Volvo Group's Industrial Operations

Higer sales

In the fourth quarter, net sales for the Volvo Group's Industrial Operations increased by 9% to SEK 74,898 M (68,934). Adjusted for both changes in exchange rates and acquired and divested units net sales in the Industrial Operations increased by 13%. Sales increased in all markets except Asia and Other markets.

Earnings impacted by write-down of Volvo Rents and restructuring charges
In the fourth quarter of 2013, operating income for the Volvo Group's Industrial Operations amounted to SEK 600 M (809), including a write-down of Volvo Rents of SEK 1,500 M and charges of SEK 581 M related to the Group-wide Efficiency Program. Excluding both the write-down of Volvo Rents and restructuring charges, the underlying operating income amounted to SEK 2,681 M (1,799).

The operating margin, including the write-down of Volvo Rents and the restructuring charges, was 0.8% (1.2). The underlying operating margin amounted to 3.6% (2.6).

The higher underlying operating income is primarily an effect of higher sales of new trucks, positive price realization and improved capacity utilization in the industrial system, partly off-set by a negative impact from currency exchange rate movements and higher costs for research and development.

Operating income was negatively impacted by a net amortization of investments in research and development in an amount of SEK 38 M, compared to a net capitalization of SEK 669 M in the fourth quarter last year.

Compared with the fourth quarter of 2012, changes in currency exchange rates had a negative impact on operating income amounting to SEK 1,007 M.

In the fourth quarter of 2012 the divestment of Volvo Aero had a positive impact of SEK 254 M.

Strong seasonal cash flow in the Industrial Operations

In the fourth quarter of 2013, operating cash flow from the Industrial Operations was positive in an amount of SEK 10.3 billion (4.7). The positive cash flow is primarily an effect of a reduction in working capital in an amount of SEK 8.8 billion which in turn primarily comes from higher trade payables and lower inventories.