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THE VOLVO GROUP
ANNUAL REPORT 2013
EXTENSIVE
PRODUCT
RENEWAL
ANNUAL REPORT
2013

Table of contents

  • Page 1
    THE VOLVO GROUP ANNUAL REPORT 2013 ANNUAL REPORT 2013 EXTENSIVE PRODUCT RENEWAL

  • Page 2
    ...events Trucks Buses Construction Equipment Volvo Penta Volvo Financial Services Financial management Shareholder value The share Risks and uncertainties CORPORATE GOVERNANCE Corporate Governance Report Board of Directors and Secretary Group Management FINANCIAL INFORMATION Financial information 2013...

  • Page 3
    ... GROUP COMPLETE PARTNER The Volvo Group oup is one of the world's leading eading manufacturers of trucks, buses, construction equipment and marine and industrial engines. i Th The G Group also l provides id complete l t solutions l ti f for financing and service. The Volvo Group, which employs...

  • Page 4
    ... equipment. • A leading independent supplier of marine and industrial engines. • One of the world's largest manufacturers of heavy-duty diesel engines. • Global market presence. GLOBAL Share of net sales by market 2013 39% 23% 20% STRENGTH Since the streamlining towards commercial vehicles...

  • Page 5
    ... amounted to 2.9% (6.5). Net debt in the Industrial Operations amounted to 29.0% of shareholders' equity. Proposed dividend of SEK 3.00 per share (3.00). The most extensive product renewal in the Group's history. Group-wide efficiency program launched. Key ratios 2013 272,622 7,854 2.9 (715)2 7,138...

  • Page 6
    ... our core business. In January 2013, we signed an agreement to acquire 45% of the Chinese company Dongfeng Commercial Vehicles. Through this alliance, we will get a very strong position in the Chinese truck market, which is the world's largest. In early January 2014, the National Development and...

  • Page 7
    ... entered into 2014 with a new product portfolio that really strengthens the Group's competitiveness. 2012 2013 2014 2015 REORGANIZATION & STRATEGY EXTENSIVE PRODUCT RENEWAL EXECUTE EFFICIENCY PROGRAM & DRIVE ORGANIC GROWTH DELIVER PROFITABILITY IMPROVEMENT READ MORE ABOUT OUR STRATEGY STARTING ON...

  • Page 8
    ... global operating environment. As part of our business and sustainability strategies, we continually analyze megatrends and regional variations to assess their impact on our Group and to seek new business development opportunities. From our perspective, the most significant trends driving our work...

  • Page 9
    ... engines, tractor weight, fuel type and driver behavior. This leads to new solutions with improved environmental, economic and social benefits for our truck, bus, construction equipment and engine customers. Reducing waste and building sustainability into manufacturing and products We work...

  • Page 10
    ... and collaborate with key partners to develop smart technology and vehicle safety and security solutions that improve conditions for drivers, road users, pedestrians, vehicles and cargo. As a global manufacturer of transport solutions, the Volvo Group works to help develop solutions adapted to the...

  • Page 11
    ... equipment, is also closely linked to the GDP trend. Increased global wealth means that there is a long-term need to build roads, airports, railways, factories, offices, shopping centers, as well as housing and recreational facilities. The registrations of new trucks on a particular market...

  • Page 12
    A GLOBAL GROUP 2013 AVSNITT Volvo FE a ï¬,exible performer How effectively will you work today? With features including a Volvo developed engine program and I-Shift transmission, the ï¬,exible new Volvo FE meets the challenges posed by city or regional distribution, light construction, utilities ...

  • Page 13
    A GLOBAL GROUP 2013 AVSNITT 9

  • Page 14
    A GLOBAL GROUP 2013 STRATEGY STRATEGY CODE OF CONDUCT WANTED POSITION and VISION CORE VALUES The Volvo Group is part of the global society as well as many local societies. This provides us with the opportunity to inï¬,uence and contribute to social and business development. We strive to act ...

  • Page 15
    ... as well as to improve the personal safety and the work environment of the drivers of our vehicles and equipment. Our long-term vision is zero accidents with Volvo Group products. Principles of human rights and social justice Volvo Group shall support and respect the protection of internationally...

  • Page 16
    ... brands and relations with business partners and thus create new business opportunities that offer longterm growth and improved profitability. Long-term plans and strategic objectives Long-term plans define the direction in a 5-15 year time perspective. They serve as a tool for management to drive...

  • Page 17
    ... management are actively integrated into our everyday business. Responsibility and sustainability are embedded in our corporate culture, values and Code of Conduct and every employee is responsible for upholding these principles. Read more in the Volvo Group's Sustainability Report 2013. The Global...

  • Page 18
    ... - New strategic objectives - New organization - New management teams - New process-oriented workï¬,ow - New corporate governance - New brand positioning   2012 2013 2014 2015 REORGANIZATION & STRATEGY EXTENSIVE PRODUCT RENEWAL EXECUTE EFFICIENCY PROGRAM & DRIVE ORGANIC GROWTH DELIVER...

  • Page 19
    ... - New range to push heavy-duty trucks in India and for export Volvo Construction Equipment - new Tier 4f engines Volvo Buses - new Euro 6 engines, upgraded coach program and articulated hybrid bus Volvo Penta - new range of industrial engines 2014 EXECUTE EFFICIENCY PROGRAM & DRIVE ORGANIC GROWTH...

  • Page 20
    A GLOBAL GROUP 2013 STRATEGY Truck operations' strategies After 15 years of active acquisition strategy and streamlining to commercial vehicles, the Volvo Group has entered a new phase, with a focus on driving organic growth and improving profitability. In the strategy for 2013 - 2015, we have ...

  • Page 21
    ... Group Trucks HD market share 3.2 Establish required commercial presence annum through vehicle optimization, diesel efficiency and electromobility 4.2 Commercialize alternative fuel technol- by reaching the employee engagement level (EEI) of high performing companies 5.2 Drive high performance...

  • Page 22
    ...GLOBAL GROUP 2013 STRATEGY Business Areas' strategies Profitable growth is the main focus area for Volvo Construction Equipment, Volvo Buses, Volvo Penta and Volvo Financial Services for the strategic period 2013-2015. Here, the presidents of Volvo Buses, Volvo CE and Volvo Penta as well as Volvo...

  • Page 23
    ... for new markets, mainly in Asia but also in Africa and South America. P rofitability, integrated offerings, increased opportunities for growth and leadership development - these are Volvo Financial Services' (VFS) cornerstones in the strategy for 2013-2015. To ensure successful execution of...

  • Page 24
    ... 73 2012 2013 Q12013 • Agreement to acquire 45% of Dongfeng Commercial Vehicles in China. Read more on page 63 • Study initiated to optimize the European truck plant footprint. Read more on page 73 • Activities to improve profitability in Japan - new commercial organization - industrial...

