Significant events 2012
The divestment of Volvo Aero, increased ownership in Deutz and the launch of the new Volvo FH truck series were some of the important events in 2012.
Annual General Meeting of AB Volvo
The Annual General Meeting of AB Volvo held on April 4, 2012 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, Ravi Venkatesan, Lars Westerberg and Ying Yeh were reelected as members of the AB Volvo Board. In addition, Carl-Henric Svanberg was elected member of the Board and Board Chairman, replacing Louis Schweitzer who had declined reelection.
Carl-Olof By, representing AB Industrivärden, Jean-Baptiste Duzan, representing Renault s.a.s, Lars Förberg, representing Violet Partners LP, Håkan Sandberg, representing Svenska Handelsbanken, SHB Pension Fund, SHB Employee Fund, SHB Pensionskassa and Oktogonen and the Chairman of the Board were elected members of the Election Committee.
AB Volvo signs memorandum of understanding with Deutz
On April 5 it was announced that AB Volvo had signed a non-binding memorandum of understanding with Deutz AG with the intention to explore the potential to extend the long-term cooperation with a joint development of the next generation of medium-duty engines for off-road applications.
The memorandum of understanding also aims at analyzing the conditions for establishing a Deutz majority-owned joint-venture company in China for the production of medium-duty engines for off-road applications. The production company is intended to provide support for the Volvo Group’s anticipated growth in off-road applications in Asia. Any implementation requires both companies to agree on the final terms and conditions in a binding contract.
Unfavorable court ruling in the US pertaining to Volvo Penta engines
Volvo Powertrain Corporation and the US Environmental Protection Agency are in a dispute pertaining to emission compliance of 8,354 model year 2005 Volvo Penta engines under a 1999 Consent Decree entered between the parties. On April 13 the US District Court for the District of Columbia issued an order directing the Volvo Group to pay a total of USD 72 M in penalties and interest. The decision has been appealed.
AB Volvo acquires shares in Deutz AG
On June 13 AB Volvo announced that it had signed an agreement under which the company was offered the opportunity to increase its shareholding in Deutz AG from 6.7 percent to just over 25 percent by acquiring a total of 22,117,693 shares from Same Deutz-Fahr Group at a price of EUR 5.88 per share, EUR 130 M in total. The transaction was completed in September and made AB Volvo the largest shareholder in Deutz AG, which since many years is a strategic partner within medium-duty engines.
AB Volvo divests Volvo Aero to British GKN for SEK 6.9 billion
On July 5 it was announced that AB Volvo divests the Group’s subsidiary Volvo Aero to the British engineering company GKN for an enterprise value of SEK 6.9 billion. The transaction was completed on October 1, 2012. The transaction generated a positive effect on the Group’s operating income of SEK 568 M of which SEK 254 M in the fourth quarter. The divestment reduced the Group’s financial net debt by SEK 5.5 billion.
New Volvo engine for Euro VI
On July 5 Volvo Trucks presented an engine tailored for the Euro VI emission regulation. Nitrogen oxide emissions will drop by 77 percent and particulate matter emissions will be halved from already low levels. First off the mark is Volvo’s D13 460 horsepower engine, which powers more than one-third of all Volvo trucks.
Renault Trucks Defense acquires French manufacturer Panhard
On July 26 it was announced that Renault Trucks Defense, which is included in the Volvo Group’s Governmental Sales business area, acquires the French company Panhard, which specializes in manufacturing light transport vehicles adapted for defense operations. In 2011 Panhard reported sales of EUR 81 M and operating profit amounted to EUR 9.4 M. The transaction was finalized in October 2012.
New Volvo FH launched
On September 5 the Volvo Group introduced its new Volvo FH series. The new Volvo FH is pushing the envelope for what a premium truck can offer. The Volvo FH is a truck built with the driver in mind and with the focus on improving the haulage firm’s profitability.
Volvo Group invests in Russia
On September 13 the Volvo Group announced that it will invest SEK 783 M in a new facility for the production of cabs at the plant in Kaluga, Russia. The facility, which is expected to become operational in 2014 will manufacture cabs for the Volvo and Renault Trucks brands with a total annual capacity of 15,000 cabs.
Volvo Group announced new truck strategy to achieve profitability improvement
The new strategy, which is an important step for the Group towards achieving the objective to improve the operating margin by 3 percentage points, was presented in detail at the Capital Market Day on September 25.
Volvo Buses to consolidate the manufacture of complete buses in Europe
On October 3 Volvo Buses announced plans to concentrate its European production of complete buses to the main plant in Wroclaw, Poland. Production at the plant in Säffle, Sweden, will be terminated at the end of June 2013.
New organization for the truck dealer networks in Europe, the Middle East and Africa
On October 10 the Volvo Group announced that it as of January 1, 2013 introduces a new organization for its truck dealer networks in Europe, the Middle East and Africa (EMEA). The reorganization aims to capitalize more effectively on opportunities for the Group’s brands and products in line with the new truck strategy.
Full lineup of Volvo Group trucks in the US earns 2014 greenhouse gas certification
On December 12 the Volvo Group announced that the US Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) had certified all Volvo Group truck models in the US, both Mack and Volvo branded, in accordance with 2014 fuel efficiency and greenhouse gas regulations.
Renault s.a.s. divests entire holding in AB Volvo
On December 13 AB Volvo received a request for the conversion of 110,048,945 Series A shares to Series B shares. Furthermore, AB Volvo’s largest shareholder, Renault s.a.s., announced that the company had divested all of its shares in AB Volvo through the sales of 138,604,945 Series A shares on the stock market. In connection with Renault’s divestment, Industrivärden increased its holding and at year-end was the largest owner with 6.5 percent of the outstanding number of shares (19.5 percent of the votes). Norges Bank Investment Management also increased its holding and at year-end was the second largest owner based on capital with 4.9 percent of the outstanding number of shares (5.1 percent of the votes).
Consolidation of the Volvo Group industrial operation in Japan
On January 11, 2013 the Volvo Group announced that it had decided to consolidate its industrial operation in Japan in order to improve the overall efficiency. In May 2013 the Ota remanufacturing plant will be closed and the operation moved to Ageo, the main plant in Japan. The project also includes cleaning of the land, demolishing of old and outdated buildings as well as moving or phasing out equipment for old products. In total, costs corresponding to SEK 280 M related to these activities were recorded in the fourth quarter of 2012, affecting the truck segment.
Events after balance sheet date
Strategic alliance with Chinese company Dongfeng Motor Group
On January 26, 2013 AB Volvo announced that it had signed an agreement with the Chinese vehicle manufacturer Dongfeng Motor Group Company Limited (DFG) to acquire 45 percent of a new subsidiary of DFG, Dongfeng Commercial Vehicles (DFCV), which will include the major part of DFG’s medium- and heavy-duty commercial vehicles business.
At completion of the transaction, the Volvo Group will become the world’s largest manufacturer of heavy-duty trucks. Completion of the transaction is subject to certain conditions, including the approval of relevant anti-trust agencies and Chinese authorities. The purchase consideration amounts to RMB 5.6 billion. The ambition is to complete the transaction as soon as possible and completion is expected to take place within approximately 12 months from signing.
Detailed information about the events is available at http://www.volvogroup.com/.
This information is extracted from the Volvo Group Annual Report 2012.