Volvo 2014 Annual Report Download - page 101

The above mentioned decisions relating to Volvo Construction Equip-
ment and the IT review are part of the increased ambitions as regards the
structural cost reduction efforts, which were announced in the fall. The
ambition is to reduce the Group’s structural costs by SEK 10 billion and to
have all activities implemented by the end of 2015 with a full-year saving-
effect in 2016.
The board has further devoted time to organizational matters, such as
the implementation of a more effi cient truck sales organization, entailing
that the previous three sales divisions were merged into one global divi-
sion as of January 1, 2015. Further the Group Executive Team was
reduced from 16 to 10 members as from January 1, 2015, partly as a
consequence of the reorganization of the truck sales operation, but also
with the purpose of creating a smaller and more effi cient management
team. As part of the Board’s organizational discussion, the Board also
regularly discusses the succession planning for senior executive positions
within the Group. In addition, the Board continuously evaluates the perfor-
mance of the CEO.
During 2014, the Board has also focused on risk-related matters, and
has kept itself continuously updated about the declining market in China
for particularly construction equipment, resulting in decreased profi tabil-
ity and weakened fi nancial position for construction equipment custom-
ers and dealers. The risk for future credit losses in China has thus
increased and as a consequence Volvo Construction Equipment recog-
nized a provision of SEK 660 M in the fourth quarter of 2014. The Board
has further devoted time and efforts to follow the on-going EU investiga-
tion, in which the EU Commission issued a Statement of Objection to
among others the Volvo Group in November. A provision of EUR 400 M
was recorded as a result of the evaluation of the Statement of Objections.
The Board further took decisions on investments during 2014, mainly
relating to product renewal projects.
The Board usually visits a Volvo Group facility once a year, and in Octo-
ber 2014 the Board visited the Group’s facilities in France.
In addition to the above the Board reviewed the fi nancial position of AB
Volvo and the Volvo Group on a regular basis and acted in order to ensure
that there are effi cient systems for follow-up and control of the business
and the fi nancial position of the Volvo Group. In connection therewith, the
Audit Committee was responsible for preparing the Board’s work to
assure the quality of the Group’s fi nancial reporting by reviewing the
interim reports, the Annual Report and consolidated accounting. The
Board also met with the company’s auditors at several occasions during
2014 and without the presence of management at one occasion.
During 2014 the Board performed its yearly evaluation of the Board’s
work.
In October 2014, the Board of Directors visited the Group’s businesses in France, including a visit at Valbonne Renault Trucks Test Track Center.
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CORPORATE GOVERNANCE REPORT 2014 CORPORATE GOVERNANCE