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T
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e Volvo Grou
p
’s pro
d
ucts an
d
services contribute to much o
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what we
all expect of a well-functionin
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society.
Our trucks, buses, en
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equipment an
d
financial services ar
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involved in man
y
of the functions tha
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most of us rel
on
ev
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.
THE VOLVO GROUP
ANNUAL AND
SUSTAINABILITY REPORT
2015

Table of contents

  • Page 1
    THE VOLVO GROUP ANNUAL AND SUSTAINABILITY REPORT 2015 The Volvo Group's products and services contribute to much of what we all expect of a well-functioning society. Our trucks, buses, engines, construction equipment and financial services are involved in many of the functions that most of us rely...

  • Page 2
    ... report for AB Volvo (publ) Eleven-year Summary Definitions Annual General Meeting Preliminary publication dates 24 26 30 32 38 42 46 50 52 54 55 56 58 64 70 SHARE OF NET SALES BY MARKET 2015 76 78 80 83 86 88 92 95 97 99 101 102 103 104 107 North America 33% Europe 39% Asia 17% South America...

  • Page 3
    ...business, sales and profitability increased in Europe and North America as an effect of good demand for new trucks as well as spare parts and services. However, this was partly offset by a less favorable development in South America. The construction equipment business faced tough market conditions...

  • Page 4
    ... rather mixed. India was the only emerging market where we had growth. As for China, the total market was down 25% in 2015. Our strategic partner Dongfeng Commercial Vehicles (DFCV) is making adjustments to manage this lower volume. How is the cooperation between the Volvo Group and DFCV developing...

  • Page 5
    .... Having worked at a competing company for many years I had a rather clear view of the company and I have been impressed in many cases. As an example I have seen Volvo Trucks' total solution approach being applied in emerging markets with not only perfectly adapted hardware but also on-site support...

  • Page 6
    ... with the help of the type of products the Volvo Group provides. Customers use our trucks, buses, construction equipment and engines in many of the important functions that people rely on every day. The majority of the Volvo Group's customers are companies within the transportation or infrastructure...

  • Page 7
    ... that the vehicles stay on the road and continue to operate safely, our dealer and service network helps our customers with excellent, quick service and first-class technical solutions. IN THE CITY The Volvo Group's products are part of many people's daily life. They take people to work, collect...

  • Page 8
    ... service contracts, accessories and spare parts that support the core products, the Volvo Group has established shed leading positions on a global glo market. #2 #4 #2 in heavy-duty trucks in construction equipment in buses for target segments #2 #1 in heavy-duty diesel engines in marine diesel...

  • Page 9
    ... AA GLOBAL GROUP 2015 OVERVIEW AVSNITT EUROPE 23.8 NORTH AMERICA 19.6 VOLVO GROUP VOLVO GROUP CHINA* 13.8 DONGFENG DONGFENG medium duty trucks 18.9 JAPAN 18.9 VOLVO GROUP MARKET SHARES, HEAVY-DUTY TRUCKS, % The Volvo Group has established positions with strong market shares in truck markets...

  • Page 10
    ... GLOBAL GROUP OVERVIEW ...competitive products ...All of the Volvo Group's products have been developed to contribute to efficient transport and infrastructure solutions. Sales of new vehicles, machines and engines as well used vehicles and machines, trailers, superstructures and special vehicles...

  • Page 11
    ...Bus Prevost POWER SOLUTIONS FOR MARINE AND INDUSTRIAL APPLICATIONS Volvo Penta manufactures engines and drive systems for both leisure boats and commercial craft, with an engine range of 10 to 900 hp and has a global service network of approximately 3,500 service points. Volvo Penta also supplies...

  • Page 12
    AA GLOBAL GLOBAL GROUP GROUP 2015 OVERVIEW AVSNITT ...and first-class services. 25% 25% OF NET SALES CAME FROM SPARE PARTS, SERVICES, ETC. DURING 2015 In addition to vehicles and machines, the Volvo Group's offering includes various types of financing solutions, insurance, rental services, spare...

  • Page 13
    ...will support them at the roadside. Financial assistance, translation service, truck and trailer repair and rental, driver repatriation and legal assistance can also be included in the service. Transport information systems Information is a means of competitiveness in the transport business. Keeping...

  • Page 14
    ...rgen Lauser started the company in 1980 and originally delivered milk in the Baden-Württemberg region. Today he runs the company in conjunction with his son, Philipp. Fleet Approx. 50 trucks, roughly half of which are Volvo. Assignments Transporting beverages and building supplies throughout Baden...

  • Page 15
    ...offer industry specific services in collaboration with partners. Customers want to operate their own devices such as smartphones and computers and demand that they work ï¬,awlessly with the Volvo Group's vehicles. Interoperability and support need to be ensured. As the transport systems become more...

  • Page 16
    ... 25-year anniversary for Volvo Action Service Volvo Action Service is Volvo Trucks Emergency roadside assistance service, available 24 hours a day, 7 days a week. 16 14 TO THE RESCUE AROUND THE GLOBE Volvo Action Service got its current name in 1998. Previously it was called Action Service Europe...

  • Page 17
    ... Originally housed in a small building near the Volvo Parts central warehouse, it quickly grew into a 24-hour multilingual call center and training facility and remains central to Uptime Solutions' operations to this day. Today the Volvo Group Uptime Solutions provides support to Volvo Trucks, Volvo...

  • Page 18
    ...North America are equipped with GuardDog Connect and RemoteDiagnostics. The service can cut the average diagnostic time by 70% and the repair time by more than 20% compared to traditional repair processes. T eams providing front-line support to Mack and Volvo Trucks' customers, dealers and drivers...

  • Page 19
    ... parts in stock before the truck arrived for the repair. The truck was fixed and back on the road in less than two hours. "With our telematics offerings, we're trying to give customers the best information we can for them to make decisions about their business," Curri says. "We don't try to make...

  • Page 20
    ... TO TRENDS IN THE WORLD AROUND US As part of our business and sustainability strategies, we continually analyze global megatrends as well as regional variations to assess their impact on the Volvo Group, seek new business opportunities and be well positioned to meet the transport needs of the future...

  • Page 21
    ... dynamics vary both between markets and within individual markets. Our industry is challenged to meet shifting economic and regulatory conditions, access and develop human capital around the world, and continually work to improve sustainability, effectiveness, and safety and security in the supply...

  • Page 22
    ... Group's vision is to become the world leader in sustainable transport solutions by: • creating value for customers in selected segments • pioneering products and services for the transport and infrastructure industries • driving quality, safety and environmental care • working with energy...

  • Page 23
    ... are our customers' closest business partners. We have captured profitable growth opportunities. We are proven innovators of energy-efficient transport and infrastructure solutions. • We are a global team of high performing people. OUR CORE VALUES OUR CODE OF CONDUCT The Volvo Group views its...

  • Page 24
    ... of construction equipment, buses and heavy-duty diesel engines as well as a leading independent supplier of marine and industrial engines. These positions provide for economies of scale in product development, production, distribution and service. The streamlining to commercial vehicles has...