  • Page 25
    Q3 2013 • Group-wide efficiency program am linked to the strategy - reduction of white-collar employees mployees and consultants - efficiency enhancements in n the global industrial system. Read more on page 69 - directional decision to rationalnalize within Group staff and support functions by ...

  • Page 26
    ...tability. STRATEGIC OBJECTIVES EXPECTED IMPACT ON GROUP OPERATING MARGIN Trucks' impact on Group + app. 4.0 percentage points 0.5 percentage points 0.5 percentage points 5.0 Business Areas: Volvo CE, Volvo Buses, Volvo Penta, Governmental Sales, Volvo Financial Services + app. IT cost at...

  • Page 27
    ... 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. Comparison group Starting in 2012 new financial targets for the Volvo Group were implemented in which growth and profitability...

  • Page 28
    ...In 2013, the Volvo Group's wholly-owned truck operations delivered 200,300 (204,300) trucks. Furthermore, the Group delivered 8,900 (9,300) buses, 70,800 (75,500) units of construction equipment, 17,500 (17,200) marine engines and 17,700 (17,600) industrial engines. Environmental work is governed by...

  • Page 29
    ... factor. The Volvo Group also offers refurbished spare parts as an option to new, as a way to extend the useful life, household with resources and reduce costs for the customer. VALUE BY STAKEHOLDER GROUP SEK M 2013 2012 To suppliers - Purchases of goods and services To employees - Salaries and...

  • Page 30
    26

  • Page 31
    ... and USAID, the Volvo Group will introduce vocational training schools for mechanics and vehicle operators in ten African countries. The aim is both to promote economic development in these countries and train a pool of mechanics that can service and support the Group's products. Read more on page...

  • Page 32
    ... announced a new Volvo VM. Renault Trucks presented a new, comprehensive truck program comprising its T, K, C and D series for long-distance haulage, construction and distribution. We launched the UD Quester, a new series of heavy-duty trucks developed specifically for growth markets. In India, our...

  • Page 33
    29

  • Page 34
    ... to reach their strategic objectives. New segments - new potential Growth markets are an important part of the Volvo Group's strategy. These markets are drivers of long-term global growth and they offer a great deal of potential for quality trucks which balance operational cost with purchase price...

  • Page 35
    ... - quality, safety and environmental care. Nova Bus is a leading North American provider of sustainable transit solutions, including buses, high-capacity vehicles and integrated intelligent transportation systems. Volvo Penta is one of the strongest and most global brand names in the engine industry...

  • Page 36
    ... of sustainability, the business case is currently unsustainable. The decision not to develop new versions for Euro 6 was announced at the end of 2013. The Volvo Group believes in hybrid technology long-term and will continue to invest in research and development for more commercially viable...

  • Page 37
    ...12%) before 2014, compared with 2008. Our agreement also states that: • the Volvo Group will develop a new truck prototype with 20% lower fuel consumption than a corresponding truck manufactured in 2008 and offer commercial trucks that operate on renewable gas before 2014 • Volvo CE will prepare...

  • Page 38
    ...rst manufacturer to commercialize DME in North America. In November, Volvo Trucks announced that, in spring 2014, it would introduce two Euro 6 engines of 240 hp and 320 hp powered using pure RME (rapeseed methyl ester). The engines will be available in the new Volvo FE and Volvo FL models. Safety...

  • Page 39
    ... to develop new fuels or new vehicle technology but to improve the efficiency of the transport operations, relates Lars Mårtensson, Environmental Director Volvo Trucks. Success requires coordination In downtown Gothenburg there are about 6,500 companies that need daily goods distribution services...

  • Page 40
    ...of products and services for efficient and economic transports. LONG-HAUL REGIONAL DISTRIBUTION CITY DISTRIBUTION CONSTRUCTION Eicher Mack k Renault Trucks UD Trucks rucks Volvo Special-purpose vehicles | The Volvo Group manufactures special-purpose vehicles for use by for instance government...

  • Page 41
    ... Equipment develops, manufactures and markets equipment for construction and related industries under the brands Volvo and SDLG. Its products are leaders in many world markets, and include a comprehensive range of wheel loaders, hydraulic wheeled and crawler excavators, articulated haulers, road...

  • Page 42
    ...(27) W hen customers choose a supplier of vehicles or machinery, the offering of supplementary services combined with excellent products is a crucial factor. Customer surveys show that the Volvo Group's companies get high ratings in terms of service and spare parts availability in most markets. As...

  • Page 43
    ... manage drivers and trucks 4) Maintaining long-term performance - use the Renault Trucks service network's know-how and experience, the latest technical innovations (i.e. Optifuel Retrofit) in order to maintain fuel efficiency throughout the truck's entire operational life. Eco Operator from Volvo...

  • Page 44
    ...advance the technologies needed for future product development and to secure the access to competent employees. One example is the Academic Partner Program (APP), which is a systematic approach for long-term cooperation with selected universities and research institutes in areas of special interest...

  • Page 45
    ... the world's largest competition for aftermarket personnel. Every other year, thousands of Volvo Trucks' and Volvo Buses' aftermarket employees meet to settle the score through several tough rounds of theoretical and practical challenges. In 2013, 30 teams got to travel to Gothenburg, Sweden, where...

  • Page 46
    ... for employees to secure new employment, says HÃ¥kan Karlsson, Head of Business Areas at Volvo Group, which includes Volvo Buses. Training in Code of Conduct A Group-wide training program was launched in November 2012 to support the implementation of the updated Code of Conduct. This training helps...

  • Page 47
    ... Volvo Group, Sida and USAID will design and finance vocational trainings in which students can become mechanics, and learn to operate vehicles, trucks, buses and construction equipment. - The generation of decent jobs gives people the ability to support themselves in the long term. By working in...

  • Page 48
    .... 6% Share of employees Major production facilities North America South America Employees Group Trucks Operations 16,397 Macungie (US) 6,275 Eicher* Mack Renault Trucks UD Trucks Volvo Engines and transmissions Construction Equipment Buses Volvo Penta * Ownership ≥ 50% New River Valley...

  • Page 49
    19% 55% 3% Europe Asia Other markets 52,334 17,953 Pithampur* (IN) 2,574 Brisbane (AU) Blainville, Bourg-en-Bresse (FR), Kaluga (RU) Ageo (JP), Hangzhou* (CN), Bangkok (TH) Göteborg, Umeå (SE), ...

  • Page 50
    ... MODEL EFFICIENT PRODUCTION AND RESPONSIBLE SOURCING Cornerstones of the Group's manufacturing operations Environmental, economic and social sustainability is a long-standing cornerstone of the Volvo Group business. We have adopted and developed tools, processes and production systems to help...

