Volvo FinanCial and Operating Statistics
Note to the reader
A few major changes have been made in the current edition of V o Ivo Financial and Operating Statistics.
Effective in 1992, financialreporting reflects the legal structure of the Volvo Group, by company group rather than by operating sectot, as was the case previously (see comments on page 18).
The restructuring of the Volvo Group was fully implemented in 1992 with the objective of combining within Volvo Car Corporation and Volvo Truck Corpora- tion all operations invalving cars, trucks and buses. Operations within marine and industrial engines have been assigned to AB Volvo Penta. Following this reorga- nization, the legal structure of the Group earresponds to the previous operating sector in all material respects.
Operating statistics now include Volvo registrations of new cars, trucks and buses in selected markets. The statistics pertaining to trucks apply solely to heavy trucks, which account for 90 percent of all Volvo trucks sold. In this year's edi- tion of Volvo Financial and Operating Statistics, the administration and address- es seetians have been omitted. For this information, please consult the 1992 Volvo Annual Report.
We hope that you will find this year's issue to be helpful in forming your view of Volvo's total operations and welcome your comments and suggestions for furthe r improvements of this publication.
First quarter figures for 1993 and major events up to the end of J une 1993 are included.
June 30, 1993
In the financialstatements and accom- panying tables in the notes, parentheses are used to indicate negative figures. In the narrative text, parentheses endase figures related to 1991 operations.
All amounts are in millions of Swedish kronor (SEK M) uniess otherwise indi- cated.
Figures in Swedish kronor (SEK) may be translated at the approximate 1992 year-end exchange rates as follows:
GBP 1.00 == SEK 10.23 USD 1.00 == SEK 5.81 DEM 1.00= SEK 3.72 FRF 1.00= SEK 1.1
o
BEF 1.00= SEK 0.18 CHF 1.00 = SEK 4.14 NLG 1.00 = SEK 3.31
During the years 1982-1992 the annual rates of inflation in Sweden, based upon the Consumer Price Index published by the National Central Bureau of Statis- tics, were as follows:
1982 19 percent 1988 6 percent 1983 9 percent 1989 7 percent 1984 8 percent 1990 11 percent 1985 6 percent 1991 8 percent 1986 3 percent 1992 2 percent 1987 5 percent
Contents
Page
2
4 7 8
9
Volvo in brief
History and business Recent developments Company groups, a summary Production facilities
Caphal expenditures and research and development costs Sales organization
Suppliers Personnel
Em•ironmental policy
- - - - - - -- --·
10 11 12
13
14 15
16
17 1819
Financial statistics
Consolidated
statements of income Balance shects at year-end
statements of changes in financial position Quarterly sales and in come
Approximate net income
in accordance with U.S. GAAP Key financial ratios
Exports from Sweden C.apitalization By company group
Sales
Operating income Assets
Capital expenditures
Research and development co5.ts Return on capital
By market area Sales
In come Assets
Page
Number of employees
20 Salaries and wage8
AB Volvo share capita! and share data
21 Share capital and dividend 22 Usting of Volvo shares
Comertible debenture loaos Number of shares traded Volvo share prices 23 Per-share data
Distribution of shares The targest shareholuers
- - - - · - - · - -
Operating statistics
24 Volvo vehicles sold Total ear registrations
25 Volvo ear registrations and market shares 26 Total heavy truck regi~trations
27 Volvo heavy truck regi8trations and market shares 28 Total bus reghtrations
29 Volvo bus regi5.trations and market shares 30 World automotive production
31 Volvo automotive production by plant and country
Renault
32 Condensed income statements Condensed balance shects Capital expenditures and
research and dcvelopment cost.'.i Operating income b)' di\ision Emplo)'ees
33 Automotive production (assembly) by country Renault ear and light commercial vehicle
..
Volvo in brief
History and business
Volvo, in terms of sales the largest in dus- trial group in the Nordie region (Sweden, Norway, Denmark, Finland and Iceland), be gan operations as a passenger ear manufacturer in 1927.
Volvo was incorporated in 1915 as a subsidiary of AB SKF, the Swedish ball hearing manufacturer. It began assem- bling cars in 1926 and trucks in 1928, and became an independent company in 1935.
Following three years of development work, the first series-produced Volvo ro lied out of the Hisingen plant in Göte- borg in April1927. A year later the first cars were exported to Finland.
The original productian models were designed to withstand the rigaurs of Sweden's rough roads and cold tempera- tures. This emphasis on durability has been a feature of Volvo products ever since.
Following the acquisition in 1931 of Sköfde Gjuteri och Mekaniska Verkstad AB, which manufactored engines for the Volvo vehicles, Volvo developed its business from an assembly to a manufac- toring operation. This was the first of a number of acquisitions of manufactoring campanies that formed the foundation for the development of the Volvo Group. In 1941 AB Volvo acquired a majority holding in Svenska Flygmotor AB (now Volvo Flygmotor AB).
Köpings Mekaniska Verkstads AB was acquired in 1942, AB Bolinder-Munktell (later Volvo BM AB, now part of VME Group NV) in 1950, and Olofström AB (now part of Volvo Car Corporation) in 1969.
2
In the 1960s Volvo's Swedish ear assembly operations and Corporate Headquarters were transferred to a new camplex at Torslanda, Göteborg, Sweden, where Volvo still has its head- quarters and one of its targest plants.
Since the 1980s, Volvo has held sub- stantial interests in the food industry.
The strategy has been to build an oper- ation with a sustained eamings capabil- ity. The build-up was carried out within the framework of Provendor, which was merged with Proeardia in 1990. In this manner, improved possibilities for restruetuTing and expansion were created, resulting as well in a partly new, larger and more efficient organization in the food industry. Since June 1990, Volvo and the Swedish Govemment are the principal owners of the Procordia Group.
