 |
 |
Nine months ended September 30, 1998
|
||
|
First nine months |
||
|
1998 |
1997 |
|
|
Net sales, SEK M |
150,320 |
130,948 |
|
Operating income, excluding items affecting comparability, |
|
|
|
Operating income, SEK M |
5,168 |
5,775 |
|
Income after financial items, SEK M2) |
7,787 |
10,721 |
|
Net income, SEK M |
5,558 |
9,253 |
|
Income per share, SEK, excluding items affecting comparability and gains on sales of shares, during most recent 12-months period, SEK |
|
|
|
Return on shareholders' equity, excluding items affecting comparability and gains on sales of shares, % |
|
|
- Items affecting comparability in 1998 pertain to reserves for
restructuring costs in Buses and Construction
Equipment amounting to SEK 240 M and SEK 910 M, respectively.
- Includes gains on sales of
shares amounting to SEK 2,125 M in 1998 and SEK 4,070 1997.
- New heavy truck program and new buses for city traffic were
introduced
during the third quarter. Favorable order bookings for the new Volvo S80.
- Volvo's net sales during the first nine months of the year
amounted to
SEK 150,320 M, an increase of 15% compared with sales in the first three
quarters of 1997. Excluding acquisitions the increase was 12%.
- Sales in Volvo's principal markets in Europe and North America
continued
to be strong. Demand in Southeast Asia, Japan and South America declined
significantly.
- Operating income, excluding items affecting comparability,
amounted to
SEK 6,318 M (5,775), and the operating margin was 4.2% (4.4). Cars’ operating income for the full period was according to plan charged with the increased production and launching costs for the new Volvo S80.
- MASA, a Mexican bus manufacturer, was acquired.
Comments by the Chief Executive Officer
Group sales are growing according to plan. Up to now the declining economy and financial turbulence in Japan and Southeast Asia have been offset by increased sales in other regions. The percentage of Volvo's sales in markets that are experiencing financial crises is relatively small. The fact that higher sales during the year have not resulted in an improved operating margin is due mainly to ongoing generational changes in which the full earnings capacity of new products has not yet been achieved. Nor did the cost-reduction programs implemented in the Group fully offset the tendency towards a disadvantageous product mix during the third quarter.
In addition to the global introduction of the Volvo S80, the product-renewal program continued during the third quarter with the launching of other strategically important products. This applied in particular to the heavy truck program – the Volvo FM series, based on the FH concept and designed for use in regional distribution systems and construction operations. Volvo Buses also launched important products – the Volvo 5000 and Volvo 7000 city buses. Costs incurred prior to and during these introductions were charged against earnings. Our overall view is that the Group's new products have been very well received.
In the area of acquisitions and establishment of new operations, the ongoing integration of the former Samsung construction equipment division is of major importance and is proceeding according to plan. The establishment of an industrial base in Mexico – and thereby within NAFTA – is an important element of Volvo's growth strategy. In addition to acquiring MASA, a bus manufacturer, Volvo is planning to begin assembling passenger cars in Mexico, for the local market and to establish a common Group purchasing and financing function, as well as to explore the opportunities to begin manufacturing construction equipment cabs.
The joint-venture agreement signed in October with Deutz AG in Germany is part of Volvo's effort to achieve an efficient development and production structure. Deutz is becoming Volvo's principal supplier of small and medium-size diesel engines, while Volvo will be able to concentrate on developing heavy diesel engines with 8-to-16-cylinder piston displacement.
Volvo's operations to date have followed the growth strategy that was presented in 1997. The current turbulence in the financial market and the deep crises in certain geographical markets were not part of the global scenario that served as the foundation for the plan. If the turbulence and crises continue and result in a declining total market, measures will have to be taken to adapt the Group's level of costs to smaller volumes.
Leif Johansson
Volvo Group - First three quarters of 1998
Group accounting during the first three quarters of 1998 was affected by the purchase of Carrus Oy – the Finnish bus body company – Nova BUS of Canada and BRS Truck Rental and Contract Hire of Great Britain and by the acquisition of the Construction Equipment Division of Samsung Heavy Industries of South Korea.
Income summary
Net sales of the Volvo Group in the first three quarters of 1998 amounted to SEK 15,320 M, an increase of 12%, excluding acquired units. Adjusted for the effects of foreign exchange movements, the increase was 11%. Net sales per market area were characterized by major geographical differences – ranging from strong demand in North America and Europe to very weak demand in Southeast Asia and leveling off of demand in South America.
