Improvements within all business areas

The improved demand was clearly visible in our truck operations, with order intake rising by 75% while deliveries increased by 41%. Order intake gradually increased from low levels in Europe and North America. In many emerging markets such as Brazil and India, demand remained strong. On the other hand, the Japanese market weakened during the second half of the year. Net sales in the truck operations increased 20% to SEK 167 billion and the operating margin improved to 6.0%. The positive trend in order intake led to a gradual increase in the pace of manufacturing and delivery in most of our truck plants.

The growth and profitability development of Construction Equipment was strong throughout the year with a gradual improvement in Europe and North America, and with a very good contribution from emerging markets, particularly China. Sales rose 51% to SEK 54 billion and the business area recorded an operating income of slightly more than SEK 6 billion. The full year operating margin was 11.5% with a strong finish to the year. We have increased our market share in the important Chinese market and now rank as its third largest manufacturer. We are moving our position forward further with the launch of SDLG branded excavators from Lingong and a large number of Volvo products.

Buses' sales increased by 11% and the operating margin rose to 3.8%. The business area had a positive trend in profitability throughout the year despite relatively low volumes in the important markets of Europe and North America. The improved profitability is partly a result of increased sales, but primarily the fruit of considerable efforts to raise internal efficiency and lower costs.

Volvo Penta turned around with a profit of SEK 578 M and a margin of 6.6% despite continued weak demand for marine engines. With one of the industry’s broadest product ranges and a global network of service and distributors, Volvo Penta is strategically well-positioned to be an innovative partner to important boat builders. The industrial engine business had a good development and the aim is to further increase sales of industrial engines by breaking into new segments of the market.

Volvo Aero’s operating income rose to SEK 286 M despite a loss of SEK 538 M related to the divestment of the U.S.-based service business. Core operations developed strongly due to increased volumes, resulting in improved capacity utilization, improved productivity and lower costs. Volvo Aero remains well-established with participation in many interesting engine programs that will be entering production in coming years.

In our Customer Finance Operations profitability gradually improved as our customers' business activity increased, which in turn led to a more stable financial situation for them. As a consequence of the Volvo Group’s increased sales of new products, we also see that our credit portfolio is growing again.