In 1991, Volvo entered into a signifi- cant alliance with Regie Nationale des Usines Renault SA, the French auto- motive manufacturer. The alliance is intended to strengthen the cars, trucks and buses operating areas through a comprehensive cooperation agreement and a structure of cross-ownership in the respective ear, truck and bus operations of Volvo and Renault. The cooperation, which invalves research and develop- ment programs, procurement and coordi- nation of investment plans, is expected to result in benefits of large-scale oper- ations and greater competitiveness for the two groups.
As earlyas 1973, Volvo Car Corpora- tion began a close cooperation with NedCar (then DAF Car BV), The Netherlands, for the development and
productian of Volvo cars in the upper medium-elass segment. In 1991 the two owners -the Dutch Government and Volvo Car Corporation- signed a cooperation agreement with Mitsubishi Motors Corporation, according to wbich the three parties hold equal shares of NedCar. The cooperation between Volvo and Mitsubishi invalves the devel- opment and productian of two distinct new ear models.
Recent developments
Agreement between the Swedish Government and Volvo regarding Procordia
On June 3, 1993, Volvo and the Swedish Government announced their intention to effeet a demerger of Procordia's operations into two parts. Through a series of transactions, the Proeardia United Brands, Proeardia Beverages, Proeardia Food and Proeardia Invest divisions are expected to become wholly- owned subsidiaries of AB Volvo. As a result, Proeardia beeomes an integrated pharmaceutical and biotechnology group.
Volvo is expected to retain a 25-percent ownership interest in Proeardia following the demerger and related traosactions.
Volvo in brief
Today, Volvo isengagedin a broad range of activities in the transport vehicle field. The activities comprise cars, trucks and buses, marine and indus- trial engines and aerospace.
In addition to its productian in Sweden, Volvo has well-established ear, truck and bus manufacturing operations within the European Community, a com- plete truck program in the United States, and truck and bus productian in Brazil.
The Volvo Group has a worldwide marketing and service organization.
More than 85 percent of its sales are in markets outside Sweden. Although the largest marketsare in Western Europe and North America, Volvo's products are marketed in all parts of the world and in most countries.
Volvo has a strong trademark. It stands for quality, safety, and durability, for enstomer care and cancern for the environment.
Volvo's alliance with Renaultwill give benefits of scale and im proved competi- tiveness.
Volvo's industrial operations are sup- plemented by large shareholdings in associated campanies within and outside Sweden.
At year-end 1992, Volvo had 60,100 employees, of whom 39,100 were in Sweden and 21,000 in other countries.
Volvo has approximately 163,800 shareholders. Volvoshares are currently Iisted in Stockholm and in 13 other mar- kets in eight countries.
Automotive industry
C ars Trucks and buses
Volvo's automotive industry (cars, trucks and buses) is characterized by the cross-ownership structure that forms the foundation for the cooperation with Renault. Thus, Volvo owns 20 percent of Regie Nationale des Usines Renault SA (the Renault Group) and 45 percent of Renault Vehicules Industriels SA. Cor- respondingly, Renault holds minority interests in Volvo Car Corporation (25 percent) and Volvo Truck Corporation (45 percent).
Volvo's other industry operations (marine and industrialengines and aero- space) are wholly owned businesses through the subsidiaries AB Volvo Penta and Volvo Flygmotor AB.
Other industry
Marineami Jndustrial engines
Listed associated rompanles
lnYc~nt AB Cardo , ·~ ,.,.
, . . . f'J
Aerospace
Non-listt:d llf$Or!laJ&I companit!!S
J'Jew1H~~r Est
a"'
AB•1~'51~1 . . .
Volvo in brie f
Company groups, a summary
Volvo Car Group
The Volvo Car Group comprises all activi- ties concerning Volvo passenger cars, such as development and design, manu- facturing of components, assembly, mar- keting and spare parts operations.
Volvo cars are marketed in more than 100 countries. The United States, Great Britain and Sweden are the targest indi- vidual markets for Volvo cars. Volvo's share of total sales for cars in its 17 primary markets is estimated at slightly more than one percent in 1992.
Volvo cars are assembled in Sweden, Belgium, The Netherlands, Canada and Southeast Asia.
Range of products. Volvo's distinctive and well-established design and perform- ance properties were augmented with new features and technical innovations in conjunction with the introduction of the Volvo 850 GLT in June 1991.
The Volvo ear range currently consists of three families of cars: the Volvo 940/960 series, the Volvo 850 series and the Volvo 400 series produced at NedCar in The Netherlands.
The Volvo 960 is a prestige ear equipped with a 3-liter engine and an electronically controlied automatic gearbox. The engine, made entirely of aluminium, features twin overhead camshafts and 24 valves.
The Volvo 940 has the same body design as the Volvo 960 and is equipped with a four-cylinder engine. The Volvo 940 is available in several models: GL, GLE, GLT, Turbo, sedan and estate versions.
4
Output Y ear of Production Passenger cars
Model
- - - -
--~ Cy1~1ac~ kW/hp introduction in 1992 Volvo 960 4-d sedan, Estate 4/6 1,986-2,922 122-150/165-204 1990 15,600 Volvo 940 4-d sedan, Estale 4 1 ,986-2,383 60-103/82-170 1990 81,900- - - - - ---
- - - - ' - -- - - - - - - - --- - - -
Volvo 850 GL T 4-d sedan, Estale 5 2,435 125/170 1991, 1993
57,000 -
- - - - - - - - - - - -
Vowo 850 GLE 4-d sedan, Estale 5 2,435 1031140 1992, 1993
Vowo 440 3-d/5-d hatchback 4 1 ,596·1 ,998 60-88/82-120 1988 53,000 33,600
- - - -
Volvo 460 4-d sedan 4 1 ,596-1,998 60-88/82-120 1989
Volvo 480 2coupe 4 1,721-1,998 75-88/102-120 1986 7,400 The Volvo 850 was introduced in 1991.
The front-wheel-drive Volvo 850 con- tains a number of technical innovations
• the 2.5liter in-line, five-cylinder engine with twin overhead camshafts and 20 valves or with twin overhead camshafts and 10 valves. The engine is transverse- mounted, which is made possible by a manual, extremely campact gearbox developed by Volvo.