  • Page 25
    A GLOBAL GROUP STRATEGY Three phases in the Volvo Group's development 1999-2011 ACQUISITION-DRIVEN GROWTH 2012-2015 TRANSFORMATION 2016-> INCREASED PROFITABILITY CREATING VALUE FOR OUR CUSTOMERS The Volvo Group creates customer value by delivering products and services that meet our customers'...

  • Page 26
    ...are located in Europe, 18% in North America, 6% in South America, 19% in Asia and 3% in other parts of the world. • In 2015, the Volvo Group's wholly-owned truck operations delivered 207,475 trucks. The Group also delivered 8,825 buses, 44,718 units of construction equipment, 17,413 marine engines...

  • Page 27
    ... units of construction equipment in the last ten years. • Our support services keep thousands of customers' ï¬,eets on the road, contributing to productivity and growth. Today, approximately 470,000 Volvo Group vehicles are connected via different telematics solutions. 6 • In 2015, the total...

  • Page 28
    ... CO2 emissions include driver training and fuel management systems. Developing hybrid technology and electromobility Electric and hybrid vehicles offer one way to increase energy efficiency and reduce environmental impact. The city bus market is moving away from diesel-powered vehicles and more and...

  • Page 29
    ... transport for many years. The Volvo Group position on alternative fuels supports our strategic objective of efficiency by prioritizing our research and development to the following applications: • Long distance: liquid methane and Dimethylether (DME) are our main alternatives. Dynamic electric...

  • Page 30
    ... more relaxed, safer and healthier driving. Volvo Trucks has developed a number of features to support the driver's comfort and driving experience such as Volvo Dynamic Steering and the I-shift Dual Clutch. See page 42. Complete transport solutions Our products and services are just one piece in the...

  • Page 31
    A GLOBAL GROUP BUSINESS MODEL PRODUCT DEVELOPMENT EMISSION REGULATIONS FOR HEAVY-DUTY VEHICLES North America EPA 2010 Europe Euro 6 Russia Euro 4* China China 4-5 Japan PNLT Brazil Euro 5 South Africa Euro 2 EPA 98 India BS 3-4 Australia Euro 5** EPA 07 Particulates, g/kWh 0.16 0.12 0.08 ...

  • Page 32
    ... improvement for the Volvo Group. Generally we source from suppliers close to our production sites to ensure efficient ï¬,ow of supplies. This means that most suppliers are located in Europe and North America. At the same time, the Group's expansion in Asia has led to an increased number of new...

  • Page 33
    A GLOBAL GROUP BUSINESS MODEL SUPPLY CHAIN LONG-TERM PARTNERSHIPS he Volvo Group strives to have long-term cooperation with suppliers in order to drive quality, efficiency and responsible behavior throughout the value chain. T Action plan for non-compliant suppliers The ethical assessment ...

  • Page 34
    ... factories supply the Group's needs on a global basis whereas assembly plants in most cases are located close to end-markets to cater for different local needs and specifications. Engine and transmission manufacturing are common for all Volvo Group business lines. Köping, Sweden is a global...

  • Page 35
    A GLOBAL GROUP BUSINESS MODEL PRODUCTION EFFICIENCY THROUGH HEALTH AND SAFETY O ur ambition is for zero accidents with our products for our employees and our customers. Our strategy to achieve this in the workplace includes providing safe and healthy working conditions to support a sustainable ...

  • Page 36
    ... in accordance with ISO 14001, or equivalent. MAJOR PRODUCTION FACILITIES NORTH AMERICA SOUTH AMERICA Volvo Trucks UD Trucks Renault Trucks Mack Trucks Eicher* Dongfeng Trucks* Engines and transmissions Construction Equipment Buses Volvo Penta * Ownership ≥ 45% New River Valley (US) Curitiba...

  • Page 37
    A GLOBAL GROUP BUSINESS MODEL PRODUCTION GLOBAL INDUSTRIAL STRUCTURE 48,074 54% Employees worldwide 2015 15,534 18% 17,046 19% 5,380 6% 2,430 3% Share of employees EUROPE ASIA OTHER MARKETS Blainville (FR), Göteborg, Umeå (SE), Gent (BE), Kaluga (RU) Bangalore (IN), Bangkok (TH) ...

  • Page 38
    ... air conditioning units. Successful hunt in Curitiba Twenty colleagues took part in the first energy treasure hunt in the truck assembly plant in Curitiba, Brazil. The teams were instructed to go and see on the factory ï¬,oor what opportunities exist on a Sunday when all production processes were...

  • Page 39
    ... hunt." Great teamwork at Volvo CE in Eskilstuna 18 employees split into three groups conducted a similar hunt at the Volvo CE plant in Eskilstuna, Sweden. The teams spent a full day searching for ways to reduce idle energy consumption. Each team identified a number of improvement areas. For...

  • Page 40
    ...and problem solving abilities needed to service today's sophisticated trucks and maximize uptime for customers. The 2015 winner was the Team Babine PG from Canada. Volvo International Service Training Award (VISTA) is the world's largest competition for aftermarket personnel. It is open to the Volvo...

  • Page 41
    A GLOBAL GROUP BUSINESS MODEL DISTRIBUTION & SERVICE IMPORTANT AFTERMARKET D uring 2015, spare parts, services and aftermarket products represented about 25% of the Volvo Group net sales... 39

  • Page 42
    ... service was launched in the Netherlands last September and allows customers to purchase the Renault Trucks T-Drive - a model that represents around 50% of Renault Trucks' current order intake - in one standard package at a set price. The package includes a 36 month/120,000 km operational lease...

  • Page 43
    A GLOBAL GROUP BUSINESS MODEL RENAULT TRUCKS OFFERS ONLINE SALES RENAULT TRUCKS E-COMMERCE • New sales channel to increase market shares • One standard package at a set price • Delivery promise within four weeks 41

  • Page 44
    ... past ten years operate on roads globally, and more than half a million units of construction equipment are in operation across construction sites. Today, more than 470,000 Volvo Group vehicles are connected via different telematics solutions. olvo Trucks is one of the leading companies in fuel ef...

  • Page 45
    A GLOBAL GROUP BUSINESS MODEL PRODUCTS IN USE RENAULT TRUCKS K R enault Trucks offers two ranges designed for construction work and other special applications, the C Construction and the K Heavy Construction. Ruggedness, working comfort, payload, pulling power, efficient engines and easy body ...

  • Page 46
    ... year if the city's buses ran on electricity instead of diesel. This is the finding from extensive analysis conducted in collaboration between the Volvo Group and the audit and advisory firm KPMG. The analysis has taken into consideration such factors as noise, travel time, emissions, energy use...

  • Page 47
    A GLOBAL GROUP BUSINESS MODEL ELECTRIC BUSES I n June 2015, the Volvo Group took a big step in the journey towards delivering sustainable transport solutions - as an entirely new electric bus route, operated by Volvo branded full-electric buses and electric hybrids, opened in Gothenburg. The aim...

