Significant events

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During 2013

Year 2013 was characterized by the most extensive product renewal in the history of the Volvo Group.

New Volvo FM
The Volvo FM was launched in Europe on March 19, 2013 – with the ground-breaking innovation Volvo Dynamic Steering as one of its prominent features. Volvo Dynamic Steering combines a conventional hydraulic power steering system with an electronically regulated electric motor fitted to the steering gear. The system gives the driver effortless steering at low speeds as well as excellent directional stability on the open road.

New Volvo FMX
The new Volvo FMX truck was launched at the Bauma trade fair in Munich on April 15, 2013, setting a new standard when it comes to robustness, handling and driver comfort. The truck, which is specially designed for heavy construction duties, boasts an array of updates including a totally redesigned cab interior, new air suspension system and raised ground-clearance. The new Volvo FMX is also equipped with Volvo Dynamic Steering – an innovation designed to improve maneuverability.

Powerful news from Volvo Trucks in North America
The new heavy-haul tractor Volvo VNX, a 13-litre engine running on liquefied natural gas, the introduction of Volvo I-Shift as standard throughout the product range, and services that boost uptime were some of the new features that Volvo Trucks in North America presented at the Mid-America Trucking Show in Louisville, Kentucky, USA on March 21, 2013. Volvo VNX is a new heavy-haul tractor for the North American market. It is intended for demanding assignments such as hauling timber and heavy machinery.

Annual General Meeting of AB Volvo
The Annual General Meeting of AB Volvo held on April 4, 2013 approved the Board of Directors’ motion that a dividend of SEK 3.00 per share be paid to the company’s shareholders.

Peter Bijur, Jean-Baptiste Duzan, Hanne de Mora, Anders Nyrén, Olof Persson, Carl-Henric Svanberg, Ravi Venkatesan, Lars Westerberg and Ying Yeh were reelected as members of the AB Volvo Board of Directors. Carl-Henric Svanberg was reelected as Board Chairman.

Carl-Olof By, representing AB Industrivärden, Lars Förberg, representing Violet Partners LP, Håkan Sandberg, representing Svenska Handelsbanken, SHB Pension Fund, SHB Employee Fund, SHB Pensionskassa and Oktogonen, Yngve Slyngstad, representing Norges Bank Investment Management and the Chairman of the Board were elected members of the Election Committee.

A Remuneration Policy for senior executives was adopted in accordance with the Board of Directors’ motion.

The Annual General Meeting adopted an amendment to the Articles of Association concerning the appointment of auditor in accordance with the Board’s proposal. The amendment entails that the appointment of auditor shall apply until the close of the annual general meeting held during the fourth financial year after the appointment of the auditor.

New Renault Trucks Range
Renault Trucks took advantage of the switch to the Euro 6 standard to totally renew its entire range including light, medium and heavy-duty trucks for distribution, construction and long-haulage. The presentation of the new Renault Trucks Euro 6 range on June 11 was the first time that any manufacturer had ever renewed its entire range at a single stroke. The Volvo Group made an investment of approximately EUR 2 billion over five years in the project and Renault Trucks carried out the most stringent testing program of its entire history.

Volvo Trucks renewed its entire European truck range and launched Euro 6

Since September 2012, Volvo Trucks has launched five new truck models. It all began in 2012 with the launch of the new Volvo FH, followed in 2013 by the introduction of the new Volvo FM, Volvo FMX, Volvo FE and Volvo FL. All the new models include innovations and features that make the driver’s job easier and more efficient. Volvo Trucks has also introduced new trucks with Euro 6 engines ranging from the smallest medium-duty 5-liter engine to the heavy-duty 13-liter variant.

Volvo Group increased warranty reserves
On July 1, it was announced that the Volvo Group would book an additional SEK 900 M in warranty reserves, which impacted the operating income negatively in the second quarter 2013. The cost relates to legacy product quality issues which are resolved in current truck production. The cost was booked in the truck segment.

Termination of local assembly of Renault Trucks in Turkey
On August 20, the Volvo Group and the Turkish manufacturer Karsan agreed to end the contract for local assembly of Renault Trucks for the Turkish market before the end of 2013. The termination had a negative impact on the Volvo Group’s operating income of approximately SEK 95 M in the third quarter of 2013. The termination was made in connection with the change to the newly launched Renault Trucks range, which instead is manufactured in France also for the Turkish market.

Volvo Group took an important strategic step with the launch of Quester
On August 26, UD Trucks launched Quester, an all-new heavy-duty truck range developed specifically for growth markets. Quester addresses new market segments in line with the Volvo Group’s truck strategy to increase sales by capturing profitable growth opportunities in fast growing markets across Asia Pacific and other regions. Production of Quester started in the third quarter of 2013 in Bangkok, Thailand. Besides serving the domestic market, the plant in Thailand will also serve as an export hub for South East Asia and beyond. In the near future, the range is also intended to be manufactured in China for the Chinese market and later on also in India.

The Volvo Group ranked as one of the world’s most sustainable companies
On September 16 it was announced that the Volvo Group once again qualifies for the Dow Jones Sustainability World Index (DJSI). The Volvo Group received a particularly good rating for its implementation of the environmental policy and management systems.

The Volvo Group announced comprehensive efficiency program linked to the strategy
On September 24 it was announced that the Volvo Group had decided to combine a number of actions into a Group-wide efficiency program. The program encompasses both reduction of white collar employees and consultants and efficiency enhancements in the global industrial system. It is estimated that the program will entail restructuring costs totaling approximately SEK 5 billion, whereof approximately SEK 0.5 billion is expected to have no impact on cash flow. The majority of the restructuring charges are expected to impact operating income during 2014. Savings are expected to amount to approximately SEK 4 billion annually, and will generate results gradually in 2014, with full effect achieved by the end of 2015.

Volvo Group to optimize truck ­manufacturing in Europe
On October 16 the Volvo Group announced a directional decision to implement changes in the European industrial structure for truck manufacturing. The aim is to enhance the efficiency and thus strengthen competitiveness. The intention is to, step-wise over the next two years, relocate cab trim operations from Umeå to Gothenburg, to concentrate the assembly of heavy duty trucks in Gothenburg to one line, and to concentrate the assembly of medium duty trucks to Blainville. The directional decision is expected to result in staff cutbacks and operational changes.

Staff and support function ­rationalization
As part of the Group-wide efficiency program the Volvo Group has made a directional decision to rationalize its staff and support functions worldwide to enhance efficiency and reduce costs. Approximately 2,000 white-collar employees and consultants are expected to be affected by the rationalization, which is intended to be implemented starting in the beginning of 2014. The action is subject to union negotiation.

Volvo Construction Equipment to acquire hauler business from Terex
In a move that will improve the company’s penetration in the core earthmoving segment and extend its presence in light mining, Volvo Construction Equipment in December agreed to acquire the off-highway hauler business of the Terex Corporation for a purchase consideration of approx. USD 160 M (approx. SEK 1 billion) on a cash and debt free basis. The acquisition includes the hauler manufacturer Terex Equipment Ltd and related assets and intellectual property. The deal, which is subject to regulatory approval, includes the main production facility in Motherwell, Scotland and two product ranges that offer both rigid and articulated haulers. It also includes the distribution of haulers in the U.S. as well as a 25.2% holding in Inner Mongolia North Hauler Joint Stock Co (NHL), which manufactures and sells rigid haulers under the Terex brand in China. NHL is listed on the Shanghai Stock Exchange. The transaction is expected to be finalized during the second quarter of 2014.