Improved earnings

  • High deliveries - strong demand in Brazil and US, pre-buy in Europe
  • Operating margin 5.7% excluding restructuring charges
  • Stable markets expected for 2014
Stable truck markets expected for 2014

In 2013, the total market for heavy-duty trucks in Europe increased by 8% for the full year, however there was a strong finish to the year due to the fact that customers chose to renew their fleets ahead of the new emissions standard, Euro 6, which became effective in January 2014. As a consequence, demand in Europe is expected to be slow in the beginning of the year and then gradually improve. The total market for heavy-duty trucks in North America decreased 5% in 2013 as a result of slow growth and, for much of the year, customer caution regarding the U.S. government's handling of budgetary and economic issues. In Brazil the total market for heavy-duty trucks rose by 19%, supported by attractive financing rates and a strong crop season. For 2014, the markets are expected to be relatively stable and the Volvo Group forecasts for the total truck markets for 2014 (presented in a table to the right) have been kept unchanged compared to previous forecasts.

Deliveries rose by 15% in the fourth quarter

In the fourth quarter of 2013, the Volvo Group delivered a total of 61,613 trucks, which was 15% more than in the fourth quarter of 2012 and 28% more than in the third quarter of 2013.

Mixed order intake - strong in North America and Asia, slower in Europe - as expected

The total net orders were up by 12% in the fourth quarter compared with the year-earlier period. Net orders of 52,683 trucks and deliveries of 61,613 trucks resulted in a book-to-bill ratio of 86% for the Group's wholly-owned operations. Orders posted large regional differences in the quarter, where orders in Europe reached 14,322, a decline of 23% compared to the previous year. Earlier in the year many transport companies renewed their truck fleets with Euro 5 trucks, and during the fourth quarter they held back their orders of Euro 6 trucks for delivery in the beginning of 2014. Many of Renault Trucks' customers chose to wait ordering new trucks until they have had the opportunity to test drive and evaluate the new generation that was launched in the autumn.

In North America, order intake during the fourth quarter increased by 67% compared with the fourth quarter last year with a particularly strong development for the Volvo brand.

In South America, orders increased slightly. Compared with the fourth quarter of 2012 orders in Asia increased by 49% as a result of higher demand in Japan and orders for the new UD Quester heavy-duty truck range for growth markets.

Operating margin of 5.7%

During the fourth quarter of 2013, the truck operation's net sales amounted to SEK 51,961 M, which was 11% higher than in the fourth quarter of 2012. Adjusted for changes in exchange rates net sales increased by 16% compared to the fourth quarter last year.

The truck operations posted an operating income of SEK 2,965 M in the fourth-quarter, excluding charges of SEK 549 M related to the Group-wide efficiency program. In the fourth quarter of 2012, operating income amounted to SEK 1,882 M excluding restructuring charges of SEK 880 M. The operating margin, excluding restructuring charges was 5.7%, compared with 4.0% in the year-earlier period. The improvement was mainly due to higher delivery volumes, positive price realization and better capacity utilization in the industrial system, which was partly offset by costs associated with the change-over to new truck models in production, negative currency effects and higher costs for research and development compared with the fourth quarter of 2012.

Cash spend in research and development was reduced by SEK 228 M compared to last year but this was offset by a move from a net capitalization of development costs last year to a net amortization this year with a total year-over-year change of SEK 827 M. In all, costs for research and development increased by SEK 599 M compared with the fourth quarter 2012.

Compared with the fourth quarter of 2012, operating income was negatively impacted by changes in currency exchange rates in an amount of SEK 791 M.