Net sales per market area
SEK MPercent of
Volvo's totalsalesFirst nine months
1998 1997Percent Change1)
Western Europe
55
82,437
72,008
+14
Eastern Europe
2
3,644
2,540
+43
North America
31
46,865
36,534
+28
South America
4
5,634
5,023
+12
Asia
6
8,456
11,659
(27)
Other
2
3,284
3,134
+3
Volvo Group total
100
150,320
130,948
+15
- Includes acquistions and effects of foreign exchange movements.
Compared with the first three quarters of 1997, net sales in all Volvo business areas, excluding acquired units, increased. Net sales of Cars increased by 6%, due to a very favorable trend of sales for the Volvo S/V40 that compensated for the phasing out of the Volvo 940 and Volvo S/V90. Sales in Trucks' principal markets in North America and Western Europe continued to be strong, with sales of the business area as a whole increasing by 26%. Sales of the Construction Equipment business area rose 9%, but there were signs of weakening demand in the third quarter.
Group operating income amounted to SEK 5,168 M (5,775). This includes items affecting comparability totaling SEK 1,150 M, pertaining to reserves for restructuring costs in Buses and Construction Equipment.
Excluding items affecting comparability, operating income increased by 9% to SEK 6,138 M (5,775). A favorable volume increase, positive foreign exchange movements and cost-savings programs offset higher costs for product development, start-up of production and the launch of new products within Cars, Trucks and Buses. Income was also affected by a shift in demand toward products with lower margins, and by declining demand in Southeast Asia.
The operating margin, excluding items affecting comparability, decreased to 4.2% (4.4).
Income from investments in associated companies – mainly NedCar, Bilia and Volvofinans – amounted to SEK 340 M (3,165). The deviation compared with the preceding year is attributable mainly to the gain of SEK 3,027 M on the sale of shares in Pripps Ringes AB.
Income from other investments amounted to SEK 2,162 M (1,179), with the sale of holdings in Pharmacia & Upjohn, Inc. accounting for the greater part.
Net interest income in the first three quarters of 1998 was SEK 247 M, compared with SEK 659 M in the corresponding period in the preceding year.
The change is attributable partly to lower interest-bearing assets, where lower interest levels in Europe adversely affected return. Volvo’s expansion in growth markets and the resulting increased financing requirement on these markets also contributed to the lower net interest. The growing financial unrest in the world resulted in significantly higher interest rates, in Asia and South America, among other areas.
Tax expense of SEK 2,224 M (1,383), which was equal to an average tax rate of 29% (13) and is attributable mainly to current taxes. In 1997, the Group’s tax expense was affected by a tax loss carryforward on the sale of the shareholding in Renault.
Net income amounted to SEK 5,558 M (9,253) and the return on equity, excluding items affecting comparability and gains on the sale of shares, was 9.4% at the end of the third quarter, compared with 11.8% a year earlier.
- Pertains to Automotive operations prior to the first quarter of 1998.
Consolidated income statements, SEK M
First nine months
1998
1997
Net sales
150,320
130,948
Cost of sales
(115,038)
(99,303)
Gross income
35,282
31,645
Research and development expenses
(7,312)
(6,489)
Selling expenses
(13,446)
(11,796)
Administrative expenses
(5,738)
(5,247)
Other operating income and expenses
(2,468)
(2,338)
Items affecting comparability1)
(1,150)
-
Operating income
5,168
5,775
Income from investments in associated companies
340
3,165
Income from other investments
2,162
1,179
Interest income and similar credits
1,149
2,957
Interest expenses and similar charges
(902)
(2,298)
Other financial income and expenses
(130)
(57)
Income after financial items
7,787
10,721
Taxes
(2,224)
(1,383)
Minority interests
(5)
(85)
Net income
5,558
9,253
- Items affecting comparability in 1998 pertain to reserves for restructuring costs in Buses and Construction Equipment amounting to SEK 240 M and SEK 910 M, respectively.