  • Page 51
    ..., we conducted training in Ageo in Japan, Shanghai in China, Bangalore in India, Eskilstuna in Sweden, and Greensboro, Hagerstown and Shippensburg in the U.S. - covering 60% of the total number of purchasers. Ethical assessment In line with general automotive industry practice, the Volvo Group uses...

  • Page 52
    48

  • Page 53
    More than 80% lower fuel consumption with plug-in hybrids In May 2013, a field test commenced with Volvo's first plug-in hybrid buses in Gothenburg, Sweden. The bus' battery is charged via the electricity network at the terminals and the bus can operate quietly and free from exhaust gases for ...

  • Page 54
    ... towards commercial vehicles was initiated more than ten years ago, the Volvo Group has grown into one of the world's largest manufacturers of heavy-duty trucks, buses and construction equipment and is today also a leading manufacturer of heavy-duty diesel engines and marine and industrial engines...

  • Page 55
    ... equipment. • A leading independent supplier of marine and industrial engines. • One of the world's largest manufacturers of heavy-duty diesel engines. • Strong brands. • Good market presence globally. Distribution of net sales by geography 2013 Europe, 39% North America, 23% South America...

  • Page 56
    A GLOBAL GROUP 2013 GROUP PERFORMANCE DEVELOPMENT BY CONTINENT EUROPE CHANGE-OVER TO NEW PRODUCTS 2013 was characterized by extensive renewal of the Volvo Group's products, with brand-new truck series from both Volvo and Renault Trucks, new bus models and the transition from the Euro 5 to Euro 6...

  • Page 57
    ... the year, Volvo CE introduced engines that meet the new emission requirements in both North America and Europe, Tier 4 Final/ Stage IV. The engines improve fuel economy by up to 5% compared with earlier models and reduce total running costs. Also Volvo Penta has upgraded its industrial engines, and...

  • Page 58
    ... to capture market shares by offering the perfect tools for its customers to operate their businesses. - A revolutionary range that sets new standards in terms of robustness, reliability and fuel savings: in fact, everything to make a truck a cost-efficient tool in an increasingly competitive...

  • Page 59
    ...new T range offers maximum comfort, with its 2.50 m wide cab, and is decidedly aerodynamic. T r a nge The Renault Trucks C is a robust vehicle, adapted to the mobility needs in construction, while preserving payload. The low weight allows customers to increase profi tability per rotation. Mainly...

  • Page 60
    ... North America is the Volvo Group's second largest market. Demand in 2013 was relatively stable, in line with the slight recovery in the U.S. economy. NORTH in 56 Volvo VN, the family of premium long-haul sleepers and daycabs offering maximum driver comfort, performance, and unsurpassed safety...

  • Page 61
    ... and small trucking companies. During the year Volvo Trucks became the first manufacturer to announce plans to commercialize dimethyl ether (DME)-powered heavy-duty commercial vehicles in North America. Volvo CE opened in Shippensburg The North American market for construction equipment displayed...

  • Page 62
    ...BRAZIL After weakening in 2012, the South American truck market strengthened in 2013, primarily as a result of the favorable trend in Brazil. The Volvo Group reported its best year to date in South America in terms of truck deliveries. 58 Volvo's hybrid buses are increasing their presence all over...

  • Page 63
    ...at the end of October. Volvo Group in South America Net sales: SEK 29,758 M (29,164) Share of net sales: 11% (10) Number of employees: 6,275 (5,977) Share of Group employees: 6% (6) Largest markets: Brazil, Peru, Chile and Argentina. Market development, heavy-duty trucks, South America, Thousands...

  • Page 64
    ... for the Volvo Group. In recent years, the market shares have gradually increased in the largest country in South America, from 12.8% in heavy-duty trucks in 2008 to 20.0% in 2013. And, this occurred in 2013 with positive price realization. It is also very positive that the new Volvo VM series...

  • Page 65
    Volvo VM, designed specifically for r the South South American Ameri Am er can ca market, was updated in 2013. The Volvo vo VM is a medi m mediumediumumheavy truck suited for various regional and distribution operations. 61

  • Page 66
    ... continues to grow in importance for the Volvo Group. In 2013, an agreement was signed to acquire 45% of Chinese truck manufacturer Dongfeng Commercial Vehicles, the UD Quester truck series was launched for emerging markets and Eicher's new and complete vehicle program in the Eicher Pro Series was...

  • Page 67
    ... capacity in both engines and truck assembly. Deal with DFCV in China approved In January 2013, AB Volvo signed an agreement with the Chinese vehicle manufacturer Dongfeng Motor Group Company Limited (DFG) to acquire 45% of a new subsidiary of DFG, Dongfeng Commercial Vehicles (DFCV), which will...

  • Page 68
    ... Volvo Group in line with the Group's truck strategy to increase sales by capturing profitable growth opportunities in fast growing markets across Asia Pacific and other parts of the world. Quester offers customers solutions tailored to their specific business needs and supports them in running...

  • Page 69
    ... approach that starts from a customer and factory ï¬,oor perspective. UD Trucks' more than 70 years of Japanese craftsmanship has gone into creating this new masterpiece. As part of the Volvo Group, Quester has been developed by the Group Trucks Technology and Group Trucks Operations functions. The...

  • Page 70
    ... for diesel engines in off-road applications. Volvo Penta's strategy to meet these new emission demands was to keep it simple - for its customers. By using the proven SCR technology, installation challenges for the manufacturers are very limited, no regeneration is needed and operating costs are low...

  • Page 71
    A GLOBAL GROUP 2013 AVSNITT 67

  • Page 72
    ... 19/02/2013 Record year for Volvo Museum 20/02/2013 Truck deliveries in January 2013 26/02/2013 Annual General Meeting of AB Volvo 28/02/2013 New number of votes in AB Volvo 01/03/2013 Changes in Volvo's Group Management 13/03/2013 AB Volvo publishes 2012 Annual Report 19/03/2013 The new Volvo FM...

  • Page 73
    ... enhancements in the global industrial system. It is estimated that the program will entail restructuring costs totaling approximately THE SECOND QUARTER 04/04/2013 Annual General Meeting of AB Volvo 04/04/2013 Volvo Technology Award for fuel-saving "autopilot" for trucks 15/04/2013 Invitation to...

  • Page 74
    .../07/2013 New number of votes in AB Volvo 20/08/2013 Termination of local assembly contract in Turkey - new range of Renault Trucks to be manufactured in France 26/08/2013 Volvo Group takes an important strategic step with the launch of Quester 26/08/2013 Semi-Annual Report of Volvo Treasury AB (publ...

