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Volvo Group – six months ended June 30, 2010

During the second quarter, the Volvo Group’s sales continued to increase as a result of the gradual recovery in demand in most of the Group’s markets. At the same time, profitability continued to improve thanks to the sales increase, strict control over our costs and a good productivity development in our industrial system. Adjusted for exchange-rate fluctuations, the Group’s sales rose 31% compared with the second quarter of 2009. Operating income reached SEK 4.8 billion in the second quarter with an operating margin of 6.9%. Operating cash flow in the Industrial Operations was strong and amounted to SEK 8.5 billion.

• In the second quarter net sales increased by 27% to SEK 68.8 billion (54.0). Adjusted for currency movements, sales increased by 31%
• The second quarter operating income amounted to SEK 4,770 M including a write-down of assets in Volvo Aero Services amounting to SEK 223 M (Loss SEK 6,883 M). Operating margin in the second quarter was 6.9% (Negative 12.8%)
• In the second quarter basic and diluted earnings per share amounted to SEK 1.55 (Negative SEK 2.75)
• In the second quarter, operating cash flow in the Industrial Operations was positive in an amount of SEK 8.5 billion (Negative SEK 2.9 billion)
• During the second quarter, net debt in the Industrial Operations was reduced by SEK 5.1 billion to SEK 39.9 billion, corresponding to 63.4% of equity (53.3% excluding provisions for post-employment benefits)
• Decision to start production of the Group’s new medium duty engine range in India

“In the near term, we will focus on ensuring that planned production increases in most of our manufacturing facilities run as efficiently as possible, with minimum capital being tied up. The pace in the recovery in demand has been rather moderate, which is positive as it gives us a good opportunity to continue with the activities that contribute to further increasing productivity and efficiency. In this area, employees in all parts of our operations have made significant contributions.” Leif Johansson, President and CEO.

Find the full report under Interim reports.

July 22, 2010

Contacts Investor Relations:
Christer Johansson, +46 31 66 13 34
Patrik Stenberg, +46 31 66 13 36
Anders Christensson, +46 31 66 11 91
John Hartwell, +1 212 418 7432