Volvo Penta

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Good profitability despite weak demand

Volvo Penta was honored with a DAME Design Award for its Glass Cockpit concept at the Marine Equipment Trade Show in Amsterdam, the Netherlands. The DAME Design Awards go to the best and most trendsetting new marine equipment and accessories in the industry.

The Volvo Group’s high-technology diesel engines create a unique competitive edge for its trucks, construction equipment and buses. Volvo Penta is in charge of sales of the Group’s diesel engines to external customers, including boat builders and manufacturers of industrial products, such as cranes and mining vehicles. 

Volvo Penta generates significant synergies for the Volvo Group’s total volumes of diesel engines. Approximately 10% of total production in the Group’s European diesel-engine plants and more than half of the Group’s global volumes of 16-liter engines are delivered to Volvo Penta’s customers.

The Industrial business segment, accounting for about half of sales, is the part of Volvo Penta’s operation that generates the largest strategic engine volumes for the Volvo Group. Featuring unique performance, installation benefits and minimized environmental footprint, Volvo Penta’s engines strengthen the competitiveness of world-leading industrial customers, such as Sandvik, Cargotec and Konecranes. By leveraging the strength of the Volvo Group’s combined service offering, Volvo Penta is able to offer efficient support in the form of global service and aftermarket services.

To the greater public, Volvo Penta is best known for its globally leading marine drive systems – for both leisure and commercial boats. Over the decades, products such as the Aquamatic sterndrive and Duoprop have given Volvo Penta a global reputation as an innovative engine supplier to most of the strongest brands in the leisure boat industry. This year, the D4/D6 engine range is celebrating its ten-year anniversary in the market and has helped to progressively strengthen Volvo Penta’s market-leading positions in Marine Leisure. As electronics make inroads into the marine industry, recent years have seen Volvo Penta increasingly move toward deliveries of complete boat-driver environments with a strong focus on comfort and user-friendliness.

Volvo Penta is the Volvo Group’s marine specialist and acts as an independent supplier, supporting customers from the design stage to installation and aftermarket service.

In the Marine Commercial business segment, Volvo Penta delivers diesel engines for use under the toughest possible offshore conditions. Coast guards and sea-rescue organizations, ferry companies, port authorities and shipyards worldwide install Volvo Penta’s reliable engines in boats for sea rescue, patrol, passenger transport, security and maintenance of offshore wind turbines, among other purposes.

Volvo Penta’s marine customers have access to one of the world’s strongest service support organizations comprising approximately 4,000 dealerships worldwide.

Continued weak leisure boat market
2013 marked the sixth consecutive year without growth in the European leisure boat market and, in the wake of the unchanged weak global demand for leisure boats, the consolidation trend in the boat industry continued. During the year, several leading boat brands underwent ownership changes, at the same time as large parts of the boat industry were forced to continue cutbacks and rationalization measures.

Reduced demand in the Chinese construction sector was one of the underlying factors putting pressure on the global market for off-road industrial engines.  In Europe, demand was upheld to a certain extent by pre-buy effects ahead of new emissions legislation that came into effect at year-end 2013.

The total market for diesel engine gensets, Volvo Penta’s largest industrial engines segment, remained stable.

Positive earnings trend
Volvo Penta's net sales declined by 1% to SEK 7,550 M compared with SEK 7,631 M in 2012. Adjusted for changes in exchange rates, net sales increased by 2%.

Operating income totaled SEK 626 M, compared with SEK 549 M in the preceding year. The operating margin was 8.3% (7.2). Earnings were positively impacted primarily by good cost control and negatviely impacted by currency in an amount of SEK 101 M.

Extensive range of new products
Volvo Penta’s new Glass Cockpit System is an integrated control and monitoring system that fundamentally changes the design of the boat driver’s environment. The new system gathers all relevant information for the boat driver and presents it on one or more displays, enabling a common, ergonomic design – and interface – for the entire dashboard of the boat.

In the industrial engine segment, Volvo Penta launched a complete and entirely new range of five to 16-liter engines during the year that will meet the new and more stringent legal requirements on emissions. The new engines, which significantly strengthen Volvo Penta’s product offering in the off-road segment, are fuel efficient, easy to install and offer highly competitive properties in terms of total running costs.

In the Marine Commercial segment, Volvo Penta launched new versions of its Inboard Performance System (IPS). As a result of the unparalleled efficiency of its forward-facing propellers, IPS has had a strong impact on the leisure boat market. The continued expansion of the range allows the system’s unique environmental properties to feature on a growing number of boat models, also within commercial shipping.