  • Page 75
    ... of the strategy program 09/12/2013 Volvo Construction Equipment set to acquire hauler business from Terex 10/12/2013 AB Volvo to sell Volvo Rents in North America 16/12/2013 Reporting dates for AB Volvo 2014 18/12/2013 Truck deliveries in November 2013 30/12/2013 New number of votes in AB Volvo 71

  • Page 76
    ...The truck operation's product offer stretches from heavy-duty trucks for long-haulage and construction work to light-duty trucks for distribution. The offering also includes maintenance and repair services, financing and leasing. Share of Group net sales, % 65 (63) Number of regular employees 58...

  • Page 77
    ... in the European truck manufacturing operations in order to increase efficiency and strengthen competitiveness. By optimizing the industrial structure in Europe, the Group will be able to build trucks in a much more efficient way with lower cost per truck. At the start of 2013 a program aimed at...

  • Page 78
    BOARD OF DIRECTORS' REPORT 2013 GROUP PERFORMANCE BUSES POSITIVE trend in ELECTROMOBILITY Volvo Buses is one of the world's leading bus manufacturers, with a strong focus on vehicles and systems for long-term sustainable public transport. The product program includes complete transport solutions,...

  • Page 79
    ...bus service that will operate commercially on fully electric vehicles and plug-in hybrids starting in 2015. Deliveries decreased but order intake increased The global bus market remained weak during 2013. Volvo Buses' deliveries declined to 8,910 buses and bus chassis compared with 9,297 during 2012...

  • Page 80
    ... of Group net sales, % 20% (21) Number of employees 14,663 Position on world market Volvo CE is the world's leading manufacturer of articulated haulers and one of the world's leading manufacturers of wheel loaders, excavators, road development machines and compact construction equipment. Brands...

  • Page 81
    ... loaders through a selected group of dealers. SDLG also entered into a number of distribution agreements to sell machines throughout EMEA, Asia Pacific and North America, while in its Chinese home market the creation of SDLG Financial Services offers customers improved financial services. 2013...

  • Page 82
    ... commercial boats, as well as for 3% (2) industrial applications such as power generation and container trucks. Share of Group net sales, % Number of employees 1,412 Position on world market Volvo Penta is the world's largest producer of diesel engines for leisure boats and a leading, independent...

  • Page 83
    ... Group's European dieselengine plants and more than half of the Group's global volumes of 16-liter engines are delivered to Volvo Penta's customers. The Industrial business segment, accounting for about half of sales, is the part of Volvo Penta's operation that generates the largest strategic engine...

  • Page 84
    ... the Volvo Group brands. Facts Volvo Financial Services conducts operations in customer and dealer financing. Share of Group net sales, % 3% (3) Number of employees 1,355 Position on world market Volvo Financial Services operates exclusively to support the sales of vehicles and equipment which...

  • Page 85
    ... of credit portfolio Volvo Trucks 45% Volvo CE 28% Renault Trucks 11% Mack Trucks 9% Buses 5% UD Trucks 2% Penetration rate1, % 1 Share of unit sales financed by Volvo Financial Services in relation to total number units sold by the Volvo Group in markets where financial services are offered...

  • Page 86
    ... Volvo Group's future ability to repay debt. A strong credit rating gives access to more funding sources and lower cost of funds. A long-term competitive market position requires access to capital to be able to invest and grow the business. The financial management secures that the capital is used...

  • Page 87
    .... In 1935, AB Volvo was listed on the Stockholm Stock Exchange. All through its history, the Volvo Group has strived to create long-term value for its shareholders. The graph shows the total return for the Volvo B share, measured as the share price development with all dividends re-invested, since...

  • Page 88
    ...Annual General Meeting, the Board of Directors, Group Management and other areas that are regulated in the "Swedish Code of Corporate Governance." The website also offers the possibility to subscribe to information from Volvo. Earnings and dividend per share, SEK Diluted earnings per share Dividend...

  • Page 89
    ... rights at the AGM. AB Volvo held 20,728,135 class A shares and 79,592,353 class B shares comprising in total 4.7% of the number of registered shares on December 31, 2013. 2 Comprises shares held by SHB, SHB Pension Fund, SHB Employee Fund, SHB Pensionskassa and Oktogonen. 40 Source: SIX Share...

  • Page 90
    ... the Corporate Governance Report on page 104-106 in the printed version. Most of the Volvo Group's financial transactions are carried out through the in-house bank, Volvo Treasury, that conducts its operations within established risk mandates and limits. Customer credit risks are mainly managed by...

  • Page 91
    ... of our suppliers to deliver. Intangible assets AB Volvo owns or otherwise has rights to patents and brands that refer to the products the Company manufactures and markets. These have been acquired over a number of years and are valuable to the operations of the Volvo Group. AB Volvo does not...

  • Page 92
    88

  • Page 93
    ...the 2013 Mid-America Trucking Show. Following successful field tests, global logistics leader UPS ordered 122 of the natural gas-powered Pinnacle tractors, which were delivered throughout the fourth quarter of 2013. Mack, a leader in trucks for the refuse industry, also offers a natural gas-powered...

  • Page 94
    ... Report Significant events during 2013 The Swedish Corporate Governance Code Corporate Governance Model In January, AB Volvo signed an agreement with the Chinese vehicle manufacturer Dongfeng Motor Group Company Limited (DFG) to acquire 45 percent of a new subsidiary of DFG, Dongfeng Commercial...

  • Page 95
    ...Prepare part of the Board's work. Elects Board 4 Board of Directors The auditors review the interim report for the period January 1 to June 30 and audit the annual report and consolidated financial statements Appoints President/CEO 8 9 President/CEO 9 Group Executive Team Operations BUSINESS...

  • Page 96
    ...and its shareholders, refer to the Board of Director's report on pages 84-85 of the Annual Report. General The General Meeting is Volvo's highest decision-making body. The General Meeting held within six months after the end of the fiscal year adopting the income statement and the balance sheet is...

  • Page 97
    93

  • Page 98
    ...By as Chairman. Duties The Board of Directors is ultimately responsible for Volvo's organization and management of the company's operations. The Board is responsible for the Group's long-term development and strategy, for regularly controlling and evaluating the Group's operations and for the other...

  • Page 99
    ...of the strategies. During the fall of 2013, the Board of Directors visited the Group's businesses in China and also plants within DFCV's businesses in China. In the end of 2013, the Volvo Group decided to sell Volvo Rents, the Group's North American rental business for construction equipment, to the...

  • Page 100
    ... of the company 's major shareholders. The Election Committee's assessment of independence prior to the Annual General Meeting 2013 is presented above under the "Independence requirements" section on pages 94-95. All members of the Audit Committee are highly familiar with accounting matters and...

  • Page 101
    ... in the Group. The Board shall, not later than two weeks prior to the Annual General Meeting, submit a report on the results of the Remuneration Committee's evaluation on the company's website. Composition and work in 2013 At the statutory Board meeting following the Annual General Meeting 2013, the...