• the highly compact, five-speed auto- matic gearbox which features a earobi- nation of three shafts and twin pinions.
The four-speed automatic gearbox is based on the same principle as the manual gearbox, with one extra shaft.
• the Delta-link split semi-independent rear-wheel suspension gives the Volvo 850 smooth road-handling characteristics and a high level of safety.
• the integrated SIPS, Side-Impact Proteetian System, is a new system for absorbing energy in side collisions.
• the automatic height-adjusting belt reel.
The Volvo 850 GLE is a family orient- ed version of the Volvo 850 with the same technology as the Volvo 850 GLT.
The Volvo 850 Estate, introduced in 1993, has a newly developed rear sea t with increased safety and comfort.
The Volvo 440 is a medium-sized hatch-back family ear available in four versions: DL, GL, GLT and Turbo.
The Volvo 460, introduced in 1989, is a sedan version of the Volvo 440.
The Volvo 480 is a sports coupe with front-wheel drive and a 2.0-liter engine developing 110 hp in the standard or 120 h p in the turbo version.
Productian of the Volvo 240 was dis- continued in May 1993. When the Volvo 240 was introduced in 1974 it was in many respects a pioneer, not least in the area of safety. In 1976 the Volvo 240 was designated as the standard ear for con- tinuing safety studies by the National Highway Transportatian Safety Admin- istration in the U.S.
Road safety - for nearly 50 years Some exaroples of Volvo ear safety devel- opment.
1944 Laminated windscreen Safety cage.
1957 Anchorages for 2-point belts in front.
1965 Power brakes and pressure limiting valve.
1966 Triaugle-split dual-circuit brake system.
Impact-absorbing body seetians front and rear.
1967 Belts in rear seat.
1968 Read restraints front.
1973 Side collision protection.
Collapsible steering wheel.
1974 Energy absorbing humpers Multi-stage impact absorbing steering column.
1982 Anti-subrnatining protection 1984 ABS nonlocking brakes.
1985 Electronic traction control (ETC)
1986 Rear center 3-point seat belt.
1987 Seat-belt pretensioner Airbag
1990 Integrated child seat
1991 SIPS, Side-Impact Proteetian System
Automatic height-adjusting belt re el
Volvo in brief
Volvo Truck Group
Through Volvo Truck Corporation Volvo develops, designs, manufactures, assembles and markets trucks, bus chassis and complete buses. Volvo is the world's secood-largest manufacturer of heavy trucks and large buses and coaches.
Volvo's estimatedshare of the world market for heavy trucks is lO percent (excluding lndia, the former Comecon countries and China). Volvo's share of the total bus market in Western Europe was just under 12 percent in 1992.
Productian of Volvo trucks and buses takes place worldwide, in more than ten plants, the !arges t of which are located in Sweden, Belgium, Great Britain, the United States (trucks only), Brazil, Peru and Australia.
The North American company, Volvo GM Heavy Truck Corporation is 87- percent owned by Volvo Truck Corpo- ration with General Motors Corporation accounting for the other 13 percent.
Range ofproducts. Volvo trucks and buses are characterized by high quality, low operating costs, good ergonornies and safety, as weil as low exhaust emission and noise levels.
Trucks are sold under the Volvo and WHITEGMC trademarks and buses under the Volvo trademark Heavy trucks (gross vehicle weight exceeding 16 tons) account for nearly 90 percent of all Volvo trucks sold. As a complement to the heavy commercial vehicles, Volvo also produces and markets a range of medium-duty trucks and buses.
Trucks. The Volvo FL6 and FE models are versatile trucks designed for appli- cations such as short-haul distribution transport, regional transport, and public service operations.
The Volvo FS7, FL7 and FLlO models are heavy-duty trucks with a low cab.
Trucks and buses Gross Vehlcle Y ear of Productian
Model
Trucks
Volvo FL6/FE forward-control Volvo FS7/FL7/FL10/FS10 forward-contro l Volvo F10/F12/F16 forward-contra!
Volvo NL 10/NL 12 normal-eontroi WHITEGMC forward/normal-eontroi
Buses
Volvo 86 rear-engine
Volvo 87 front -engine
Volvo 858181 OM m id-engine
Volvo 8108 rear -engine
Weight, tons
7.5-23.6 19.7-42.0 19.7-41.0 19.7-35.0
11.5 16.0-18.0 18.0-28.0 18.0
Output hp
170-250 230-320 318-500 275-405 215-450
introduction in 1992
1985 6,460 1985 6,160 1977 13,350 1989 3,950 16,560
180 1991
211 242-340 245-340
1987 1980 1992
100 4,340 320
The Volvo FlO, F12 and F16 models are suitable for demanding long-distance transport.
The WHITEGMC Aero is the main product in the United States. It is a normal-eontroi aerodynamically s ty led truck which is available in several dif- ferent versions. Other Volvo truck models in the United States are
WHITEGMC Expeditor, WHITEGMC Autocar and WHITEGMC High Cab- over.
Buses. The Volvo B6 is amidi-chassis suitable for city and tourist traffic.
The B7 bus chassis has high ground clearance and is suitable for traffic oper- ations on poor roads.
The BlOM chassis can be fitted with bus bodies 9-20 meters in length. The chassis is suitable for city, regular and tourist traffic, both as a single- and double-deeker version. The Volvo B lOB bus chassis is a rear-engine version based on the BlOM design.
The Volvo B12 is a special bus design for exclusive tourist coaches or buses operating in regular traffic.
The Volvo Olympian is a double- deeker chassis designed for use in urban areas.
Milestooes for trucks and buses 1928 The first Volvo truck, also
used as a bus.
