The Volvo Group in Brief

Three years ago Volvo decided to concentrate all available resources on its automotive and transport equipment operations in order to maintain and strengthen the Group's long-term profitability in one of the world's most competitive industries.

Since 1994 Volvo's core operations have been strengthened through acquisitions of shareholdings and companies while businesses outside the automotive and transport equipment operations with a value of SEK 34 billion have been divested.

Volvo has today an operating structure in which passenger cars and heavy commercial vehicles each account for approximately half of the Group's sales. The equity/ assets ratio has improved and the Group's freedom of action has increased.

Substantial resources are being invested to strengthen the Group through aggressive product and process development, the introduction of new families of products and increased facilities such as financing and service contracts.

Investments in Volvo's industrial system are increasing as a means of strengthening the Group's international presence and its proximity to customers. Marketing is being focused on strategically important regions. The dealer network, and the service and spare parts operations are being further developed.

Volvo is an international transport equipment group with 70,000 employees, production in more than 20 countries, and a global marketing and service organization.

The Group occupies a prominent position as a producer of passenger cars in its segment of the market and is among the world's leading producers of trucks, buses, construction equipment and drive systems for marine and industrial use. In the aircraft engine field, Volvo has substantial resources for the maintenance of engines and development of components.

Volvo has a strong identity that has been built up over a period of seven decades. The Group's ambition is to further enhance its leadership in the field of vehicle safety.

In the environmental area, Volvo is intensifying its programs in preparation for future shifts in technology.



Volvo's operations in 1996

• Consolidated income in 1996 increased from SEK 9.3 billion in 1995 to SEK 12.5 billion. Income per share rose from SEK 20.20 to SEK 26.90.
  
  
• The level of operating income from automotive operations, which amounted to SEK 3.6 billion, was substantially lower than income of SEK 7.5 billion in 1995 and was not acceptable.
  
  
• The year was characterized by the launching of several product innovations, a high rate of product development and aggressive measures to strengthen production and marketing systems.
  
  
• The decline in income was attributable primarily to Volvo Trucks' losses in North and South America.
  
  The trend of income in Volvo Cars was favorable and Volvo Construction Equipment continued to show good results.
  
  
• In addition to a regular cash dividend of SEK 4.30 per share on 1996 operations, Volvo's Board of Directors will propose the redemption of one share for every 20 shares held.

The effective return on Volvo shares (dividend plus increase in share value) during the past 15 years has averaged 29% per year.

	1994	1995	1996
Sales	155,866	171,511	156,060
Operating income before nonrecurring items, automotive operations	7,486	7,493	3,619
Net income	13,230	9,262	12,477
Income per share, SEK	31.80	20.20	26.90
Cash dividend, per share	3.40	4.00 1)	4.30 2)
Capital expenditures, property plant and equipment	4,274	6,491	8,200
Research and development costs	4,604	7,289	8,209
Number of employees, December 31	75,550	79,050	70,330
1 Plus one share of Swedish Match AB for each Volvo share held at SEK 21.74 (weighted average of ten first trading days after listing on the exchange).
2 Proposed by the Board of Directors.

Source: Volvo Annual Report 1996