  • Page 102
    ... Volvo Board since 2008. Holdings in Volvo, own and related parties: 700 Series B shares. Principal work experience: Several leading positions within the American engine manufacturer Cummins. Chairman of Microsoft India and responsible for Microsoft 's marketing, operational and business development...

  • Page 103
    ... of the Volvo Board since 2009. Holdings in Volvo, own and related parties: 600 shares, including 250 Series B shares. 14. Hans Hansson Employee representative, deputy member. Born 1964. With Volvo since 1985. Deputy member of the Volvo Board since 2012. Holdings in Volvo, own and related parties...

  • Page 104
    ... REPORT 2013 CORPORATE GOVERNANCE 7 External auditing 8 Governance and organizational structure Volvo's auditors are elected by the Annual General Meeting. The current auditor is PricewaterhouseCoopers AB (PwC), which was elected at the Annual General Meeting 2010 for a period of four years...

  • Page 105
    ... Corporate Process & IT Corporate Strategy GROUP TRUCKS Group Trucks Sales & Marketing Americas Group Trucks Sales & Marketing EMEA Group Trucks Sales & Marketing and JVs APAC Group Trucks Operations Group Trucks Technology Construction Equipment Business Areas Volvo Financial Services...

  • Page 106
    ... M. Sc. Industrial Engineering and Management, M. Sc. Financial Economics, M. Sc. Business and Economics. Has held various senior positions in the Volvo Group, most recently as Executive Vice President Group Trucks Sales & Marketing APAC 2012. President of Volvo Group Asia Truck Operations 2007-2011...

  • Page 107
    ... Executive Vice President Volvo Construction Equipment Born 1962. Bachelor of Science, Master of Business Administration. Head of Volvo Financial Services 2010-2013. President of Volvo Financial Services the Americas 2005-2010. Member of the Group Executive Team 2010-2011 and since 2013. With Volvo...

  • Page 108
    ... for 2013 will be available on Volvo's website not later than two weeks prior to the Annual General Meeting 2014, www.volvogroup.com. For more information about remuneration to the Group Executive Team and an account of outstanding share and share-price related incentive programs to the management...

  • Page 109
    ... within IT security and maintenance are a key part of Volvo's internal control over financial reporting. Information and communication Policies and instructions relating to the financial reporting are updated and communicated on a regular basis from management to all affected employees. The Group...

  • Page 110
    ... evaluation activities are reported to Group management and the Audit Committee. To the annual meeting of the shareholders of AB Volvo (publ), corporate identity number 556012-5790 It is the Board of Directors who is responsible for the Corporate Governance Statement for the year 2013 on pages 90...

  • Page 111
    ... Shareholders' equity Notes to financial statements Parent Company AB Volvo Proposed remuneration policy Proposed disposition of unappropriated earnings Audit report for AB Volvo Eleven-year summary 108 112 114 116 117 168 178 179 180 181 Note 1 2 3 4 5 The Volvo Group Accounting principles Key...

  • Page 112
    ...the Volvo Group, the year 2013 was characterized by the most extensive product renewal in the history of the Group, with associated costs in manufacturing, sales, administration and research and development, as well as costs connected to restructuring primarily within the truck operations. Net sales...

  • Page 113
    ...069 1 Adjusted for acquired and divested units and changes in currency rates, net sales decreased by 2%. Operating margin , % Trucks Construction Equipment Buses Volvo Penta Volvo Aero Industrial Operations Volvo Group Change in operating income, SEK bn Operating income 2012 Change in gross income...

  • Page 114
    FINANCIAL INFORMATION 2013 Industrial Operations In 2013, net sales for the Volvo Group's Industrial Operations decreased by 9% to SEK 265,420 M (292,198). Compared with 2012, sales decreased in all of the Group's markets except South America. Adjusted for changes in exchange rates net sales ...

  • Page 115
    ...) 1,062 12.5 Key ratios, Customer Finance1 Credit portfolio net, SEK M Operating income, SEK M Return on shareholders' equity, % Total penetration rate, % Penetration by business area1, % Volvo CE Volvo Trucks Renault Trucks Mack Trucks Buses UD Trucks 2013 103,873 1,522 12.1 27 2012 99,690 1,496...

  • Page 116
    ...mainly a result of increased customer financing receivables due to portfolio growth in the Customer Finance Operations which is offset by changes in currency rates. 112 The Volvo Group's intangible assets amounted to SEK 36.6 billion as of December 31, 2013. Investments in research and development...

  • Page 117
    BALANCE SHEETS VOLVO GROUP - SHAREHOLDERS' EQUITY AND LIABILITIES Industrial Operations SEK M Equity and liabilities Equity attributable to the equity holder of the Parent Company Minority interests Total equity Non-current provisions Provisions for post-employment benefits Provisions for deferred ...

  • Page 118
    ... xed assets and leasing vehicles Operating cash ï¬,ow Investments and divestments of shares, net Acquired and divested operations, net Interest-bearing receivables incl marketable securities Cash-ï¬,ow after net investments Financing activities Change in loans, net Dividend to AB Volvo shareholders...

  • Page 119
    ... as in 2013. The investments will mainly cover optimization of the industrial footprint, dealer investments and product related tooling; with a large share related to the Volvo Group strategic objectives. Acquisitions and divestments In September 2012 AB Volvo increased its shareholding in Deutz...

  • Page 120
    FINANCIAL INFORMATION 2013 CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Shareholders' equity attributable to equity holders of the Parent Company SEK M Balance at December 31, 2011 Effect of changes in accounting principles Adjusted opening balance at January 1, 2012 Income for the period Share ...

  • Page 121
    ... of Financial Statements and with the Swedish Annual Accounts Act. In addition, RFR 1 Supplementary Rules for Groups, has been applied, which is issued by the Swedish Financial Reporting Board. Accounting principle Non-current assets held for sale and discontinued operations Business combinations...

  • Page 122
    ... using exchange rates at year-end (closing rate). Exchange differences arising, are recognized in other comprehensive income and accumulated in equity. The accumulated translation differencies related to a certain subsidiary, joint venture or associated company are reversed to the income statement...

  • Page 123
    ... on the Volvo Group's financial statements. New accounting principles for 2014 and later When preparing the consolidated financial statements as of December 31, 2013, a number of standards and interpretations has been published, but has not yet become effective. IFRS 9 Financial instruments IFRS...

  • Page 124
    ... AB Volvo's holding of shares in subsidiaries as of December 31, 2013 is disclosed in note 13 for the Parent Company. Signifi cant acquisitions, formations and divestments within the Group are listed below. Business combinations during the period During 2013, the Volvo Group acquired net assets...

  • Page 125
    ... of Volvo Rents in North America. Volvo Rents offers rental of comprehensive range of machines intended for the construction and engineering industry, including Volvo CE products. Volvo Rents has operations in the US, Canada and Puerto Rico and has about 2,100 employees. As part of its strategic...

