturing.
Approximately 10% of
the total volumes in the
Group’s diesel-engine
plants in Europe and
more than half of the
Group’s global volumes
of 16-liter engines are
delivered to Volvo Penta’s
customers.
2% (3)
Share of Group
net sales
64