1929 The first Volvo truck with a 6-cylinder in-line engine 1931 First heavy-duty Volvo truck 1932 First Volvo bus chassis, LV70B,
based on a truck chassis 1934 First original Volvo bus chassis,
1945-46 First Volvo Diesel buses and trucks
1950 First mid-engine Volvo bus 1954-55 First Volvo Turbo trucks
and buses
1956 Volvo L420 Snabbe introduced, the first series-produced truck with a steel cab made by Volvo 1960 The first impact-tested Volvo
safety steel cab
1962 Volvo trucks with tilt cab 1965
1977
1978 1979
1985
1988
A new generation of trucks with unique fully-synchronized gearboxes
FlO and F12 introduced, with hitherto unavailable ergonornie properties
Volvo Intercooler truck The first Volvo Globetrotter, a singularly prestigious and com- fortable truck with outstanding safety features, including safety steering wheel and an electronic safety belt
Introduction of a new Iine of trucks with low cab, the FL truckrange
Productian of trucks under the WHITEGMC nameplate begins at Volvo GM Heavy Truck Corporation in the United States
1991 Volvo Geartronic, a mechanical gearbox with automatic gear- shifting
Volvo B12 and B6, the first two buses in a new generation of rear-engine chassis, is introduced.
Volvo in brief
The Volvo Penta Group is responsible for development, design, manufactoring and marketing of diesel and gasoline engines, as weil as transmissions for marine and industrial applications.
Volvo Penta products are sold in more than 100markets worldwide.
Range of Products. The Volvo Penta products are used in leisure and com- mercial craft, in work vehicles and as power sources for generators and pumps.
Leisure marine. The leisurecraft engines are used in almost all types of leisure boats, from sailboats and family motor cruisers to high-perfonnance powerboats.
The range covers diesel and gas engines with outputs from 7.5 to 450 kW (10 to 612 hp). Volvo Penta also offers a complete transmission program, including the unique Duoprop drive, reverse gears and S-drive design concepts.
Commercial marine. Commercial craft invalves all types of vessels, from light fast-planing boats to heavy-duty com- mercial vessels. An advanced range of 4-to 6-cylinder diesel engines is offered in this sector, for propulsion as weil as auxiliary power. Capacities range from 2.4 to 16liters and from 81 to 810 kW (110 to 1,200 bp).
Industrial. Volvo Penta diesel en gines are used in all types of mobile applica- tions, such as in materials-handling vehi- cles and construction equipment, and as power sources for generators and pumps.
Engines range between 80 to 479 kW.
6
The Volvo Flygmotor Group operations comprise the development, productian andsale of jet engines and engine com- ponents for military and commercial air- eratt and forspace launch vehicles. Oper- ations also include product support for military and commercial aircraft engines and activities within the product areas of gas turbines, heaters, dieselengines and transmission systems.
Military aircraft engines. Volvo Flyg- motor AB has manufactured aircraft en- gines for 60 years and is now responsible for product support and maintenance for the RM8 engines in Swedish Viggen military aircraft. The company is also responsible for the development and productian of the RM12 engine for the new Swedish multirale military aircraft, the J AS 39 Gripen.
Commercial aircraft engines. Volvo Flygmotor is closely cooperating with the world's leading manufacturers of aircraft engines, such as the General Electric range of large engines for the Airbus 300/310 and the Boeing 747 and 767, Pratt & Whitney's largest program in the medium-size engine segment for the Boeing 757 and other aircraft, and Garrett engines for executive and small commercial aircraft.
Commercial overhauls. The commercial overhauls division in Trollhättan and the two subsidiaries Scandinavian Aero Engine Services and Sean Motive are tagetber authorized to service more tban ten different types of aircraft engines.
Volvo Flygmotor also participates in the Ariane space program and is respon- sible for developing and manufacturing combustion cbambers for the Ariane launcber as well as fuel turbines and exhaust nozzles for the Vulcain engine.
Volvo Flygmotor also has a number of commercial non-aviatian products, including gas turbines, heaters, diesel engine components and transmission systems and, in a joint venture with Atlas Copco AB, specialized hydraulic machinery.
lovestments in associated companies.
Besides the cross-ownersbip with Renault, Volvo has substantial share- boldings in campanies in the pharma- ceuticals and food seetars (Procordia), in the construction equipment field (VME), and in other associated campanies (most of them linked to Volvo's industrial operations, as weH as same investment companies) in whicb Volvo's holdings range from 20 to 50 percent.
Most of the principal associated com~
panies are listed on the Stockholm Stock Exchange. Volvo's investments in Iisted campanies as of mid-June 1992 included:
• a 43-percent interest in the voting power (39 percent of the equity) in Procordia, the paren t company of the Proeardia group with the main oper- ations in the pbarmaceutical and bio- technology industries and in brandname consumer products. (See also recent developments on page 2)
• a 37-percent interest in AB Catena, whose operations include automotive retailing tbrough a Volvo dealer network in the Nordie area and witbin the Euro- pean Community. Catena also bas inter- ests in campanies trading in pulp and in transport service companies.
• a 29-percent interest in the voting power (25 percent of the equity) in AB Custos, an investment company with substantial interests in publicly traded Swedish industrial companies, real estate campanies and banks.
Volvo in brief
• a 47-percent interest in lovestment AB Cardo, a mixed investment company with international industrial operations and alargestock portfolio, including five percent of the voting power (two percent of the equity) of AB Volvo.
Volvo's other major investments in associated campanies include:
• through Volvo Car Corporation, a 33- percent interest in NedCar, The Nether- lands. The remairring interest is held equally by Mitsubishi Motors Corpora- tion and the Dutch Government. NedCar develops and produces Volvo cars in the medium-dass segment.
• a 50-percent interest in the VME Group, one of the world's targest manu- facturers of earthrnaving and construc- tion equipment.
• a 26-percent interest in Park Ridge Corporation, the paren t company of The Hertz Corporation, the world's targest ear-rental company.
• a 30-percent interest in Synergas A/S, a Norwegian seeurities management com- pany, with a portfolio largely containing shares in Norwegian companies.
• a 40-percent interest in the voting rights (25 percent of the equity) in Pleiad Real Estate AB, a real-estate manage- ment company.