First nine months
Gross and operating margin, %
1998
1997
Gross margin
23.5
24.2
Research and development expenses in % of net sales
4.9
5.0
Selling expenses in % of net sales
8.9
9.0
Administrative expenses in % of net sales
3.8
4.0
Operating margin, excluding items affecting comparability
4.2
4.4
Operating margin
3.4
4.4
Financial position
Consolidated balance sheets, SEK M Volvo Group excl sales financing1)
Sales financing
Total
980930
971231
980930
971231
980930
971231
Assets
Intangible assets
4,956
3,262
113
22
5,069
3,284
Property, plant and equipment
35,278
30,677
158
116
35,436
30,793
Assets under operating leases
1,822
1,366
17,772
12,135
19,594
13,501
Shares and participations1)
8,903
8,069
686
728
3,582
4,583
Long-term sales finance reveivables
216
190
21,266
13,777
21,482
13,967
Long-term interest-bearing receivables
1,766
2,266
3
3
1,769
2,269Other long-term receivables
4,904
3,708
13
0
4,917
3,708
Inventories
31,414
27,756
139
237
31,553
27,993
Short-term sales finance receivables
52
37
20,950
18,300
21,002
18,337
Short-term interest bearing receivables
1,364
2,398
0
0
1,364
2,398Other short-term receivables
28,362
21,118
364
741
28,726
21,859
Marketable securities
8,747
10,930
34
32
8,781
10,962
Cash and bank
9,069
8,807
1,067
834
10,136
9,641
Total assets
136,853
120,584
62,565
46,925
193,411
163,295
Shareholders' equity and liabilities
Shareholders' equity1)
64,223
60,431
6,007
4,214
64,223
60,431
Minority interests
1,126
859
63
40
1,189
899
Provision for post-employment benefits
3,156
3,268
34
28
3,190
3,296Other provisons
21,474
18,266
1,717
1,391
23,191
19,657
Loans
4,785
2,097
51,194
39,120
55,979
41,217
Other liabilities
42,089
35,663
3,550
2,132
45,639
37,795
Shareholders' equity and liabilities
136,853
120,584
62,565
46,925
193,411
163,295
- Sales-finance operations are reported in accordance
with the equity method.
Internal receivables and liabilities related to the sales-finance operations are excluded.
The Group's total assets rose by SEK 30.1 billion, or 18%, during the first three quarters. Excluding sales financing, acquired units and the effects of foreign exchange movements, the increase amounted to SEK 3.3 billion.
Capital expenditures for property, plant and equipment amounted to SEK 7.3 billion (6.9), of which a substantial portion pertained to production changeovers in Cars and Trucks.
Shareholders' equity increased by SEK 3.8 billion. Net income for the period provided SEK 5.6 billion, while the dividend to shareholders reduced capital by SEK 2.2 billion.
The Group's net financial assets, excluding sales financing, decreased from SEK 19.1 billion at January 1 to SEK 13.1 billion at September 30, due mainly to acquisitions.
Cash flow analysis, SEK billions
Volvo Group excl sales financing
Sales financing
Total
Net income
5.4
0.2
5.6
Depreciation and other noncash-related items
2.62.1
4.7
Change in operating capital and deferred tax liabilities
0,0
(0.2)
(0.2)
Cash flow from operations
8.0
2.1
10.1
Capital expenditures
(7.2)
(0.1)
(7.3)
Investments in leasing assets
(0.6)
(7.9)
(8.5)
Disposals
0.9
0.4
1.3
Investments in shares, net
2.8
-
2.8
Long-term receivables, net
0.1
(6.7)
(6.6)
Acquisitions and sales of companies
(5.2)
(0.6)
(5.8)
Remaining after net investments
(1,2)
(12.8)
(14.0)
Increase in loans
14.3
Dividend paid to AB Volvo's shareholders
(2.2)
Other
0.0
Change in liquid funds, excluding translation differences
(1.9)
Translation differences in liquid funds
0.2
Change in liquid funds
(1.7)
In the cash flow analysis, the effects of major acquisitions and divestments of subsidiaries have been excluded from other changes in the balance sheet. The effects of changes in foreign exchange rates at translation of foreign subsidiaries have been excluded, since they do not affect cash flow.