  • Page 126
    ...Volvo Group's short-term interest-bearing securities is to achieve a return on these assets equivalent to a three-month fixed term security. On December 31, 2013, the average interest on Industrial operations financial assets was 1.1% (1.1). After taking derivatives into account, outstanding loans...

  • Page 127
    ...in the Volvo Group's operations are related to changes in the value of contracted and expected future payment ï¬,ows (commercial currency exposure), changes in the value of loans and investments (financial currency exposure) and changes in the value of assets and liabilities in foreign subsidiaries...

  • Page 128
    ... further information see section commercial currency exposure. Financial currency exposure Loans and investments in the Volvo Group's subsidiaries are performed mainly in local currencies through Volvo Treasury, which minimizes individual companies' financial currency exposure. Volvo Treasury uses...

  • Page 129
    ...in currency exchange rates compared to 2012 (Total SEK neg 3.4 bn) Appreciation of SEK by 10% (Total SEK neg 4.5 bn) in relation to other currencies H The Volvo Group's currency review When the Volvo Group communicates the currency impact on operating income for Industrial operations, the following...

  • Page 130
    ... contract when using derivative instruments (financial counterparty risk). Financial credit risk The Volvo Group's financial assets are largely managed by Volvo Treasury and invested in the money and capital markets. All investments must meet the requirements of low credit risk and high liquidity...

  • Page 131
    ... where prices are set in the global markets. Changes in commodity prices are included in the product cost calculation. Increased commodity prices is therefore reï¬,ected in the sales price of the Volvo Group's final products. Purchasing agreements with commodity suppliers may also be long term in...

  • Page 132
    ... changes in the Volvo Group's financial reporting 2013. The following tables present summarized financial information for the Volvo Group's joint ventures: Summarized income statements VE Commercial Vehicles, Ltd. Net sales Operating income1 Interest income and similar credits Interest expense and...

  • Page 133
    ...-employment benefits) amounted to negative 149 (244) as of December 31, 2013. As of December 31, 2013, Volvo Group's share of contingent liabilities in its joint ventures amounted to 62 (61). Dividend received from VE Commercial Vehicles., Ltd, amounts to 41 (46). Associated companies Investments...

  • Page 134
    ... for sale for which a reliable market value can be calculated. 96 99 Other shares and participations The carrying amount of the Volvo Group's holding of shares and participations in other companies as of December 31, 2013, is disclosed in the table below. Holding of shares in listed companies Dec...

  • Page 135
    ...), Group Trucks Sales & Marketing Americas, Group Trucks Sales & Marketing and JV's APAC (Asia Pacific), Group Trucks Operations and Group Trucks Technology. Business areas Buses, Construction Equipment, Volvo Penta and Customer Finance are separate business areas. Governmental Sales and Volvo Rents...

  • Page 136
    ...standard cost of sales, including calculated interest and product improvement expenses. Internal sales from service companies are generally made at market price. Reporting by market Europe of which Sweden of which France North America of which USA South America of which Brazil Asia of which China of...

  • Page 137
    ... Rents. 2 Restructuring costs are mainly related to the Group wide efficiency program which impacted the Group with an amount of SEK 715 M (1,550). Read more regarding the company 's management of credit risk and credit reserves in Note 4. NOTE 9 OTHER FINANCIAL INCOME AND EXPENSES ! SOURCES...

  • Page 138
    ..., deferred tax assets of 22,326 (23,096) were recognized in the Volvo Group's balance sheet. The Volvo Group has significant tax-loss carryforwards that are related to countries with long or indefinite periods of utilization, mainly Sweden, France and Japan. The Volvo Group considers that suf...

  • Page 139
    ... in foreign subsidiaries, which the Volvo Group currently intends to indefinitely reinvest outside of Sweden and upon which deferred income taxes have not been provided is SEK 59 billion (60) at year end. The main part of the undistributed earnings is pertaining to countries where the dividends are...

  • Page 140
    .... The valuation is based on a business plan which is an integral part of the Volvo Group's financial planning process and represents management's best estimate of the development of the Group's operations'. Assumption of 2% (2) long-term market growth and the Group's expected performance in this...

  • Page 141
    ...ed from assets held for sale Reclassifications and other Acquisition cost as of Dec 31, 2013 22,588 - - 588 (1,380) 297 - 22,093 - - 21 (734) - 32 21,412 Entrance fees, industrial programs 224 93 (14) (3,182) (11) 3,198 (19) 289 154 - - 24 - 48 515 Capitalized product and software development 29...

  • Page 142
    ... 31, 2013 1 1 Type-specific tools Assets under operating leases Machinery Buildings and investment properties Land improvements 2 to 8 years 3 to 5 years 5 to 20 years 25 to 50 years 20 years ! SOURCES OF ESTIMATION UNCERTAINTY Impairment of tangible assets If, at the balance-sheet date, there...

  • Page 143
    ... the line item assets under operating leases. Most reclassifications within tangible assets relate to construction in progress, which are reclassified to the respective category within property, plant and equipment. Investment properties The acquisition value of investment properties at year-end...

  • Page 144
    ... rents Operating leases: Contingent rents Rental payments Sublease payments Total (8) (32) (1,125) 7 (1,158) 2012 (10) (36) (1,113) 7 (1,152) Carrying amount of assets subject to financial leases: Dec 31, 2013 Costs: Buildings Land and land improvements Machinery and equipment Assets...

  • Page 145
    ... Installment credits Financial leasing Dealer financing Other receivables Current customer financing receivables as of December 31 B/S Non-current and current receivables recognized in the Volvo Group's customer financing operations. ! SOURCES OF ESTIMATION UNCERTAINTY Dec 31, 2013 11...

  • Page 146
    ...geographical markets. Read more about the Volvo Group's overall description credit risks in Note 4, Financial-risk management. Read more about Volvo Financial Services' trend during the year on page 81. Geographic market, percentage of customer-financing portfolio (%). Europe, 45.7% North America...

  • Page 147
    ... other manufacturing-related costs. The standard costs are tested regularly and adjustments are made based on current conditions. Costs for research and development, selling, administration and financial expenses are not included. Net realizable value is calculated as the selling price less costs...

  • Page 148
    ...Unrestricted equity in the Parent Company as of December 31, 2013 amounted to SEK 24,693 M (31,346). Refer to Note 27 regarding the Volvo Group long-term incentive program. Total registered Series A shares Total registered Series B shares Total registered shares Average number of outstanding shares...

  • Page 149
    ... actuarial calculations are made separately for the respective countries of the Volvo Group's operations which result in obligations for post-employment benefits. The assumptions include discount rates, health care cost trends rates, inï¬,ation, salary growth, retirement rates, mortality rates and...