• a 43-percent interest in Protorp Förvaltnings AB, an investment company with substantial interests in publicly traded Swedish construction and building materials companies. Protorp also owns 4 percent of the voting rights (2 percent of the equity) in AB Volvo.
Productian facilities
The Group's principal facilities are located in Sweden, where Volvo has assembly plants for cars, trucks, buses and bus chassis, and factories producing vital components such as engines, gear- boxes, axles, brakes and bodies, as weil as marine, industrial and aircraft engines.
Volvo has established wholly-owned assembly plants in Belgium, Great Britain, the United States, Canada, Brazil and Australia, and partly owned plants in The Netherlands, Iran, Malaysia, Thailand and Peru.
Assembly work is also carried out in local facilities in Greece, Portugal, Morocco, Kenya, Mozambique, Venezuela, Indonesia and Australia.
Due to the sharp decline in ear sales productian of Volvo cars will be Concen- trated in Torslanda, Göteborg and in G hen t, Belgi.um. It was thus decided in 1992 to close Volvo Car Corporation's smaller assembly plants in Sweden;
Uddevalla as of April1993 and the Kalmar assembly plant as of mid-year 1994. Cars have been assembled in the Tarslanda plant in Göteborg since 1964.
Productian in Belgium started as early as 1965.
Volvo also has ear assembly plants in Canada, Malaysia, Indonesia and Thailand. NedCar's assembly plant is located in Born, The Netherlands.
Trucks have been assembled in Göteborg since the late 1920s. Today, assembly operations are concentrated to the Tuve plant in Göteborg. Truck cabs are manufactured in the Umeå plant.
In Europe, trucks are assembled in Belgium and Great Britain.
In the United States, Volvo GM Heavy Truck Corporation has two assembly plants in Virginia and Ohio, and one truck-cab factory in Ohio. Volvo also has truck assembly facilities in Brazil, Peru and Australia.
The first Volvo bus was built in 1928 and the first purpose-built bus chassis were produced in 1934. A separate bus chassis plant in Borås, Sweden started productian in 1978. Bus chassis are also manufactored in Great Britain and Brazil and assembled in Peru and Australia. Bus bodies are built in Sweden.
Volvo Penta marine and industrial engines are produced in Skövde, where this subsidiary has its origins, as weil as in Vara, Sweden and in Lexington, Tennessee.
Volvo Flygmotor's productian and overhaul facilities are located in Trollhättan, Arboga and Stockholm, Sweden.
Volvo in brief
Capital expenditures and research and development costs
During the most recent five-year period Volvo has invested approximately SEK 20 billion in property, plant and equip- ment. The new ear engine plant in Skövde, representing an investment of more than SEK 5 billion, is one example.
Other exaroples within the Volvo Car Group are the paint-finisbing plant In Torslanda, the transmission plant in Köping, and the new productian unit in the stamping plant at Olofström. In G hen t, a new body plant and a final- assembly unit were placed in service in connectionwith the start-up of prodoc- tian of the Volvo 850 GLT.
The greater part of the Volvo Truck Group's capita! expenditures invalves rationalization of productian and expendi- tures related to the development of new products. In 1991 a new cleaning facility was placed in service in the cab finisbing plant in Umeå. In 1992 major invest- ments, designed to achieve more efficient and safer productian processes, were made in the cab plant in Umeå and in the diesel engine productian in Skövde.
Investments were also made in order to concentrate productian in Göteborg with- in the Tuve area, as weil as to furtber improve the efficiency of material flow and of the assembly process.
Research and development costs have increased significantly during the 1980s and peaked in 1990 at SEK 7,061 M. In 1991 and 1992 research and development costs were SEK 6,414 M and SEK 6,178 M, respectively, and are expected to stabilize at this level as product programs for the mid-1990s are implemented.
8
Sales organization
Volvo has a worldwidesales network with sales campanies in Sweden, Denmark, Finland, Norway, Great Britain, Germany, Switzerland, Belgium, The Netherlands, France, Italy, Spain, the United States, Canada, Argentina, Brazil, Peru, Japan and Australia.
AB Catena, in which Volvo has a 37- percent interest, has a number of dealerships in the Nordie countries and within the EC.
Volvo cars are sold to retail enstomers through about 2,000 dealers. Mostly all of Volvo's dealers are independent, and same have more than one outlet. The number of service shops is approximately 2,700, and roughly one out of every three persons in the Volvoear Group's inter- national organization isengagedin some form of eostomer-support service. Ap- proximately 20 percent of the workshops are located in the Nordie region, 54 per- cent in Western Europe (excluding the Nordie region), 18 percent in North America and 8 percent in other m arkets.
Volvo has 1,200 independent outlets for truck sales in the world, approximately 270 of which are outlets for WHITEGMC and Volvo in North America. Most of the Volvo truck dealers outside North America also sell Volvo buses.
Suppliers
Volvo's decisions on whether to manu- facture or to purchase from suppliers any particular components are made eompeti- tively on commercial terms. Although Volvo manufactures certain major com- ponents, including engines, transmis- sions, ear bodies and truck cabs, com- ponents are to a large extent purchased from suppliers outside the Volvo Group.
Inereasingly, Volvo contracts with suppliers to manufacture an entire functional unit, such as completely finished seats, with the supplier assuming full responsibility for productian to Volvo's specifications.
The primary prerequisites for eoop- eration with suppliers are zero-defect quality level, competitive eost, and flex- ible and reliable delivery performance.
Also, in it,s selection of suppliers Volvo takes into account environmental con- siderations.
In 1992, approximately 24 percent of the value of the Group's total purchases for automotive equipment came from Sweden, 2 percent from other countries in the Nordie area, 47 percent from other European countries, 20 percent from North America and 7 percent from elsewhere.
The benefits of the alliance with Renault are increasingly apparent in the procurement area for cars as weil as for trucks. Since January 1993, the purchasing department within Volvo Car Corpora- tion has established a common purchasing organization with Renault. The aim is to increase efficiency to achieve east reduetions and at the same time increase
quality levels and to forther reduce lead times. The strategy will be to use a more common and limited supplier base than today. Purchasing from common suppliers will increase from 15 percent to 80 percent within the next three years.