  • Page 48
    ... part of the Volvo Group's business. In 2015, total Volvo Group sales of remanufactured components amounted to SEK 8.3 billion, an increase of close to 20% compared with 2014. The Volvo Group has more than 50 years of experience and eight remanufacturing centers worldwide handling used components...

  • Page 49
    A GLOBAL GROUP BUSINESS MODEL REUSE & RECYCLING REMANUFACTURING IS A WIN FOR CUSTOMERS, VOLVO GROUP AND THE ENVIRONMENT he Volvo Group's different remanufacturing programs lower costs for our customers. At the same time all components are remanufactured to original specifications. The result is ...

  • Page 50
    ... WWF Climate Savers partnership WWF is one of the world's largest and most respected environmental organizations. Its Climate Savers Program involves multinational companies in the effort to reduce carbon emissions. Each company pledges to reduce its greenhouse gas emissions following an agreement...

  • Page 51
    ...year in savings. This corresponds to 8% of the energy use in Volvo Group's production sites. • Reducing CO2 emissions per produced unit from the Volvo Group freight transport by 20%. • Developing truck prototypes with substantially lower fuel consumption compared with a corresponding truck today...

  • Page 52
    ... operate. Environmental Our production involves the use of various materials, including metals, such as iron, steel and aluminium. The additional materials are mainly plastic, rubber and electronics components. Our energy sources include renewable energy from wind and hydro generation. VOLVO GROUP...

  • Page 53
    ... structure, is also essential. Investments Economic Our reliable, quality products and services satisfy the needs of customers in the transport and infrastructure industry for fuel efficiency that reduces operating costs, and increases uptime. Strong sales coupled with strategic efficiencies...

  • Page 54
    ...invest in innovative development. Thereby, we create employment opportunities and long-term growth. Our largest environmental impact comes downstream, from our products in use, and we therefore aim to deliver energy-efficient transport and infrastructure solutions, corresponding to customers' needs...

  • Page 55
    ... stronger Shared value The Volvo Group moves our business forward by meeting the needs of customers in selected segments of the commercial vehicles and the construction equipment industry, and supporting their value creation. Working with cultural values and investing in skills development, safety...

  • Page 56
    ... infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all. ƒ All Group brands offer integrated transport information systems based on wireless communication technologies ƒ 470,000 Volvo Group connected vehicles SUSTAINABILITY...

  • Page 57
    ... development; traffic and work site safety; and environmental sustainability. Leading supplier of vehicle safety solutions for our customers and a safe workplace for our employees • Long-term: Our ambition is zero accidents for our employees and our customers with our products. • Medium/short...

  • Page 58
    ... Business ethics and integrity Energy efficiency (products) Customer satisfaction Intelligent technology Emissions (products) Environmental impacts (operations) Product use and end of life Workplace health, safety & wellbeing Diversity and inclusion Supply chain Skilled workforce Financial...

  • Page 59
    ...risks in order to maintain our reputation as a trustworthy company. The starting point being Volvo Group culture values, leadership, transparency and our Code of Conduct. Our new Game of Conduct course is an example of an activity in this area. Supply chain Creating long-term business relations with...

  • Page 60
    ... operations but there are additional ways to push development forward. Founded in 1997, Volvo Group Venture Capital is an investment company owned by the Volvo Group. Its ambition is to be a leading corporate investor in sustainable transport solutions. Each investment should have a positive return...

  • Page 61
    A GLOBAL GROUP BUSINESS MODEL SUSTAINABLE TRANSPORT SOLUTIONS GO STRAIGHT INSTEAD OF AROUND he new Volvo 7900 Electric is so much more than an electric bus. It's an enabler, a tool that gives cities and municipalities totally new possibilities to develop their public transport - and entire cities...

  • Page 62
    ...Group has a leading position in hybrid technology and electromobility. Volvo Buses has sold more than 2,300 hybrid buses in over 20 countries. The first Volvo Electric Hybrid went into commercial operation in Hamburg in December 2014, followed by Stockholm in 2015. In June 2015, bus route 55 opened...

  • Page 63
    ... Construction Equipment in India trained close to 2,000 operators in 2015 and the total trained since the start 2007 is above 10,200. • Volvo Driver Academy is a demo training project initiated in China for drivers to drive more safely and efficiently. IMPROVED DRIVER VISIBILITY Volvo Trucks...

  • Page 64
    ... transport solutions for tomorrow. Refuse truck driver supported by robot The Volvo Group is currently working on a joint initiative within the Academic Partner Program (APP) together with Chalmers University of Technology and Mälardalen University in Sweden, Penn State University in the United...

  • Page 65
    ... on wheels than a traditional vehicle. T " Within a few years this is going to revolutionize productivity in the transport industry," says Hayder Wokil, Market & Product Performance Manager at Volvo Trucks. oday there are about 175,000 online-connected Volvo trucks on Europe's roads. A number of...

  • Page 66
    ...company and shareholders by delivering transport and infrastructure solutions that contribute to our customers' success. We create value for suppliers through the purchase of goods and services. We support our customers' value creation through efficient products and world-class services. Our trucks...

  • Page 67
    A GLOBAL GROUP BUSINESS MODEL SHARED VALUE equipment, 17,413 marine engines and 15,295 industrial engines from our Group operations. These products and services support our customers' profitability by enabling them to meet their customers' needs. We engage with our customers in a variety of ways...

  • Page 68
    ..., where Volvo is one of the main participants, was recognized by the European Association for Renewable Energy, Eurosolar, for being the best example for 2015 of sustainable public transport using renewable energy. • The SDLG LG6460E excavator was named one of China's best construction products by...

  • Page 69
    A GLOBAL GROUP BUSINESS MODEL SHARED VALUE 2015 COMMERCIAL VEHICLE MAKER OF THE YEAR U-Automotive, a leading organization focused on the connected vehicle technology segment, recognized Mack's ongoing commitment to offering state-of-the-art uptime and telematics solutions with the 2015 Commercial...

  • Page 70
    ... working in areas that support the Volvo Group's long-term plan. We have APP partners in Sweden, France, the US, China, India and Japan. APP includes two kinds of partnerships: Preferred Research Partners and Preferred Talent Partners. Personal business plan to ensure progress All employees...

  • Page 71
    ...drivers and operators of trucks, buses and construction equipment, mainly in Africa and South East Asia. In total, training will be provided for around 4,500 young people enabling them to be employed within the transport industry and enabling Volvo Group customers to find skilled drivers, operators...

  • Page 72
    A GLOBAL GROUP BUSINESS MODEL RESPONSIBLE BUSINESS BEHAVIOR ACTIVELY EARNING TRUST The Volvo Group aims to increase trust and gain long-term strength by managing and mitigating risks and behaving in a responsible manner across our entire operations and value chain. SUSTAINABLE TRANSPORT SHARED ...