  • Page 150
    FINANCIAL INFORMATION 2013 Sweden The main defined benefit plan in Sweden is the ITP2 plan and it is based on final salary. The plan is semi-closed, meaning that only new employees born before 1979 have the possibility to choose the ITP2 solution. The Volvo Group's pension foundation in Sweden ...

  • Page 151
    ...ation United States Discount rate1 2 Expected salary increase Inï¬,ation France Discount rate1 Expected salary increase Inï¬,ation Great Britain Discount rate1 Expected salary increases Inï¬,ation Dec 31, 2013 4.00 3.00 1.50 Dec 31, 2012 3.25 3.00 1.50 Pension costs Current year service costs...

  • Page 152
    ...of experience adjustments Exchange rate translation Benefits paid Obligations as of December 31, 2012 of which Funded defined-benefit plans Acquisitions, divestments and other changes Current year service costs Interest costs Past service costs Settlement payments from plan Employee contributions...

  • Page 153
    ...Dec 31, 2013 232 11,247 11,423 149 7 784 573 17 24,432 Dec 31, 2012 419 9,440 9,939 260 11 629 541 0 21,239 Investment strategy and risk management The Volvo Group manages the allocation and investment of pension plan assets with the purpose of meeting the long term objectives. The main objectives...

  • Page 154
    ..., primarily trucks, are generally recognized in the balance sheet as assets under operating leases. Depreciation of these products are recognized on a straight-line basis over the term of the commitment and the depreciable amount is adjusted to agree with estimated net realizable value at the end of...

  • Page 155
    ... as of Dec 31, 2012 Warranties Provisions in insurance operations Restructuring measures Provisions for residual value risks Provisions for service contracts Dealer bonus Other provisions B/S The Volvo Group regularly reviews the development of significant outstanding legal disputes in which the...

  • Page 156
    ... the Volvo Group's non-current liabilities in which the largest loans are listed by currency. The main part are issued by Volvo Treasury AB. Information regarding loan terms refer to December 31, 2013. The Volvo Group hedges foreign-exchange and interest-rate risks using derivative instruments...

  • Page 157
    ... 4,928 (3,722). In 2013 an asset-backed securitization was completed. Under the terms of the transaction, 4,297 of securities were issued tied to US-based loans, secured by Customer Finance receivables recognized on the balance-sheet with trucks and construction equipment assets as collaterals. 153

  • Page 158
    ...19, 2013, imposing a fine in the amount of appr. SEK 104 M. Volvo has appealed the decision and a contingent liability in a corresponding amount has been disclosed. In January 2011, the Volvo Group and a number of other companies in the truck industry became part of an investigation by the European...

  • Page 159
    ... the Volvo Group's share in associated companies. The increase in sales to associated companies is mainly explained by Arabian Vehicle & Truck Industry Ltd. The increase in purchases is explained by Deutz AG, which is an associated company from September 2012. Commercial terms and market prices...

  • Page 160
    ... Meeting 2011, as proposed by the Board of AB Volvo, it was decided to implement a long-term share-based incentive program for Group Executive Team members and other senior executives in the Volvo Group consisting of three annual programs covering each of the financial years 2011, 2012 and 2013...

  • Page 161
    ...on salaries and benefits, special pension tax and additional costs for other benefits. The remuneration model of the Volvo Group is to a main part designed to follow changes in the profitability of the Group. Long-term incentive program The Annual General Meeting held in 2011 approved a long-term...

  • Page 162
    ... of shares. During 2013, including both the share settled plan and the cash-settled plan, a total of 462,474 shares (250,922) Average number of employees AB Volvo Sweden Subsidiaries Sweden Western Europe (excl. Sweden) Eastern Europe North America South America Asia Other countries Group total...

  • Page 163
    ... related to doubtful accounts receivable/customer-financing receivables Capital gains/losses on the sale of subsidiaries and other business units Unrealized exchange rate gains/losses on accounts receivable and payable Provision for global profit sharing program Fair value commercial derivatives...

  • Page 164
    ... with the effective interest method. Dividends received attributable to these assets are recognized in the income statement as Income from other investments. Volvo Group recognizes shares and participations in listed companies at market value on the balance­sheet date, with the exception of...

  • Page 165
    ... the balance sheet. During 2013, the Volvo Group applied hedge accounting for these financial instruments. SEK M Assets Financial assets at fair value through the income statement1 The Volvo Group's outstanding interest and currency risk derivatives (A)5 The Volvo Group's outstanding raw materials...

  • Page 166
    .... Reported in operating income1 SEK M Financial assets and liabilities at fair value through the income statement2 Currency risk derivatives3 Loans receivable and other receivables Accounts receivables / trade payables Customer financing receivables VFS Financial assets available for sale Shares...

  • Page 167
    ... instruments and options of financial and commercial receivables and liabilities. Outstanding derivative instruments for dealing with currency and interest-rate risks related to financial and commercial assets and liabilities SEK M Interest-rate swaps - receivable position - payable position...

  • Page 168
    ... amount is recognized in the balance sheet as "Investment in joint ventures and associates". The Volvo Group's equity share in the joint venture VE Commercial Vehicles (VECV) amounts to 45.6 %. The 8.4 % share in the other joint partner, the listed company Eicher Motors Ltd, is recognized...

  • Page 169
    ...Non-current assets Intangible assets Tangible assets Property, plant and equipment Assets under operating leases Financial assets Investments in Joint Venturs and associated companies Other shares and participations Non-current customer-financing receivables Deferred tax assets Prepaid pensions Non...

  • Page 170
    ... Non-current assets Intangible assets Tangible assets Property, plant and equipment Assets under operating leases Financial assets Investments in Joint Ventures and associated companies Other shares and participations Non-current customer-financing receivables Deferred tax assets Prepaid pensions...

  • Page 171
    Income statement full year, 2012 Previously reported 2012 Restatement joint ventures After joint venture restatement Volvo Group Restatement postemployment benefi ts After postemployment benefi t restatement Restatement hedging of firm ï¬,ows SEK M After restatements Net sales Cost of sales ...

  • Page 172
    FINANCIAL INFORMATION 2013 Parent Company AB Volvo Corporate registration number 556012-5790. Amounts in SEK M unless otherwise specified. Amounts within parentheses refer to the preceding year, 2012. Board of Directors' report AB Volvo is the Parent Company of the Volvo Group and its operations ...

  • Page 173
    BALANCE SHEET SEK M Assets Non-current assets Intangible assets Tangible assets Financial assets Shares and participations in Group companies Receivables from Group companies Investments in joint ventures and associated companies Other shares and participations Deferred tax assets Other non-current ...

  • Page 174
    ... Investments and divestments of shares in non-group companies, net Interest-bearing receivables Cash-ï¬,ow after net investments Financing activities Change in loans, net Dividend to AB Volvo's shareholders Other Change in liquid funds Liquid funds, beginning of year Liquid funds, end of year 2013...