Volvo in brie f
Persann el
At the end 1992, the Volvo Group had 60,115 employees worldwide, of w horn 39,130 were employed in Sweden. The Group employed 20,985 people outside Sweden, of w horn the greatest pro- portion were located in Belgium, the United States, Great Britain and Brazil.
Excluding units acquired and divested, the number of employees in the Volvo Group decreased by 3,800 during 1992.
Lower demand for the Group's prod- ucts and higher productivity have reduced personnel requirements substantially.
Hiring freezes were in effect in nearly all Volvo campanies during 1992. The very low rate of employee turnover, 4 percent, was not adequate to solve the problem of reducing the workforce through natural attrition. Early-retirement agree- ments for slightly more than 100 em- ployees reduced the need for dismissals only to a limited degree.
During 1992 approximately 1,000 persons ended their employment within Volvo in Sweden through dismissals due to redundancy. The comparable number in Group campanies outside Sweden was estimated at 700, mostly as a result of the shutdown of the bus factory in Great Britain and personnel reductions in Brazil and Peru.
Environmental policy
Long-term environmental policy guide- lirres for the Volvo Group are as follows:
• developing and marketing products with superior environmental properties which meet the highest efficiency require- ments;
• opting for manufacturing processes that have the least possible impact on the environment;
• participating actively in, and conduct- ing research and development in, the environmental field;
• selecting environmentally compatible and recyclable materials in connection with the development and manufacture of Volvo's products and w hen purchas- ing components from suppliers;
• applying a total view regarding the adverse impact of Volvo' s products on the environment; and
• s triving to attain a uniform, worldwide environmental standard for processes and products.
The president of each Volvo company is responsible for implementing measures in accordance with the policy guidelines.
In all major Volvo companies, environ- mental councils have been formed and action programs for the next three to five years have been adopted.
Volvo's environmental auditing pro- gram is a control instrument for the cam- panies in the Volvo Group and provides them with support in the ongoing task of achieving improvements in the environ- mental area. Eight major environmental
audits were conducted at Volvo plants around the world in 1992, from South America and Canada to Volvo's borne base in Sweden. Since Volvostarted the auditing programme, a total of 21 major environmental audits have been per- formed.
The finisbing plant at Torslanda, which startedoperations in 1991, en- abled Volvo to change over cOmpletely to the use of water-based paints for metallic colors in the first stage and also for certain solid colors during 1993, thereby reducing hydraearbon emissions during the application of paint. The plant also has equipment for treatment of solvent emissions from the conven- tional paints that are still in use.
In 1992, Volvo evaluated and refined the Environmental Priority Strategies (EPS) system. Developed initially in 1989, EPS was introduced by Volvo Car Corporation in 1991, in cooperation with the Swedish Environmental Research Institute. The system enables engineers and designers to evaluate the complete life-cycle impact of a product right from the design stage. As an effective too l affording an overall view of environmen- tal problems, this technique of making the environmental effects visible provides decision-makers with a factual basis on which to base environmentally correct decisions.
During 1992, the Volvo Car Corpora- tion presented the Volvo ECC. A hybrid vehicle, the Volvo ECC uses energy from two separate sources. The ear is driven by an electric motor and is equipped with a high-speed gas turbine-driven
generator, which supplies earrent to the on-board batteries. Zero emissions are achieved in urban traffic by running on batteries alone, while the gas turbine affords a earobination of extreme! y low emissions and fuel consumption. The materials in the ECC have been ehosen for their recyclability and low overall environmental impact.
Financial statistics, consolidated
statements ofincome
SEKM 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992
- - -
Sales 75,624 99,460 87,052 86,196 84,090 92,520 96,639 90,972 83,185 77,223 83,002
- - -- - - -- - -
- - - -Cost of operations (71,032} (93,551) (79,202) (78,159) (75,699) (83,845) (87,318) (83,620) (79,997) (75,602) (82,565) Operatng income before
depreciation and amortization 4,592 5,909 7,850 8,037 8,391 8,675 9,321 7,352 3,188 1,621 437
- - - - - - - - - - - - - - - -
Depreciation and amortization (1,297) (1,573) (1,402) (1,725} (2,062) (2,213} (2.293} (2,535) (2.621} (2,789) (2,686) Operatng income Qoss} 3,295 4,336 6,448 6,312 6,329 6,462 7,028 4,817 567 (1 ,168) (2,249)
Restructi.Xing costs (2,450} (1 ,450)
- - - -
lncorne from equity method investments 1,015 1,322 1,218 96
Interest incorne (expense) (564) (417) 249 421 345 677 952 734 46 (729} (791)
- - - --- --- ---- - - - - - ---
Foreign ?xchange gain (loss} (721} (226} (551) 759 445 561 (126) (60) 41 166 (81)
--- - - - -
Other financial income (expense) 195 86 138 110 218 1,311 213 148 147 2,041 (274)
lncome Dass) after financial income
(expense) 2,205 3,779 6,284 7,602 7,337 9,011 8,067 6,654 (327) 1,528 (4,749)
--- - - - - -
Extraordinary items 235 1,363 193 176 313 (725)
- - - - -
Minority interests in (income) loss (56) 40 310 1,437
lncome Dass) before allocations
andtaxas 2,440 3,779 7,647 7,602 7,530 9,011 8,243 6,911 (287) 1,113 (3,312)
--- ----
Allocation to untaxed reserves (1,348} (2,981) (4,384) {3,330)
Taxes
--
(508) (752) (1,624) (1 ,713) (3,074) (3,272) {3,200) (2,124) (733} (431) (8)-
- -
Minority interests in (l!lcome) loss (88) 158 (74) (13) (36) (74) (103)
Net incorne (loss) 496 204 1,565 2,546 4,420 5,665 4,940 4,787 (1,020) 682 (3,320)
lO
Changes in accounting principles Untaxed reseNes and allocations
As part of the program of adapting Volvo's tinancial reporting to international accounting practice, the Consolidated Balance Sheets and lncome statements as of 1 990 are pre- sentad exclusive of untaxed reseNes and allocations.