  • Page 73
    .... The Volvo Group is planning to enhance the whistleblower procedure in 2016 by offering reporters a secure web-based reporting mechanism. Quality, safety and environmental care Our core values, as defined on page 21, are key to support the development of sustainable transport solutions. Our...

  • Page 74
    ...security and health. We are increasingly developing and integrating tools to assess and manage human rights in all our main processes. During 2016 we will initiate human rights due diligence for our own organization. Labor rights of business partners' employees The Volvo Group's Code of Conduct sets...

  • Page 75
    ...were resolved through close communication and partnership with our employee representatives. L Collaborating to find solutions LESS THAN In response to economic conditions and sales volumes, we made 3,400 redundancies among regular Volvo Group employees globally OF WORKING during 2015. Compulsory...

  • Page 76
    ... measure gender balance in total and at senior management level: • The Gender Balance Indicator shows that women accounted for 18% of the Volvo Group's global workforce, at the end of 2015. This was at the same level as 2014. The share of women among presidents and senior executives was also ï¬,at...

  • Page 77
    A GLOBAL GROUP BUSINESS MODEL RESPONSIBLE BUSINESS BEHAVIOR CELEBRATING DIVERSITY AND INCLUSION T he Volvo Group Diversity and Inclusion week was celebrated all over the world in September. This is a team from our parts factory in Ghent, Belgium, taking part in the celebrations. 75

  • Page 78
    ...Europe 30 N. America Brazil Japan India China SOUTH AMERICA Net sales: SEK 16,725 M (26,958) ) Share of net sales: 5% (10) Number of employees: 5,380 (6,353) 53) Share of Group employees: 6% (7) ) Largest markets: Brazil, Peru, Chile e and Argentina. Argentina rg Market development, construction...

  • Page 79
    ...,046 (17,793) Share of Group employees: 19% (19) Largest markets: Japan, China, South Korea, Turkey and India. • Continued decline in the important Chinese market for construction equipment, which went down by a further 48%. • Mixed development in the truck markets with India growing, Japan and...

  • Page 80
    ... The sale generated a capital gain of SEK 2,471 M, which impacted operating income in the Trucks segment in the first quarter of 2015. The divestment of shares has no effect on ownership or the development of the longstanding joint venture, VE Commercial Vehicles. Annual General Meeting of AB Volvo...

  • Page 81
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 SIGNIFICANT EVENTS approximately SEK 2.2 billion. The sale generated a capital gain of SEK 2,137 M, which impacted operating income in the Trucks segment in the second quarter of 2015. New CEO of the Volvo Group On October 22, 2015 Martin ...

  • Page 82
    ... Volvo Group 2015 was a year with improved underlying profitability despite unchanged volumes. INCOME STATEMENTS VOLVO GROUP Industrial Operations SEK M 2015 2014 Customer Finance 2015 2014 Eliminations 2015 2014 Volvo Group 2015 2014 Net sales Cost of sales Gross income Research and development...

  • Page 83
    ...volumes for Volvo Penta. Net sales by business area , SEK M Trucks Construction Equipment Buses Volvo Penta Corporate Functions, Group Functions & Other Eliminations Industrial Operations1 Customer Finance Reclassifications and eliminations Volvo Group 2015 2014 % Out of the Volvo Group total sale...

  • Page 84
    ... KRW -8 -9 SEK Other -39 9 -33 11 22.2 5.1 8.5 1.9 7.0 21.3 6.0 9.3 1.9 1.5 Net sales by market area, SEK M Western Europe Eastern Europe North America South America Asia Other markets Total Industrial Operations 2015 2014 % 99,944 17,402 97,971 15,611 52,923 19,731 303,582 86,011 17,826 73...

  • Page 85
    ... Customer Finance Operations. During the year the Volvo Groups financial assets have been impacted by the disposal of shares in the listed Indian company Eicher Motors limited and by the acquisition of 45% of shares in Dongfeng Commercial Vehicles Co., Ltd. Read more in Note 5 regarding Volvo Group...

  • Page 86
    ... Group Dec 31 2015 Dec 31 2014 Assets Non-current assets Intangible assets Tangible assets Property, plant and equipment Investment property Assets under operating leases Financial assets Investments in joint ventures and associated companies Other shares and participations Non-current customer...

  • Page 87
    ... BOARD OF DIRECTORS' REPORT 2015 FINANCIAL POSITION BALANCE SHEET VOLVO GROUP - SHAREHOLDERS' EQUITY AND LIABILITIES Industrial Operations SEK M Dec 31 2015 Dec 31 2014 Customer Finance Dec 31 2015 Dec 31 2014 Eliminations Dec 31 2015 Dec 31 2014 Volvo Group Dec 31 2015 Dec 31 2014 Equity...

  • Page 88
    ... impact on the Volvo Group's financial statements. In total acquired and divested operations in 2015 had a positive impact on cash ï¬,ow of SEK 0.4 billion (7,4). Read more in Note 3 regarding Acquisitions and divestments of shares in subsidiaries. Financing and dividend Net borrowings decreased...

  • Page 89
    ... M 2015 2014 Customer Finance 2015 2014 Eliminations 2015 2014 Volvo Group Total 2015 2014 Operating activities Operating income Depreciation tangible assets Amortization intangible assets Depreciation leasing vehicles Other non-cash items Total change in working capital whereof Change in accounts...

  • Page 90
    ... parts of the world. Volvo Group's deliveries of trucks increased by 2% compared to 2014. Share of Group net sales, 68% (67) emand continued to good in North America for most of the year as a result of the economy developing well. The European market also showed good growth while South America...

  • Page 91
    ..., including Volvo Dynamic Steering for dual front axles and increased front axle loads. This further highlights Volvo Trucks' special attention to the construction segment. NET SALES BY MARKET DELIVERIES BY MARKET SEK M Europe North America South America Asia Other markets Total 2015 83,767...

  • Page 92
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 TRUCKS In March Volvo Trucks in North America introduced a rugged version of the Volvo I-Shift automated manual transmission for severe-duty applications. The new I-Shift version is designed for on- and off-road work in construction and other ...

  • Page 93
    GROUP PERFORMANCE A GLOBAL BOARD GROUP OF DIRECTORS' 2015 AVSNITT REPORT 2015 TRUCKS VOLVO FMX AUTOMATIC TRACTION CONTROL ll the traction the driver needs. But only when needed. When driving in challenging terrain, one may need a truck with all-wheel drive, to avoid the risk of getting stuck in ...

  • Page 94
    ...one of the world's leading manufacturers of wheel loaders, excavators, road development machines and compact construction equipment. Brands Volvo, SDLG (Lingong) and Terex Trucks. Number of regular employees 13,889 (14,901) favorable currencies and a favorable product mix and net sales decreased by...

  • Page 95
    ... products are designed and built for reduced wear and long service intervals. Machines will always need service and maintenance and today Volvo CE customers can manage service plans and wear parts via the CareTrack telematics system. Volvo CE's vision for the future is zero unplanned stops: a world...