Key ratios
Oct 1997 -
Sept 1998Jan - Dec
1997Return on shareholders equity, %
10.8
17.4
Return on shareholders' equity excluding items affecting comparability and gain on sales of shares, %
9.4
10.4Income per share, SEK
15.20
22.90
Income per share, excluding items affecting comparability and gain on sales of shares, SEK
12.60
12.70Shareholders' equity and minority interests as percentage of total assets
33.8
37.6Shareholders' equity and minority interests excluding sales financing, as percentage of total assets
47.8
50.8Net financial assets, SEK billion
13.1
19.1
Net financial assets as percentage of shareholders’ equity and minority interests
20.0
31.2Net sales, SEK M
First nine months
1998First nine months
1997Change in %1)
Oct 1997-
Sept 1998Jan-Dec 1997
Cars
73,936
70,005
+6
100,384
96,453
Trucks
45,041
35,315
+26
60,566
50,840
Buses
9,724
7,469
+1
12,837
10,582
Construction equipment
13,733
12,028
+9
18,463
16,758
Marine and industrial engines
3,659
3,337
+10
4,788
4,466
Aero
6,270
5,062
+24
8,684
7,476
Other and eliminations
(2,043)
(2,268)
+10
(2,725)
(2,950)
Volvo Group total
150,320
130,948
+12
202,997
183,625
- Excluding divested and acquired units.
Operating income, SEK M
First nine months
1998First nine months
1997Oct 1997-
Sept 1998Jan-Dec 1997
Cars
2,555
3,273
3,792
4,510
Trucks
1,939
990
2,761
1,812
Buses1)
345
344
551
550
Construction equipment2)
1,133
996
1,581
1,444
Marine and industrial engines
153
205
129
181
Aero
349
343
478
472
Other and eliminations
(156)
(376)
(331)
(551)
Operating income, excluding items affecting comparability
6,318
5,775
8,961
8,418
Items affecting comparability
(1,150)
-
(1,150)
-
Volvo Group total
5,168
5,775
7,811
8,418
- Including items of SEK 240 M affecting
comparability, operating income was SEK 105 M
for the first nine months 1998. - Including items of SEK 910 M affecting comparability, the
operating income was SEK 223 M
for the first nine months 1998.
Operating margin, %
First nine months
1998
1997
Cars
3.5
4.7
Trucks
4.3
2.8
Buses1)
3.5
4.6
Construction Equipment2)
8.3
8.3
Marine and industrial engines
4.2
6.1
Aero
5.6
6.8
Operating income, excluding items affecting comparability
4.2
4.4
Items affecting comparability
(0.8)
-
Operating margin total
3.4
4.4
- Including items affecting comparability, the operating margin was 1.1% for the first nine months 1998.
- Including items affecting comparability, the operating margin was 1.6% for the first nine months 1998.
Cars
The number of new-car registrations throughout the world increased by approximately 1% during the first three quarters of 1998, compared with year-earlier registrations. The Western European market, which continued to be strong, increased by 7%, while the North American market decreased by 2%. The Japanese market was down 10%.
Net sales for Cars in the first three quarters of 1998 increased to SEK 73,936 M, an increase of 6% compared with net sales in the corresponding period last year.
The number of Volvo cars sold rose 3%. Production of the Volvo 940 and Volvo S/V90 was halted in the first quarter, with the result that the supply of products was limited to two car models during the greater part of the period. Lower volumes in Asia (-31%) were offset favorably by higher volumes in Europe (+8%) and North America (+4%). Sales of the S/V40 is developing very favorably and utilization of capacity in the plant at Born is high. Orders for new Volvo S80 models are strong and production is now at an annual rate of 70,000 cars and will be increased gradually.
Introduction of the Volvo S80 took place throughout the summer, with very positive reception in the press and from customers. It has been possible to signe orders since the beginning of June and showings in Volvo dealer showrooms in Sweden were begun at the end of August. A scheduled program in other countries will be completed during October.
The market share of the Volvo S/V40 cars in Europe increased sharply, while the larger Volvo models lost market shares as a result of the phasing out of the Volvo 940 and Volvo S/V90. Volvo's share of the market in North America was higher, due in part to the strong demand for the four-wheel Volvo V70 Cross Country model and the V70 All Wheel Drive model. In Japan, 12,900 Volvo cars were registered during the period, a decrease of 14% from 1997. The number of total cars imported in Japan during the period decreased by 18%.