Comparable figures for 1986-89 have been adjusted. For practical reasons the tax Hability in untaxed reseNes of the Group's Swedish campanies has been calculated on a 30- percent tax rate in all years.
Associated campanies
Effective in the 1989 accounts, associated campanies are reported in accordance with the equity method. Accordingly, Volvo' s share of reported income in associated companies, before allocations and taxes, but not the dividends received from them, is included in the consolidated income statement In the consolidaled balance sheet. the reported value of shares and participations is affected by Volvo' s share of the atter-tax earnings of associated campanies (reduced by amortiza- tion of goodwill and dMdends received).
Minority interests in (income) /oss were reported before taxes in the years 1989 through 1992. Prior to this period and as from 1993 they are reported after t~es.
Type-specific too/s were charged against operating income up to and including 1992.
Effective in 1993, type-specific tools with an economic Iife exceeding one year will be capitalized (and depreciated over the estimated Iife of the tools, generally two to five years).
Financial statistics, consolidated
Balance sheets at year-end
SEKM 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Due to changes in accounting principles in
Assets 1990, comparable figures for 1986-1989 have
Liquid funds 7,250 11,625 11,900 14,394 17,777 22,497 15,632 18,470 18,779 21,760
been adjusted. See also page 10.
17,585
Receivables 10,528 10,706 13,265 11,244 12,346 12,724 13,945 15,837 15,718 17,065 19,519 lnventories 14,341 15,415 15,462 16,044 18,235 16,561 19,401 19,411 19,886 18,022 20,460 Current assets 32,119 37,746 40,627 41,682 48,358 51,782 48,978 53,718 53,189 53,866 61,739
- - -
lnvestments in bonds 1,664 3,956 3,455 2,854 928
Restricted deposits in Bank of Sweden 221 264 1,762 2,823 1,180 1,721 4,034 5,293 2,072 41 2 Other assets 13,935 15,496 15,240 18,288 22,644 22,895 29,983 35,677 43,982 51,913 55,266
Total assets 46,275 53,506 57,629 62,793 72,182 78,062 86,951 98,143 102,097 106,748 117,007
Uabilities and shareholders' equity
Current liabiliues 21,484 26,631 26,066 26,856 31,548 31,368 34,500 42,846 48,712 47,778 59,386 Long-term liabi~ties 10,904 9,706 9,005 9,285 15,709 17,077 18,727 17,244 17,794 20,120 23,981
Minority interests 732 757 229 116 132 340 484 414 300 4,986 3,919
Untaxed reserves 7,846 10,832 14,973 17,738
Shareholders' equity 5,309 5,580 7,356 8,798 24,793 29,277 33,240 37,639 35,291 33,864 29,721 Total liabilities and shareholders' equity 46,275 53,506 57,629 62,793 72,182 78,062 86,951 98,143 102,097 106,748 117,007
Assets pledged 5,500 5,915 3,516 3,033 2,959 1,943 1,997 2,427 2,417 2,641 4,114
Contingent liabilities 3,289 3,182 2,620 2,106 2,830 3,417 3,095 2,986 3,270 4,691 6,808
Financial statistics, consolidated
statements of changes in financial position
SEKM 1982 1983 1984 1985 1986 1987 1986 1989 1990 1991 1992 As a consequence of the changes in the
Year's operations Consolidated balance sheets and income
Net incorne (loss) 496 204 1,565 2,546 4,420 5,665 4,940 4,787 (1,020) 682 (3,320) statements in 1990 (see also page 1 O}, corresponding changes have been made in Depreciation and amortization 1,297 1,573 1,402 1,725 2,062 2,213 2,293 2,535 2,621 2,789 2,686 the statements of changes in financial position
Adjustments in untaxed reserves 1,348 2,981 4,384 3,330 for 1986-89.
Furthermore, from 1991 a new layout for
Write-down of fixad assets and shareholdings 674 725 315 the statements of changes in financial position
---
has been implemented.In come from equity method investments after taxes (337) (704) (899) 417
Dividends received from associated companies 675 700 Figures for prior years have been adjusted,
225 277 where relevant, to conform with the new
Minority interests after taxes 88 (158) 74 13 36 74 103 35 (26) (439) (1,286) layout.
Decrease (increase) in Receivables (1,982) (178) (2.559) 2,021 (1,102) (378) (1 ,221) (1,892) (966) (1,347) (1,316) 1. The increase In 1989 was SEK 2,340 M. This current operating assets lnventories (2,761) (1,074) (47) (582) (2,191) 1,674 (2,840) (10) (2,886) 1,864 (301) figure was adjusted for the nonrecurring effect
of the adjustment of stated Group values of lncrease in current operating liab~ities 2,274 2,208 420 352 3,984 968 1,351 58 2,639 608 3,659 associated campanies in connection with the lncr.ease (dlecrease) in accruals for pensions 146 184 (79) (29) 480 234 250 307 1,065 476 257 change to the equity method, SEK 467 M, and
the effect of the equity method of accounting on
lncrease (decrease) in deferred tax liabilities 1989 income after laxes, SEK 112M.
n
L.ntaxed reserves (1) 651 352 14 98 (812) (521) (1,907)Net financing from year's operations 905 5,740 5,160 9,376 8,340 10,802 4,890 5,806 862 4,613 (96) lovestments (increase)
Property, plant Capita! expenditures (2,346) (2,397) (2,589) (3,506) (3,425) (3,864) (3,948) (6,281) (4,598) (2,874) (2,915) and equipment, etc.