  • Page 96
    ... with Volvo CE's purpose-built, high-lift L180H HL wheel loader designed for log handling. NET SALES BY MARKET DELIVERIES BY MARKET SEK M Europe North America South America Asia Other markets Total 2015 17,732 11,843 2,207 16,424 2,802 51,008 2014 17,215 10,784 3,234 18,458 3,164 52,855 Number...

  • Page 97
    .... Share of Group net sales, 7% (6) T he first Volvo bus rolled out of the factory in Sweden in 1928. Today production facilities are situated globally in Europe, North America, South America and Asia. Volvo Buses' safe and efficient transport solutions are sold and supported in 85 countries by...

  • Page 98
    ...425 2,557 1,678 23,580 2014 6,139 6,721 2,559 1,892 1,334 18,645 Number of buses Europe North America South America Asia Other markets Total Non-consolidated operations VE Commercial Vehicles Shanghai Sunwin Bus Corporation Dongfeng Commercial Vehicle Company 2015 2,431 2,398 1,415 1,656 925...

  • Page 99
    ...has helped to progressively strengthen Volvo Penta's market leading position in Marine Leisure. NET SALES BY MARKET DELIVERIES PER SEGMENT SEK M Europe North America South America Asia Other markets Total 2015 4,462 2,161 365 1,855 562 9,406 2014 3,779 1,584 386 1,615 425 7,790 Number of units...

  • Page 100
    ... for China, the outlook is negative due to general economic development. The market for industrial power generation engines showed a positive growth rate with a stable development in North America and the export-oriented European market. Positive sales and earnings trend Volvo Penta's net sales...

  • Page 101
    ...VFS conducts customer financing in 44 countries in the world. Position on world market Volvo Financial Services operates exclusively to support the sales of vehicles and equipment which are produced by the Volvo Group. In doing so, VFS enhances the competitiveness of Volvo Group products and helps...

  • Page 102
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 VOLVO FINANCIAL SERVICES Operating income excluding restructuring charges amounted to SEK 2,006 M compared to SEK 1,717 M in the previous year and the return on shareholders' equity was 13.4% (12.5). The equity ratio at the end of the year was ...

  • Page 103
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 FINANCIAL TARGETS IMPROVEMENTS FROM L AST YEAR INDUSTRIAL OPERATIONS TRUCKS AND BUSES Target 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...

  • Page 104
    ... Volvo Group is to assure shareholders long-term attractive and stable total return, and debt providers the financial strength and ï¬,exibility to secure proceeds and repayment. long-term competitive business requires access to capital to be able to invest. The financial management secures that...

  • Page 105
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Shareholders' equity attributable to equity holders of the Parent Company SEK M Share capital Other reserves 1 Translation reserve Retained earnings Total Minority interests Total equity Balance at ...

  • Page 106
    ...the world's leading stock markets had a volatile development in 2015 and ended the year lower than they started. The price of the Volvo B share decreased by 7% during the year. T he Volvo share is listed on the stock exchange Nasdaq Stockholm, Sweden. One A share carries one vote at Annual General...

  • Page 107
    GROUP PERFORMANCE BOARD OF DIRECTORS' REPORT 2015 THE SHARE PRICE TREND, VOLVO SERIES B SHARES, 2010-2015, SEK 180 The largest shareholders in AB Volvo, December 31, 20151 Voting rights, % Capital, % Industrivärden 150 Cevian Capital Norges Bank Investment Management SHB 2 Alecta 22.3 14.8 ...

  • Page 108
    ... factory in Göteborg, Sweden. The first serial produced truck saw the light of day in 1928 and was an immediate success. In 1935, AB Volvo was listed on the Stockholm Stock Exchange. The graph shows the total return for the Volvo B share, measured as the share price development with all dividends...

  • Page 109
    ...the regulatory challenges regarding products relate to reduced engine emissions. The Volvo Group is a leading company in the commercial vehicle industry and one of the world's largest producers of heavy-duty diesel engines. The product development capacity within the Volvo Group is well consolidated...

  • Page 110
    ... DIRECTORS' REPORT 2015 RISKS AND UNCERTAINTIES OPERATIONAL RISKS Operational risks are risks found in Volvo Group's everyday business activities. Product development The Volvo Group's long-term profitability depends on its ability to successfully launch and market its new products. Product life...

  • Page 111
    ... the Group's development. customers within Construction Equipment. Secondly, the customer finance activity in Volvo Financial Services manages a significant credit portfolio, equivalent to SEK 123 billion at year-end 2015. The portfolio is largely secured by the title to the financed commercial...

  • Page 112
    ... AB Volvo Eleven-year summary 111 158 188 189 190 191 Note The Volvo Group 1 Accounting policies 2 Key sources of estimation uncertainty 3 Acquisitions and divestments of shares in subsidiaries 4 Goals and policies in financial risk management 5 Investments in joint ventures, associated companies...

  • Page 113
    ... 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 Joint ventures...

  • Page 114
    ... using exchange rates at year-end (closing rate). Exchange differences are recognized in other comprehensive income and accumulated in equity. The accumulated translation differences related to a certain subsidiary, joint venture or associated company are reversed to the income statement as a part...

  • Page 115
    ... 21, Other provisions The Volvo Group's most significant accounting policies are described together with the applicable note. Read more in Note 1, Accounting Policies for a specification. The preparation of AB Volvo's Consolidated Financial Statements requires the use of estimates and assumptions...

  • Page 116
    ... Group's balance sheet and cash-ï¬,ow statement in connection with the acquisitions of subsidiaries and other business units are specified in the following table: Acquisitions Intangible assets Property, plant and equipment Assets under operating lease Shares and participations Inventories Current...

  • Page 117
    ... for sale As of December 31, 2015, the Volvo Group recognized assets amounting to SEK 3,314 M and liabilities amounting to SEK 573 M as assets and liabilities held for sale. Those mainly pertain to the planned divestment of the North American used truck business, Arrow Truck Sales. The assets and...

  • Page 118
    ... Operations. At year-end 2015, in addition to the assets in its Customer Finance Operations, the Volvo Group's interest-bearing assets consisted primarily of cash, cash equivalents and liquid assets invested in short-term interest-bearing securities. The objective for the Volvo Group's short-term...

  • Page 119
    ... 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 (currency exposure of equity). The aim of the Volvo Group's currency risk management is to secure...

  • Page 120
    ... The Volvo Group conducts manufacturing in 18 countries around the globe and more than 90% of net sales are generated in countries other than Sweden. Transaction exposure from commercial ï¬,ows in foreign currency is generated from internal purchases and sales between manufacturing units and market...

  • Page 121
    ...surpluses or deficits in key currencies. For further information read more in the section Commercial currency exposure. 4:6 4:5 Translation effect on operating income in foreign subsidiaries in 2015 versus 2014 SEK bn 2.0 1.5 1.0 0.5 0 -0.5 CNY -0.2 BRL -0.2 GBP -0.1 EUR 0.0 KRW 0.3 USD 1.6 Other...