Operating income for the period declined to SEK 2,555 M (3,273). A larger volume of sales, beneficial effects of foreign exchange movements and cost-reduction measures – mainly in production and purchasing – did not compensate fully for the planned higher costs of introducing and starting up production of the Volvo S80, and for the shift in demand toward models with lower margins. In addition, operating income was affected by weakening demand in Southeast Asia. The operating margin in the first three quarters was 3.5% (4.7).
As part of the Group's review of its industrial structure, Volvo Cars decided to close the final assembly plant in Halifax, Canada. As a result, earnings in the third quarter were charged with SEK 70 M. Production is concentrated to the plants in Born, the Netherlands, Ghent in Belgium and Torslanda in Sweden.
Trucks
The world market for heavy trucks this year is expected to be slightly smaller than in 1997. Western Europe and North America are at a record number while Southeast Asia declines sharply. The South American truck market, which accounts for approximately 5% of the world total, will also be smaller in 1998 than it was last year.
Volvo delivered 59,570 medium-heavy and heavy trucks during the first nine months of the year, 26% more than in the corresponding period of 1997. The upturn was attributable to the markets in Europe and North America, where deliveries increased by 22% and 47%, respectively.
Volvo's share of the market in the heavy truck class in Western Europe was 15.4% (15.6) up to and including August; its share of the market in the United States was 11.9% (9.4), and its share of the market for heavy trucks in Brazil was 23.3% (23.1). Utilization of capacity in Volvo Trucks' industrial system was very high.
Orders booked during the first nine months of the year were 22% higher than in the comparable period of 1997 and the order backlog at the end of the third quarter was 40% larger.
Trucks' operating income amounted to SEK 1,939 M (990). The higher income was attributable to the larger volume of sales and to improved margins in the North American operations, which to some extent was offset by increased costs for introduction and start-up of production of new products. The operating margin for the first three quarters was 4.3% (2.8).
In August Volvo Trucks launched a new truck program in the heavy class - FM - based on the modular technology of the FH concept. The FM series has been developed with emphasis on applications in regional distribution programs and construction operations.
Buses
The total market for heavy buses in Western Europe and North America remained strong, but slowed significantly in South America and Southeast Asia.
Volvo increased the number of complete buses and bus chassis delivered by 13% to 6,720 units, compared with 5,930 units in the year-earlier period. The increase is attributable largely to the acquisition of Canadian Nova BUS.
Net sales rose to SEK 9,724 M (7,469). The greater increase in sales, relative to the rise in delivered units, is due mainly to increased sales of complete buses.
Operating income, excluding items affecting comparability, amounted to SEK 345 M (344). Among other items, earnings were charged with increased costs for product development in conjunction with the completion of the new products, Volvo 5000 and Volvo 7000, as well as adverse currency effects. The operating margin was 3.5% (4.6).
Volvo has reached an agreement covering acquisition of the Mexican bus manufacturer Mexicana de Autobuses SA, MASA. The acquisition is part of Volvo’s growth strategy in the NAFTA countries (U.S., Canada and Mexico) and means that the position as one of the world’s largest bus manufacturers is strengthened. In addition, synergistic effects are expected, mainly with Volvo’s existing bus production in North America as well as with the operations of the other business areas represented in the region. As a result of this acquisition, combined with the previous acquisitions of Prévost and Nova BUS, Volvo Buses becomes the leading bus manufacturer in North America, with a total market share in city, intercity and tourist buses of about 30%. After this acquisition, a consolidation phase is now being initiated in Buses’ North American operations.
Construction equipment
The trend of business continues to be good in most of Volvo's most important markets for construction equipment. The total market in the United States and Western Europe increased, but the rate of increase is now smaller than it was earlier. The trend in Asia is still negative and the financial crisis, which has also affected Russia, is causing uncertainty with respect to the trend in a number of other markets, including those in South America. Net sales of the Construction equipment business area amounted to SEK 13,733 M (12,028), an increase of 9%, excluding acquired units.
Operating income, excluding items affecting comparability, amounted to SEK 1,133 M (996), and the operating margin was 8.3% (8.3). Operating income includes Volvo Construction Equipment Korea (formerly the construction equipment division of Samsung Heavy Industries) beginning in the third quarter. Integration of the acquired operation is proceeding according to plan but income is being affected by the financial crisis in Asia and it has not yet been possible to compensate for the loss of domestic sales through increased exports.