  • Page 175
    ... Total income for the period Transactions with shareholders Dividend to AB Volvo's shareholders Share based payments Transactions with shareholders Balance at December 31, 2012 Income for the period Other comprehensive income Available-for-sale investments: Gains/losses at valuation to fair value...

  • Page 176
    ...President. The Parent Company has outstanding pension obligations of 1 (0) to these individuals. The number of employees at year-end was 279 (258). Read more about the average number of employees, wages, salaries and other remunerations including incentive program as well as Board members and senior...

  • Page 177
    ..., cost for credit facilities, costs for credit rating, financial costs pertaining to changed taxable income previous years and costs for registration of AB Volvo shares. Income taxes for the period Specification of deferred tax assets Tax-loss carryforwards Provision for post-employment bene...

  • Page 178
    ... NOTE 13 INVESTMENTS IN SHARES AND PARTICIPATIONS Changes in AB Volvo's holding of shares and participations are disclosed below: Group companies 2013 Adjusted opening balance at January 1 Changes in accounting principles Acquisitions/New issue of shares Divestments Shareholder's contribution...

  • Page 179
    ... shares in subsidiaries Volvo Lastvagnar Sverige AB, Sweden Volvo Holding Sverige AB, Sweden Volvo Group Japan Co, Japan Volvo Bussar AB, Sweden Volvo Construction Equipment NV, The Netherlands AB Volvo Penta, Sweden VNA Holding Inc., USA Volvo Financial Services AB, Sweden Volvo Treasury AB, Sweden...

  • Page 180
    ... as of December 31, 2013 amounted to 688 (670). The benefit obligation has been secured partly through provisions in the balance sheet and partly through transfer of funds to pension foundations. Net asset value in the Pension Foundation, market to market, accrued to AB Volvo was 36 higher than the...

  • Page 181
    ... of shares in non-Group companies, net 2013 (1) - (1) 2012 (1,108) 10 (1,098) Investments and divestments of participations in non-Group companies are presented in Note 13. Change in loans, net Increase in loans is related to the company 's liability in the group account at Volvo Treasury AB. The...

  • Page 182
    ... General Meeting 2011 decided to adopt a share-based incentive program for senior executives in the Volvo Group relating to the financial years 2011, 2012 and 2013. Since the program adopted in 2011 has expired, the Board has decided to propose to the Annual General Meeting to be held in April 2014...

  • Page 183
    ... due to transfer of treasury shares to participants in the company's long-term, share-based incentive program. The Board of Directors and the President certify that the annual financial report has been prepared in accordance with generally accepted accounting principles and that the consolidated...

  • Page 184
    ... parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group. Report on other legal and regulatory requirements In addition to our audit of the annual accounts...

  • Page 185
    ... income statements Industrial Operations SEK M Net sales Cost of sales Gross income Research and development expenses Selling expenses Administrative expenses Other operating income and expenses Income from Volvo Financial Services Income from investments in joint ventures and associated companies...

  • Page 186
    FINANCIAL INFORMATION 2013 Consolidated balance sheets SEK M Intangible assets Property, plant and equipment Assets under operating leases Shares and participations Inventories Customer-financing receivables Interest-bearing receivables Other receivables Non-current assets held for sale Cash and ...

  • Page 187
    ..., plant and equipment Assets under operating leases Shares and participations Inventories Customer-financing receivables Interest-bearing receivables Other receivables Non-current assets held for sale Cash and cash equivalents Assets Shareholders' equity Provision for post-employment benefits...

  • Page 188
    ... leasing assets Shares and participations, net Acquired and divested subsidiaries and other business units, net Interest-bearing receivables including marketable securities Cash-ï¬,ow after net investments Change in loans, net Repurchase of own shares Dividend to AB Volvo's shareholders Cash payment...

  • Page 189
    ...Research and development expenses as percentage of net sales1 Selling expenses as percentage of net sales1 Administration expenses as percentage of net sales1 Return on shareholders' equity, % Interest coverage, times1 Self-financing ratio, % Self-financing ratio Industrial Operations, % Financial...

  • Page 190
    ... interests divided by operating income excluding restructuring costs and revaluation of shares. 6 Cash dividend divided by basic earnings per share. 7 Shareholders' equity for shareholders in AB Volvo divided by number of shares outstanding at year-end. 8 Including distribution of shares in Ainax...

  • Page 191
    ...153 (630) 183,291 Construction Equipment Volvo Penta Europe North America South America Asia Other markets Total Other and eliminations Net sales Industrial Operations Volvo Aero Customer Finance Europe North America South America Asia Other markets Total Eliminations Volvo Group total 1 As of...

  • Page 192
    ...AB). 4 Volvo Aero was divested October 1, 2012. 5 Operating income in 2013 includes a revaluation of neg 1,500 related to Volvo Rents, reported in Other. Operating margin % Trucks Buses Construction Equipment Volvo Penta Volvo Aero Volvo Group Industrial Operations Customer Finance Volvo Group 2013...

  • Page 193
    Employees Number1 Sweden Europe, excluding Sweden North America South America Asia Other markets Volvo Group total 2013 22,588 29,746 16,397 6,275 17,953 2,574 95,533 2012 23,052 30,382 16,569 5,977 20,222 2,515 98,717 2011 24,663 30,458 15,427 5,234 19,924 2,456 98,162 ...

  • Page 194
    ... step, we completed the process internally this year. Colleagues from the Group's CSR committee, business intelligence, business strategy and management teams assessed and ranked a long list of issues relevant to the Volvo Group's business success. Employees with close contact and detailed knowledge...

  • Page 195
    ... impact of product in use Production related environmental issues Volvo Group values and culture Availability of skilled workforce Transport system efficiency Employee training and development Traffic safety Responsible sourcing Occupational health and safety Emerging markets products Stakeholder...

  • Page 196
    ...-employment benefits. Operating margin Operating income divided by net sales. Penetration rate Share of unit sales financed by Volvo Financial Services in relation to total number units sold by the Volvo Group in markets where financial services are offered. Return on shareholders' equity Income...

  • Page 197
    ... MEETING, APRIL 2, 2014 The Annual General Meeting of AB Volvo will be held in Göteborg in Lisebergshallen (entrance from Ã-rgrytevägen) Wednesday, April 2, 2014, at 3:00 p.m. Doors to meeting hall open at 1.30 p.m. Notice Those who wish to participate must be recorded as shareholders in the share...

  • Page 198
    ... is full of challenges. That is why creating new solutions and innovations is an important part of our work at Volvo Group. So, we decided to ask a group of children, the engineers of tomorrow, to help us, and they came up with some great ideas! Then we invited technology students to take the ideas...