Cash-flow statement

Negative operating cash-flow

During 2012, operating cash flow in the Industrial Operations amounted to a negative SEK 4.8 billion (positive 14.1).

The cash flow within Industrial Operations was positively affected by the operating income and negatively affected by the increased working capital. Accounts receivables increased with SEK 1.2  billion while inventories decreased SEK 0.6 billion and the trade payables decreased SEK 7.6 billion. Financial items and paid income taxes had a SEK 7.3 billion negative effect on cash flow within Industrial Operations, mainly through payments of interests and income tax. Operating cash flow within Customer Finance was a negative SEK 14.8 billion (neg: SEK 14.1 billion), mainly due to increased customer financing-receivables.

The industrial operations’ investments in fixed assets and capitalized R&D during 2012 amounted to SEK 14.6 billion (12.6).

Capital expenditures in Trucks amounted to SEK 10.7 billion (8.4). As for previous year, the capital expenditures within Trucks consist to a large extent of investments related to product renewals in the product program, including emission regulations, with product development activities and required adaptations in the plants. There are also large investments in capacity for cylinder blocks and cylinder heads in Skövde, Sweden, and cab paint capacity in Curitiba, Brazil. During 2012 there were also investments in the dealer network and workshops, mainly in Europe and Asia (mainly Japan and Thailand), as well as in our joint venture VE Commercial Vehicles (VECV).

Capital expenditures for Construction Equipment amounted to SEK 1.7 billion (1.9). The major investments during 2012 continued on strategic areas such as excavator assembly plant in Kaluga, Russia, facilities (plant and sales office) in Shippensburg, US, to support the North American markets, and the Jinan Technology center in China handling development of BRIC machines for both Volvo and SDLG brand. Product related investments during the year refer to the latest emission regulations in Europe and North America (Tier 4 final), and market specific requirements for new models in the BRIC countries.

The investments in Buses were SEK 0.3 billion (0.3), and in Penta SEK 0.2 billion (0.2). For 2011 Volvo Aero was included with SEK 0.5 billion, but is not included in the comparison for 2012 due to reclassification to assets held for sale.

Investments in Volvo Rents, besides leasing assets, were SEK 0.6 billion (0.1) during 2012, and are mainly referable to delivery vehicles. These are directly related to the expansion of fleet and the additional store locations added during the year.

Investments in leasing assets amounted to SEK 3.6 billion (1.4), the increase from last year is related to the build-up phase that Volvo Rents has been in during 2012, increasing its presence and expanded the fleet through acquisitions and greenfield investments.  

For 2013, the Volvo Group estimate that investments in property, plant and equipment will be more or less on the same level as for 2012. The investments will mainly cover the industrial footprint and tooling related to the product renewals, and also needs in order to deliver on the strategic objectives.

Acquisitions and divestments
In September 2012 AB Volvo increased its shareholding in Deutz AG to just over 25% which had a negative impact on cash flow of  SEK 1.1 billion. 

In October 2012 the sale of Volvo Aero to the British company GKN was finalized. Acquired operations refer mainly to the acquisition of the French automotive manufacturer Panhard as well as  several minor acquisitions of assets and liabilities in construction equipment rental operations.

Acquired and divested operations 2012 had a positive impact on cash flow of SEK 3.4 billion (negative 1.6).  

Financing and dividend
Net borrowings increased cash and cash equivalents by SEK 14.1 billion during 2012.

During the year dividend of SEK 6.1 billion, corresponding to SEK 3.00 per share, was paid to the shareholders of AB Volvo.

Change in cash and cash equivalents
The Volvo Group’s cash and cash equivalents decreased by SEK 4.6 billion during the year and amounted to SEK 25.8 billion at December 31, 2012.

Refer to Note 29 for principles for preparing the cash flow analysis.