  • Page 122
    ...not fulfilling its part of the 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...

  • Page 123
    ...metals and electricity are made on a regular basis where prices are set in the global markets. Changes in commodity prices are included in the product cost calculation. Increased commodity prices are therefore reï¬,ected in the sales price of the Volvo Group's final products. Purchasing agreements...

  • Page 124
    ... VENTURES, ASSOCIATED COMPANIES AND OTHER SHARES AND PARTICIPATIONS ACCOUNTING POLICY Subsidiaries The Volvo Group has production facilities in 18 countries and sales of products in more than 190 markets which means that the Volvo Group has subsidiaries in many parts of the world. A subsidiary...

  • Page 125
    ...from translating joint ventures equity in the Volvo Group are excluded as of 2015. Comparative figures are restated accordingly. Summarized balance sheets VE Commercial Vehicles, Ltd. Non-current assets Marketable securities, cash and cash equivalents Other current assets Total assets Equity1 Non...

  • Page 126
    ... the Volvo Group with a time lag of one quarter. Dividends of SEK 20 M (0) was received from Deutz AG. 3 Financial statements of Inner Mongolia North Hauler Jont Stock Co, Ltd., China has been included for the first time in 2015. Investments in associated companies Dongfeng Commercial Vehicles Co...

  • Page 127
    ...the operating segments, has been identified as the Group Executive Team that makes strategic decisions. The internal reporting is provided based on the Group's different business areas which are Trucks, Construction Equipment, Buses, Volvo Penta, Governmental Sales and Customer Finance. Volvo Rents...

  • Page 128
    ... made at standard cost of sales, including calculated interest and product improvement expenses. 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 which Japan Other markets I/S B/S Net sales 2015 120,413 9,142...

  • Page 129
    ... reporting periods. Read more in Note 21, Other provisions, for a description of residual value risks. NOTE 9 OTHER FINANCIAL INCOME AND EXPENSES ACCOUNTING POLICY Vehicle and Service & Aftermarket The Volvo Group's product range is divided into Vehicle and Service & Aftermarket. The sale...

  • Page 130
    ...differences Income tax rate for the Volvo Group1 ACCOUNTING POLICY Income tax for the period includes current and deferred taxes. Current taxes are calculated on the basis of the tax regulations prevailing in the countries where the Group companies have operations. Deferred taxes are recognized on...

  • Page 131
    ... the Volvo Group currently intends to indefinitely reinvest outside of Sweden and which no deferred income tax have been accounted for, amounted to SEK 23 billion (24) at year end. As of 2015 undistributed earnings pertaining to countries where the dividends are not taxable are excluded. Read more...

  • Page 132
    ... combination. 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 beyond the forecast period and the...

  • Page 133
    ... 3 , Acquisitions and divestments of shares in subsidiaries, for a description of acquired and divested operations. Goodwill per Business Area Trucks Construction Equipment Buses Other business areas Total goodwill value Dec 31, 2015 12,101 8,475 992 519 22,088 Dec 31, 2014 11,515 8,392 1,053 534...

  • Page 134
    ... projects are assets under construction and advanced payments. Operating leases are assets under operating leases that do not occur from rental business or sales with residual value commitments. Rental ï¬,eet is assets under operating lease used in a ï¬,eet for rental business. Sales with residual...

  • Page 135
    ... of shares in subsidiaries, for a description of acquired and divested operations. Reclassifications and other mainly consist of assets within sales with residual value commitments related to legal sales transactions, where revenue is deferred and accounted for as operating lease revenue. Assets...

  • Page 136
    ... to SEK 5,140 M (5,524). Future rental payments 2016 2017-2020 2021 or later Total Finance leases 81 245 298 624 2015 -5 -34 -1,447 5 -1,481 Operating leases 1,277 2,205 1,035 4,516 2014 -6 -31 -1,563 8 -1,592 ACCOUNTING POLICY Volvo Group as the lessor Leasing contracts are defined in two...

  • Page 137
    ...of the total credit portfolio in the segment. This reserve ratio, which is used as an important measure for the Customer Finance segment, includes operating leases and inventory, whereas this note specifies the balance sheet item Customer Finance receivables for the Volvo Group and thereby excludes...

  • Page 138
    ... and description of credit risks. Read more about Volvo Financial Services' development during the year in the Board of Directors' Report on Volvo Financial Services. Geographic market, percentage of customer-financing portfolio (%). Europe, 39.3% North America, 43.4% Asia, 7.1% South America, 10...

  • Page 139
    ... 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 attributable to the sale. Finished products Production materials, etc. B/S Inventory...

  • Page 140
    ... Annual General Meeting 2014, was SEK 3.00 (3.00) per share or totally SEK 6,089.8 M (6,084.4). During 2015 AB Volvo transferred, free of consideration, 1,377,988 treasury B-shares, with a total quota value of 1,653,585.60 SEK, to participants in the long-term share-based incentive program for Group...

  • Page 141
    GROUP PERFORMANCE 2015 NOTES Information regarding shares Number of outstanding shares, December 31, in millions Average number of shares before dilution in millions Average number of shares after dilution in millions Average share price, SEK Net income attributable to Parent Company shareholders ...

  • Page 142
    ...fied pension plans are funded while the other plans are generally unfunded. The Volvo Group's subsidiaries in the United States mainly secure their pension obligations through transfer of funds to pension plans. At the end of 2015, the total value of pension obligations secured by pension plans of...

  • Page 143
    ... salary increases Inï¬,ation Dec 31, 2015 Dec 31, 2014 2.75 3.00 1.50 Pension costs Current year service costs Interest costs Interest income Past service costs Gain/loss on settlements Pension costs for the period, defined-benefit plans Pension costs for defined-contribution plans Total...

  • Page 144
    ... of experience adjustments Exchange rate translation Benefits paid Obligations as of December 31, 2014 of which Funded defined-benefit plans Acquisitions, divestments and other changes Current year service costs Interest costs Past service costs Settlements Employee contributions Remeasurements...

  • Page 145
    ... Total Dec 31, 2015 579 13,574 13,069 1,653 -4 3,440 - 573 32,883 Dec 31, 2014 194 14,550 13,398 590 -59 2,880 - 623 32,176 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...

  • Page 146
    ... are attributable to operating lease contracts or sales transactions combined with buy-back agreements or residual value guarantees. Residual value risks are the risks that the Volvo Group in the future would have to dispose used products at a loss if the price development of these products is worse...

  • Page 147
    ...Volvo Group and a number of other companies in the truck industry became part of an investigation by the European Commission regarding a possible violation of EU antitrust rules. On November 20, 2014 the European Commission issued a Statement of Objections stating its preliminary view that the Volvo...

  • Page 148
    ...non-current liabilities in which the largest loans are listed by currency. Loans in subsidiaries are mainly in local currencies through Volvo Treasury. Volvo Treasury uses various derivatives to facilitate lending and borrowing in different currencies without increasing Volvo Group's risk. Read more...