In Germany, Volvo Construction Equipment acquired its largest dealer, Kopsch AG, which had sales of approximately SEK 840 M in 1997 and accounted for approximately 20% of the sales of Volvo's construction equipment in that country. Volvo also took over the Trakma importing firm and four dealerships in Turkey.
Early in October Volvo concluded an agreement with Hitachi Construction Machinery Ltd to reduce the Group's stake in Euclid Hitachi Heavy Equipment Company, a jointly owned company, from 60% at the present time to 20%. In connection with the agreement Volvo has also divested its rigid dump truck operations in Australia. The divestments are a result of Volvo's review of the current operational structure with the aim of increasing operating efficiency.
Marine and industrial engines
Net sales posted by Marine and industrial engines increased 10%, compared with sales in the year-earlier period. The sales trend for marine engines continued to be strong in Europe – notable in the Nordic region – and in Southern Europe.
In North America, where the market for marine engines was sluggish, Volvo Penta's sales and market shares were higher. The trend of sales of marine engines was also favorable in South America and Australia.
Sales of industrial engines rose in Europe, while sales to customers in Southeast Asia were lower than a year earlier.
Operating income amounted to SEK 153 M (205). Earnings were charged with increased product development costs and costs attributable to marketing efforts. The operating margin declined to 4.2% (6.1).
Aero
Commercial air traffic has increased by 2.5% to date in 1998, half the rate of the increase recorded a year earlier. The decrease is attributable to the crisis in Asia, where air traffic has declined 4%. Orders received by the aircraft industry are still at the 1997 level but the bulk of the order backlog has shifted from customers in Asia to those in Europe and the U.S.
Another consequence of the crisis in Asia is that Chile has deferred its decision to renew its air force. The Swedish multirole "Gripen" military aircraft, for which Volvo Aero supplies the engine, is one of the aircraft that Chilean authorities are considering acquiring.
Aero's net sales increased to SEK 6,270 M (5,062), due primarily to higher sales in the Aviation Support Services, Engine Services and Commercial Engines.
Operating income amounted to SEK 349 M (343). The operating margin declined to 5.6% (6.8), due to higher development costs in the commercial aircraft engine program and in the gas turbine operations.
During the period British Airways placed orders for 59 Airbus 319/320 aircraft. The aircraft are to be equipped with V2500 engines – a type being supplied by a joint venture in which Volvo Aero is a risk-sharing partner with Pratt & Whitney, among other companies. Volvo Aero's share of this order will be worth approximately SEK 1 billion during a five-year period beginning in 1999.
Volvo Aero reached an agreement in principle in October to acquire 67% of the capital in Norsk Jetmotor A/S, the Norwegian manufacturer of aircraft engine components. The sellers are the Norwegian government and the Kongsberg Group.
Sales financing
Total assets in Volvo’s sales finance operations amounted to SEK 62.6 billion, an increase of 33% compared with year-end 1997. The increase is attributable mainly to a strong growth in the North American market from Trucks and Cars and the passenger car operations in Germany and Great Britain.
Net sales rose to SEK 6,982 M (3,886) and the operating income amounted to SEK 318 M (142).
Employees
The number of employees in the Volvo Group increased by 6,740 between January 1 and the close of the period. Of this number, acquired units provided slightly more than 4,000 new employees. The number of employees as of September 30, 1998 was 79,640.
New member in Volvo Group Executive Committee
Stefan Johnsson has been appointed a new member of the Volvo Group Executive Committee, responsible for strategic matters and business development, effective October 15, 1998. Stefan Johnsson, formerly president of Volvo Group Finance, succeeds Claes Malmros.
Options program for senior executives
The Board of Directors of AB Volvo has decided to establish a rolling options program whereby the senior executives in the Volvo Group will be allotted call options in Volvo, beginning in 1999. The senior executive’s bonus serves as the base for the allotment of options. The lifetime of the options is five years. The options will be written and priced by an independent market player, beginning in April next year. The terms and conditions of the options will be based on a fair market assessment.
Year 2000 problem at Volvo
The transition to the year 2000 is a global technical problem and the extensive use of information technology means that the millennium shift effects major parts of the operations in most companies, as well as Volvo. Work with identifying and solving the problems which could arise due to the millennium shift has high priority at Volvo and has been intensified during 1998. The goal is to avoid disturbances which could have effect on Volvo's operations.
