Volvo Penta Annual Results 2008

Extracts from the annual report published today by Volvo Group.

"The total market for marine engines weakened in Europa, while demand for industrial engines continued to be relatively stable.

In North America, the weakening trend of recent years in the marine engine market continued. Following the financial crisis during the second half of the year, boat sales in North America declined to historically low levels.

In Asia and many markets in other parts of the world, for instance the Middle East and South America, demand for industrial engines and marine engines continued to be favorable.

With aggressive investments in product development and product renewal, Volvo Penta has created a modern and complete product portfolio that is in demand from a growing number of boat builders and industrial engine customers around the world.

Volvo Penta has consolidated and strengthened its market share in most market segments, not least thanks to continued great success for Volvo Penta IPS, which to an ever greater extent replaces traditional shaft installations in the inboard segment.

In total, net sales amounted to SEK 11,433 M, compared to SEK 11,719 M in the preceding year. Operating income amounted to SEK 928 M compared to SEK 1,173 M the preceding year. Operating margin amounted to 8.1% (10.0).

Operating income was negatively impacted by sharply lower volumes during the second half of the year, increased under-absorption of costs in production and one-time costs of about SEK 100 M associated with carried-out adjustments of operations to lower demand.

During the year, Volvo Penta invested approximately SEK 100 M in a new logistics system that fully implemented will enable substantial efficiency improvements in the entire chain from order to delivery.

Production in the plants in Vara, Sweden and Lexington, Tennessee, USA was gradually lowered in line with falling demand for marine engines. Towards the end of the year, Volvo Penta was forced to implement personnel reductions in both factories and central administration to adjust the company to a significantly lower demand as a consequence of a weaker world market."

Date Added - 11-Mar-2009

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