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Volvo – nine months ended September 30, 2006

The Volvo Group delivered new record earnings in the third quarter. Sales rose 9% compared with the corresponding quarter in the preceding year.

• Net sales increased by 9% to SEK 57,426 M (52,532) in the third quarter

• Income for the period rose 34% to SEK 3,939 M (2,935) in the third quarter

• Basic earnings per share rose to SEK 9.70 (7.24) in the third quarter

• Operating income excluding adjustment of goodwill rose 24% to SEK 4,972 M (4,004) in the third quarter and the operating margin rose to 8.7% (7.6)

• Increased profitability within Mack Trucks resulted in a reversal of a valuation reserve for deferred tax receivables and an adjustment of goodwill. In total, this had a positive impact of SEK 336 M on income for the period

• Operating cash flow, excluding Financial Services, in the third quarter was negative in an amount of SEK 0.4 billion (neg. SEK 0.7 billion)

• Strengthened position in Asia through increased holdings in Nissan Diesel and an agreement to acquire 70% of Lingong, a Chinese manufacturer of wheel loaders

 

             Third quarter

           First nine months

 

2006

2005

2006

2005

 

 

 

 

 

Net sales, SEK M

57,426

52,532

183,070

165,904

Operating income, SEK M 1)

4,972

4,004

16,941

13,891

Goodwill adjustment

(1,712)

                    -

(1,712)

                    -

Operating income, SEK M

3,260

4,004

15,229

13,891

Income after financial items, SEK M

3,144

4,015

15,073

13,872

Income for the period, SEK M

3,939

2,935

12,617

10,113

Basic earnings per share, SEK

9.70

7.24

31.07

24.84

Return on shareholders’ equity during most recent 12 month period, %

19.3

19.0

1) Excluding adjustment of goodwill in the subsidiary Mack Trucks in the third quarter of 2006.

 

As of January 1, 2005 AB Volvo complies with International Financial Reporting Standards (IFRS), previously known as IAS, as adopted by the European Union. In the comments on earnings on pages 1-20 however, Volvo Financial Services is reported in accordance with the equity method. Financial information with Volvo Financial Services reported in accordance with the purchase method as it is stipulated by IFRS begins on page 21.

For further information, contact:

Investor Relations
Christer Johansson, +46 31 66 13 34
Joakim Wahlström, +46 31 66 11 91
John Hartwell, +1 212 418 7432
Noah Weiss, +1 212 418 7431

For the full report, see attachments