Dispasals 308 247 348 228 305 334 274 747 180 1,243 299
lnvestments for leasing purposes (693) (223)
lnvestments in shares, net (1,624) 262 (2,215) (1,485) (1,988) 666 (1,896) (1 ,761)1 (5,572) (9,264) (355) Long-term recelvables and loans, net (378} (674) 457 4 114 139 (3,008) 36 (28) (102) (2,520) Acquisitlons and sales of campanies 308 (430) 2,934 (233) (1 ,492) 8 (166) (49) (964) (210) 323 Remalnlng after net invesbnents (2,827) 2,748 4,095 4,384 1,854 8,085 (4,547) (1,725) (10, 120) (6,594) (5,264) Financing, dividends, etc.
lncrease (decrease) in short-term loans 1,822 2,939 (985) 438 708 (1,148) 1,781 8,288 5,124 (1,542) 3,802 lncrease (decrease) in long-term loans 2,224 (1,382) (622) 309 (1,018) (232) 589 (1,752) 1,732 2,371 4,588
Share issue 608 304 237
(lncrease) dieeraase in restricted deposits
in Bark of Sweden (13) (43) (1 ,498) (1,061) 1,643 (541) (2,313) (1.259) 3,221 2,031 39 lncrease (dlecrease) in minority illerests 193 183 (602) (126) (20) 134 41 (105) (87) 5,282 122 Dividends paid to AB Vo~o shareholders (251) (340) (399) (411) (660) (718) (815) (1,086) (1,203) (1,203) (1,203)
Dividends paid to mnority shareholders (157) (81)
Translatlon differences, etc. 18 (34) 49 (1,039) 876 804 691 (24) (153) (920) 50
lncrease (decrease) in liquid funds and
lovestments in bonds 1,774 4,375 275 2,494 3,383 6,384 (4,573) 2,337 (1,486) (732) 2,053
Decrease Qncrease) in investments in bands (1,664) (2,292) 501 601 1,926 928
lncrease (decrease) In liquid funds 1,774 4,375 275 2,494 3,383 4,720 (6,865) 2,838 (885) 1,194 2,981
12
Financial statistics, consolidated
Quarterly sales and income
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 See changes in accounting principles on page 10.
Sales (SEK M)
1. Up to and including 1985: lncome (loss) belare 1st quarter 14,946 23,631 21,687 21,809 20,661 21,635 21,422 23,067 21,675 17,457 20,023 22,946 allocations and taxes; 1986-1992: lncome (loss) 2nd quarter 19,168 26,269 21,930 20,470 21,519 22,717 24,337 23,482 22,917 20,482 21,353 belare laxes; as from 1993: lncome (loss) before
laxes and minority interests.
3rd quarter 17,392 21,583 19,091 20,060 18,798 21,875 22,225 19,241 17,844 17,616 17,429
4th quarter 23,112 26,293 28,655 2. lncome pershare is calculated as income divided
24,118 27,977 24,344 23,857 25,182 20,749 21,668 24,197 by the weighted averaga number of shares out-
Full year 75,624 99,460 87,052 86,196 84,090 92,520 96,639 90,972 83,185 77,223 83,002 standing during the year.
Through 1985 income includes income betare
lncome (loss) before taxes 1 (SEK M} allocations and laxes reduced by a standard tax
charge of 50 percent
1st quarter 516 1,025 2,600 2,167 2,410 1,982 1,462 2,188 1,058 396 (52) (331) As from 1986, income pershare is calculated on the basis of Net income.
2nd quarter 1,004 1,392 3,466 2,001 2,238 2,247 2,379 2,289 1,004 258 361 Adjustments have been made for stock split
and for new issues of shares.
3rd quarter 408 793 921 1,552 1,283 1,558 1,616 2,030 (2,226)7 255 (352)
3. lncludes extraordinary income of SEK 744 M,
4th quarter 512 569 660 1,882 1,599 3,224 2,786 4045 (123) 204 (3,269)9 equal to SEK 9.60 per share.
Full year 2,440 3,779 7,647 7,602 7,530 9,011 8,243 6,9116 (287)7 1 '113 (3,312)9 4. lncome in 1986 was charged with a write-down of SEK 500 M on the book value of shareholdings,
lncome (loss) per share 2 (SEK) equal to SEK 6.40 per share.
1st quarter 3.90 7.00 15.60 13.10 18.20 16.10 11.30 19.50 4.20 4.40 (2.30) (3.60) 5. lncome in the fourth quarter of 1989 was charged in a total amount of SEK 794 M pertelning to the 2nd quarter 7.50 8.80 21.90 12.40 17.00 18.20 18.40 20.40 4.00 0.808 1.30 amortizat1on of goodwill in connection with the
acquisition of Volvo Espaiia, S.A.. Spain and a 3rd quarter 2.60 4.80 5.60 9.40 9.70 12.60 12.50 18.20 (21.00)7 0.708 (5.10) change in the principle applied in valuing consum- 4th quarter 2.20 3.70 3.40 14.30 12.10 26.10 21.50 3.605 (0.30} 2.908 (36.70)9 able items and spare parts for fixed assets.
6. As a consequence of the change in accounting
Full year 15.70 24.30 46.50 49.20 57.00 73.00 63.70 61.70 (13.10)7 8.80 (42.80)9 principles in 1990, the allocation of SEK 100 M to an employee faundatlon shown in Volvo's 1989 accounts as on allocation, has been reclassified in 1990 as an extraordinary expense.
7. Restrueluring costs reduced income before taxes
Approximate net income in accordance with U.S. generally accepted
by SEK 2,450 M and income pershare by SEK21.90.accounting principles (U.S. GAAP)
8. Excluding extraordinary expenses, income per share during the seeond, third and fourth 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 quarters of 1991 was SEK 8.30, SEK 2.1 O and Net income (loss) (SEK M) 850 1,496 4,100 4,4783 2,9564 4,636 4,953 5,400 (23)7 816 (4,619)9 SEK 3.30, respectively.9. Restructuri ng costs in c reased loss betare taxes
Net income (loss) by SEK 1 ,450 M and loss per share by SEK
per share (SEK) 12.70 19.80 52.90 57.703 38.104 59.70 63.80 69.60 (0.30)7 10.90 (62.00)9 11.20.