  • Page 149
    ...were secured by assets pledged. NOTE 23 ASSETS PLEDGED Dec 31, 2015 65 - 9,323 40 9,428 Dec 31, 2014 88 209 7,343 40 7,680 Assets pledged Property, plant and equipment - mortgages Assets under operating leases Receivables Cash, loans and marketable securities Total Non-current and current loans...

  • Page 150
    ... a number of other companies in the truck industry became part of an investigation by the European Commission regarding a possible violation of EU antitrust rules. After the European Commission had issued its Statement of Objections on November 20, 2014 the Volvo Group recognized a provision. Read...

  • Page 151
    ... of vehicles and parts and purchase of engine long blocks and services. Commercial terms and market prices apply for the supply of goods and services to/from joint ventures. Read more in Note 5 Investments in joint ventures, associated companies and other shares and participations The Volvo Group...

  • Page 152
    ... General Meeting 2014, as proposed by the Board of AB Volvo, it was decided to implement a new 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 2014, 2015...

  • Page 153
    ... end of the year. Other benefits, mainly pertaining to car and housing, amounted to SEK 783,478 in 2015. Group Executive Team members, excluding the CEO, also participate in the long-term share-based incentive programs decided by the Annual General Meetings 2011 and 2014. Return on equity for 2015...

  • Page 154
    ... shares. During 2015, for the equity-settled plan, a total of Average number of employees AB Volvo Sweden Subsidiaries Sweden Western Europe (excl. Sweden) Eastern Europe North America South America Asia Other countries Group total 2015 Number of employees of which women, % 2014 Number of employees...

  • Page 155
    ... Dongfeng Commercial Vehicles Co., Ltd, DFCV, in China. The purchase consideration amounted to approximately SEK 7.0 billion. During 2015 Volvo Group sold the holding of the shares in the listed Indian automotive manufacturer Eicher Motors Limited. The sale generated a gain of SEK 4.6 billion. Read...

  • Page 156
    ... in Note 15 for accounting policy on customer-finance receivables. Read more in Note 16 for accounting policy on accounts receivable and other interest-bearing receivables. Financial assets at fair value through the income statement All of the Volvo Group's financial assets that are recognized at...

  • Page 157
    ... B/S Accounts receivable Customer financing receivables1 Other interest-bearing receivables Note 16 Note 15 Note 16 29,101 102,583 1,482 133,166 - - - - 30,895 99,166 976 131,037 - - - - Financial assets available for sale Holding of shares in listed companies Holding of shares in non-listed...

  • Page 158
    ..., Accounts receivable and customer financing receivables, as well as in Note 8, Other operating income and expenses. 2 Accrued and realized interest is included in gains and losses related to Financial assets and liabilities at fair value through the income statement. 3 The Volvo Group uses forward...

  • Page 159
    ...the hedge is recognized in the income statement. • Hedging of forecasted electricity consumption. Changes in the fair value are recognized in the cash ï¬,ow hedge reserve in OCI for effective hedge accounting. Refer to Note 19 Equity and numbers of shares for information on the changes in the fair...

  • Page 160
    ...967). AB Volvo's risk capital (shareholders' equity plus untaxed reserves) amounted to 41,010 (38,290) corresponding to 41% (46%) of total assets. INCOME STATEMENT SEK M Net sales Cost of sales Gross income Administrative expenses Other operating income and expenses Income from investments in Group...

  • Page 161
    ... receivables Total non-current assets Current assets Current receivables Receivables Group companies Other receivables Cash and bank accounts Total current assets Total assets Shareholders' equity and liabilities Shareholders' equity Restricted equity Share capital (2,128,420,220 shares, quota value...

  • Page 162
    ...and divestments of shares in non-group companies, net Interest-bearing receivables Cash-ï¬,ow after net investments Financing activities Change in loans, net Dividends to AB Volvo shareholders Other Change in liquid funds Liquid funds, beginning of year Liquid funds, end of year 2015 3,481 17 -5,104...

  • Page 163
    ... period Total income for the period Transactions with shareholders Dividends to AB Volvo shareholders Share based payments Transactions with shareholders Balance at December 31, 2014 Income for the period Other comprehensive income Available-for-sale investments: Divestment of fair value investment...

  • Page 164
    ... financial statements. The main deviations between the accounting policies applied by the Volvo Group and the Parent Company are described below. Shares and participations in Group companies and investments in joint ventures and associated companies are recognized at cost in the Parent Company and...

  • Page 165
    ...Income from investments in Group Companies Dividends received Volvo Financial Services AB Volvo Automotive Finance (China) Volvo Malaysia Sdn Bhd. Volvo China Investment Co. Ltd. Volvo Danmark AS Volvo East Asia (Pte) Ltd. Volvo Holding Sverige AB Volvo Korea Holding AB Volvo Event Management UK Ltd...

  • Page 166
    ... Reporting in the consolidated financial statements. AB Volvo owns, directly or indirectly, 278 (294) legal entities. The legal structure is designed to effectively manage legal requirements, administration and taxes, as well as the operations conducted by the Group in each country it operates...

  • Page 167
    ... AB Volvo and Volvo Trucks Region Central Europe GmbH is 100%. 6 Total holding by AB Volvo Penta is 100% (2014: 49% AB Volvo and 51% AB Volvo Penta). 7 AB Volvo's share of shareholders' equity in subsidiaries (including equity in untaxed reserves) was 103,382 (101,274). 8 In Volvo Group the company...

  • Page 168
    ...116 Total other receivables The valuation allowance for doubtful receivables amounted to 1 (2) at the end of the year. The company considers that fair value does not differ from carrying value. Fair value of plan assets in funded plans Plan assets opening balance 2014 Actual return on plan assets...

  • Page 169
    ... 2015 PARENT COMPANY NOTES Volvo Group applies IAS 19 Employee Benefits in the consolidated financial statements. This implies differences, which may be significant, in the accounting of defined-benefit pension plans as well as in the accounting of plan assets invested in the Volvo Pension...

  • Page 170
    ... and other key parties. The Swedish Corporate Governance Code, which is applied by the Volvo Group, aims at creating a sound balance of power between shareholders, the board of directors and the senior management. Sound corporate governance, characterized by high standards when it comes to...

  • Page 171
    ...'s largest manufacturers of both medium-duty and heavy-duty trucks. In March and June, the Volvo Group divested its shares in the listed Indian automotive manufacturer Eicher Motors Limited (EML). The divestment had no impact on the ownership or control of the joint venture VE Commercial Vehicles in...

  • Page 172
    ... phase, the Board decided in April 2015 to recruit Martin Lundstedt as new President and Chief Executive Officer (CEO) of the Volvo Group and he took on the position in October. Martin brings 25 years of experience from development, production and sales within the commercial vehicle industry into...

  • Page 173
    ...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 9 10 President/CEO 8 Corporate Audit 11 Internal Control over Financial Reporting 10 Group Executive Board BUSINESS...