The preliminary report on operations for the full year 1998 will be issued on
February 11, 1999.Göteborg, October 21, 1998
Leif Johansson
President and Chief Executive Officer
This report has not been reviewed by AB Volvo's auditors
Volvo Group quarterly figures,
SEK M unless otherwise specified3/1997
4/1997
1/1998
2/1998
3/1998
Net sales
41,924
52,677
48,839
52,867
48,614
Cost of sales
(31,330)
(39,687)
(37,015)
(40,717)
(37,306)
Gross income
10,594
12,990
11,824
12,150
11,308
Research and development expenses
(2,000)
(2,170)
(2,372)
(2,472)
(2,468)
Selling expenses
(3,914)
(5,364)
(4,385)
(4,528)
(4,533)
Administrative expenses
(1,788)
(1,771)
(1,754)
(1,991)
(1,993)
Other operating income and expenses
(1,065)
(1,042)
(1,337)
(438)
(693)
Items affecting comparability
-
-
-
(1,150)
-
Operating income
1,827
2,643
1,976
1,571
1,621
Income from investments in associated companies
85
(236)
99
136
105
Income from other investments
845
(11)
79
2,098
(15)
Interest income and similar credits
929
529
427
552
170
Interest expenses and similar charges
(785)
(450)
(248)
(438)
(216)
Other financial income and expenses
(125)
(20)
(59)
(84)
13
Income after financial items
2,776
2,455
2,274
3,835
1,678
Taxes
22
(1,322)
(710)
(920)
(594)
Minority interests
(7)
(27)
17
(21)
(1)
Net income
2,791
1,106
1,581
2,894
1,083
Depreciations included above
1,557
2,030
1,933
2,264
2,286
Income per share, SEK
6.40
2.60
3.60
6.50
2.50
Average number of shares, million
441.5
441.5
441.5
441.5
441.5
Volvo car sales, number of units invoiced
First nine months
1998
First nine months
1997
Change
in %Oct 1997- Sept 1998
Jan-Dec 1997
Europe
185,530
172,320
+8
253,170
239,960
Western Europe
180,910
168,070
+8
246,890
234,050
Eastern Europe
4,620
4,250
+9
6,280
5,910
North America
79,500
76,390
+4
105,090
101,980
South America
1,260
1,740
(28)
1,800
2,280
Asia
18,650
27,050
(31)
27,770
36,170
Other markets
5,330
4.210
+26
7,170
6,050
Total Volvo cars
290,270
281,710
+3
395,000
386,440
Renault cars
24,030
20,910
+15
32,750
29,630
Total cars
314,300
302,620
+4
427,750
416,070
By series
Volvo S/V901)
8,700
21,570
(60)
15,420
28,290
Volvo 9401)
6,460
27,000
(78)
18,810
39,450
Volvo S80
6,450
-
-
6,450
-
Volvo S/V70
148,560
154,170
(4)
198,060
203,670
Volvo S/V40
113,580
78,900
+44
148,830
114,150
Volvo C70
6,520
70
-
7,330
880
Total
290,270
281,710
+3
395,000
386,440
- Production ceased during first half of 1998
Trucks, units invoiced
Europe
28,950
23,760
+22
39,650
34,460
Western Europe
25,940
21,550
+20
35,420
31,030
Eastern Europe
3,010
2,210
+36
4,230
3,430
North America
21,210
14,430
+47
27,680
20,900
South America
5,060
4,920
+3
7,110
6,970
Asia
2,930
2,900
+1
4,740
4,710
Other markets
1,420
1,330
+7
2,030
1,940
Total trucks
59,570
47,340
+26
81,210
68,980
Volvo bus/bus chassis, units invoiced
Europe
2,730
2,940
(7)
3,980
4,190
North America1)
1,450
600
+142
1,960
1,110
South America
1,230
1,050
+17
1,530
1,350
Asia
1,040
910
+14
1,540
1,410
Other markets
270
430
(37)
510
670
Total, buses
6,720
5,930
+13
9,520
8,730
- Including the acquisition of Nova BUS as of second quarter 1998.
As of the fourth quarter, 1997, the Volvo Group’s reporting is by market area in accordance with new geographical definitions based on ISO standards. Reporting in prior periods has been adjusted to reflect the new principle.
- New heavy truck program and new buses for city traffic were
introduced
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