Industrial Operations

In 2011, net sales for the Volvo Group’s Industrial Operations increased by 18% to SEK 303,589 M (257,375). 

Compared with 2010, sales increased in all of the Group's market areas. Sales increased strongly in Eastern Europe and had a very positive development in North America, South America and Asia. In Western Europe demand weakened towards the end of the year. 

Considerable earnings improvement
In 2011, the operating income for the Volvo Group’s Industrial Operations amounted to SEK 25,957 M compared to SEK 17,834 M in the preceding year. The operating margin for the Industrial Operations amounted to 8.6% (6.9).

The earnings improvement is the result of increased sales and improved cost coverage in the industrial system, as an effect of increased production levels.

In 2011, research and development expenses amounted to SEK 13,276 M (12,970). The continued high cost level is primarily a consequence of projects relating to new emission regulations in Europe and South America and the development of products for the growth markets.

Selling expenses increased by 8% and administration expenses by 26%.

Since return on equity was 23,1%, SEK 550 M was provisioned for profit-sharing to employees.

 Impact of exchange rates on operating income
The combined effect of changed exchange rates had a negative effect on operating income of approximately SEK 5.2  billion in 2011, compared with 2010. This is mainly attributable to that the USD was weak during most of 2011.