  • Page 174
    .... The total number of votes amounted to 667,775,786. For more information about the Volvo share and its shareholders, refer to the Board of Director's report on pages 104-106 of the Annual Report. General The General Meeting is Volvo's highest decision-making body. The General Meeting held within...

  • Page 175
    ... Board and of the Group Executive Board were present at the Meeting. Authorized Public Accountants Peter Clemedtson, Volvo's Lead Audit Partner, and Johan Rippe were also present, representing the company's auditor PricewaterhouseCoopers AB. The Annual General Meeting 2015 decided to pay a dividend...

  • Page 176
    ... GOVERNANCE CORPORATE GOVERNANCE REPORT 2015 4 Board of Directors 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...

  • Page 177
    ... REPORT 2015 In October 2015, the Board of Directors visited the Group's businesses in Japan, including a visit at the Experience Center in Ageo. Board has kept itself continuously updated about the weak markets in Brazil and China. The declining market in China for particularly construction...

  • Page 178
    ... audit and risk management. Finally, the Audit Committee adopts guidelines for transactions with companies and persons closely associated with Volvo. Composition and work in 2015 At the statutory Board meeting following the Annual General Meeting 2015, the following Board members were appointed...

  • Page 179
    ..., deputy member 5 Total number of meetings 11 11 11 8 6 1 11 8 5 1 Joined the Board on April 1, 2015. 2 Stepped down from the Board on April 1, 2015. 3 Stepped down from the Board on April 21, 2015 4 Joined the Board as employee representative, deputy member...

  • Page 180
    ...of the Executive Committe of Eastern European Economic Relations of German Industry. Board Chairman: Bilfinger SE. Started with Daimler Benz AG, where he has held several management positions, such as head of the trucks and buses business, Head of Group Controlling, Corporate Development and M&A in...

  • Page 181
    ... Financial Assurance Partnership Marketing and Division President General Electric Fleet Services; President and Chief Executive Officer of Ceridian Corporation and subsequently also Chairman; Board Chairman, President and Chief Executive Officer of Stream Global Services, Inc. Until January 2015...

  • Page 182
    ... be introduced to meet the specific needs of the Group's truck customers in the value truck segments. The Truck Division Group Trucks Technology (GTT) will continue to be responsible for product development of engines, transmissions and trucks. The Truck Division Group Trucks Operations (GTO) will...

  • Page 183
    ...Resources Group Communication & Sustainability Affairs BUSINESS AREAS Renault Trucks TRUCK DIVISIONS Mack Trucks UD Trucks Volvo Trucks Value Trucks & JVs Value Trucks DFCV Volvo CE Volvo Buses Volvo Penta Governmental Sales VFS Group Trucks Technology Group Trucks Operations Group Trucks...

  • Page 184
    ... report on the evaluation for 2015 will be available on Volvo's website no later than three weeks prior to the Annual General Meeting 2016, www.volvogroup.com. For more information about remuneration to the Group Executive Board and an account of outstanding share and share-price related incentive...

  • Page 185
    .... Following this, he will remain in the Volvo Group as senior advisor in research and development. In December 2015, Mikael Bratt, Executive Vice President GTO, announced that he intends to leave the Volvo Group. He will remain in his current position for a time period of up to six months. 183

  • Page 186
    ... Director Scania AB 1998-1999. Member of the Group Executive Board since 2014. With Volvo 1999-2001 and since 2014. 1957 Has held various positions in the Volvo Group since 1982. Senior Vice President Latin America 2015. Senior Vice President Europe North and Central, Group Trucks Sales (2013-2014...

  • Page 187
    ... Engineering and Management, MSc. Financial Economics, MSc. Business and Economics. 1970 Has held various senior positions in the Volvo Group, most recently as Executive Vice President Group Trucks Sales 2015. Executive Vice President Group Trucks Sales & Marketing APAC 2012-2014. President of Volvo...

  • Page 188
    ... established within the Group and in which managers and employees operate. Volvo works actively on communications and training regarding the company's basic values as described in The Volvo Way, an internal document concerning Volvo's business culture, and the Group's Code of Conduct, to ensure that...

  • Page 189
    ... and final assessment of the control environment. 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 Report for the year 2015 on pages 168-187 and that it has been prepared...

  • Page 190
    ... that they invest the net award in AB Volvo shares and that they retain the shares for at least three years. The long-term share-based incentive program resolved by the 2014 Annual General Meeting is therefore discontinued after 2015. New share-based incentive programs, will, where applicable, be...

  • Page 191
    ...dividend. If the Annual General Meeting resolves in accordance with the Board of Directors' proposal, SEK 25,021,373,396.36 will remain of the Company's non-restricted equity, calculated as per year end 2015. The Board of Directors has the view that the Company's and the Group's shareholders' equity...

  • Page 192
    ...INFORMATION Audit Report for AB Volvo (publ) To the annual meeting of the shareholders of AB Volvo (publ), corporate identity number 556012-5790 Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts of AB Volvo (publ) for the year 2015...

  • Page 193
    ... statement 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/loss from investments in joint ventures and associated companies...

  • Page 194
    ... 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-interest-bearing assets held for sale Cash and cash equivalents Assets Shareholders' equity1...

  • Page 195
    ... Operations 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 cash equivalents Assets Shareholders' equity...

  • Page 196
    ... and 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 Dividend...

  • Page 197
    ...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, % Net Financial position...

  • Page 198
    ... 4 Share price at year-end divided by basic earnings per share. 5 Market value at year-end minus net financial position and minority interests divided by operating income. 6 Cash dividend divided by basic earnings per share. 7 Shareholders' equity for shareholders in AB Volvo divided by number of...

  • Page 199
    ...549 1,819 240,559 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 200
    ... of 660. 5 Operating income in 2014 included a capital gain of SEK 4,608 M from a sale of shares in Eicher Motors Limited. Operating margin % Trucks Buses Construction Equipment Volvo Penta Volvo Aero Volvo Group Industrial Operations Customer Finance Volvo Group 2015 9.1 3.6 4.0 11.5 - 7.0 17...

  • Page 201
    OTHER INFORMATION Employees Number1 Sweden Europe, excluding Sweden North America South America Asia Other markets Volvo Group total 2015 20,412 27,662 15,534 5,380 17,046 2,430 88,464 2014 21,384 29,449 15,217 6,353 17,793 2,626 92,822 2013 22,588 29,746 16,397 6,275 17,953 2,574 95,533 ...

  • Page 202
    ... 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 operating capital Income for the period divided by average operating capital. Return on shareholders' equity Income...

  • Page 203
    ...) • address and telephone number • name and personal number (registration number) of the proxy, if any • number of any accompanying assistant(s) To be entitled to participate in the annual general meeting, shareholders having their shares registered in the name of a nominee must request the...

  • Page 204
    ...of the world's leading manufacturers of trucks, buses, construction equipment and marine and industrial engines. The Group also provides complete solutions for financing and service. The Volvo Group, with its headquarters in Gothenburg, Sweden employs about 100,000 people, has production facilities...