GOTEBORG, Sweden, March 15, 2004 (PRIMEZONE) -- Volvo -- Definitive report on 2003 operations
This definitive report on Operations 2003 has been updated to reflect changes in Volvo's holding in Scania and the effects from a revaluation of the holding in Henlys Group Plc.
Fourth quarter Year
2003 2002 2003 2002
Net sales, SEK M 48 733 45 877 174 768 177 080
Operating income*, SEK M 1 766 823 6 534 2 837
Write-down of shares**, SEK M (4 030) -- (4 030) --
Operating income (loss), SEK M (2 264) 823 2 504 2 837
Income (loss) after financial (2 441) 737 1 657 2 013
items, SEK M
Net income (loss), SEK M (2 886) 638 298 1 393
Sales growth, % 6.2 (5.7) (1.3) (2.0)
Income per share*, SEK 2.70 1.50 10.30 3.30
Income (loss) per share, SEK (6.90) 1.50 0.70 3.30
Return on shareholders' equity during most 0.4 1.7
recent 12 months period, %
*) Excluding write-down of shares in Scania AB and Henlys
Group Plc during the fourth quarter 2003.
**) Write-down of shares in Scania AB amounting to SEK 3,601 M
and Henlys Group Plc amounting to SEK 429 M.
-- Net sales for the fourth quarter 2003 amounted to SEK 48,733 M
(45,877).
-- Net loss amounted to SEK 2,886 M (income: 638) in the fourth quarter.
-- Income per share for the fourth quarter was a negative SEK 6.90
(income: 1.50). Income per share for the year amounted to SEK
0.70 (3.30).
-- Operating income for the fourth quarter included a write-down of
shares in Scania AB and Henlys Group Plc amounting to SEK 3,601 M
and SEK 429 M respectively.
-- Cash flow after net investments excluding Financial Services
improved to SEK 7.8 billion (4.9) in the fourth quarter.
-- The Board of Directors proposes that a cash dividend of SEK 8.00
per share be paid for 2003. In addition it proposes that 99% of the
shares in the wholly owned company, Ainax, be distributed to the
shareholders of AB Volvo. The value of the Ainax shares corresponds
to a value of SEK 14:40 per Volvo share based on the Scania A
closing price of SEK 223:50 at March 12, 2004.
Comments by the Chief Executive Officer
We have been involved in discussions with a number of potential buyers regarding the sale of our holding in Scania for some time. As a result of these discussions, Volvo's holding of Scania B shares was divested to Deutsche Bank on March 4, 2004 for an amount of about SEK 15 billion. The transaction was carried out as part of our commitment to the European Commission to divest the Scania shares not later than April 23, 2004. After the sale, Volvo owns 27.3 million A shares in Scania AB, corresponding to 24.8% of the votes and 13.7% of the capital. As an agreement has not yet been reached regarding a divestment of the Scania A shares and Volvo has not yet received a decision from the Commission on Volvo's request for an extension of the divestment period, the Board of AB Volvo has decided to transfer the Scania A shares to the wholly owned company, Ainax AB. The Board proposes that slightly more than 99% of the Ainax shares be distributed to the shareholders of AB Volvo. This arrangement will provide Volvo's shareholders the possibility to realize the added value that exists in a large block of A shares and to fully exercise the influence in Scania that is inherent in the high voting rights carried by A shares. During the holding period, Volvo has received dividends amounting to SEK 2.3 billion from Scania. See further on page 3.
Our positive development continued during the fourth quarter, with sharply improved profitability and very strong cash flow. Operating income and operating margin, excluding write-down of shares, doubled compared with the fourth quarter of 2002. Operating income also doubled for the full year, and income per share tripled -- despite the volume of sales not having increased to any significant extent. This major improvement is attributable mainly to new products, synergies and cost savings.
Our new products and services have captured market shares in important markets and provided increased value to our customers, which is reflected in a relevant price picture.
The synergies are the result of many years of work carried out throughout the Group to coordinate operations, from product development and purchasing to production and distribution. During 2003 these efforts began to have an effect on earnings.
Costs and capacity were aligned with lower demand within Volvo Aero, Buses and the North American truck operations. Many of the measures will yield long-term efficiency improvements, for example coordination between Mack Trucks and Volvo Trucks in North America.
In terms of individual business areas, Volvo Penta again reported strong earnings, with an operating margin for the full year exceeding 9%.
The truck operations improved profitability in significant figures for the Group as a result of reduced costs in North America, stable and high earnings capacity for Volvo Trucks in Europe and increased productivity in Renault Trucks.
Financial Services nearly doubled operating income and developed solidly.
Volvo CE also advanced strongly during 2003. Sales rose significantly in the fourth quarter. The upturn in the North American market noted during 2003 is looking increasingly stable.
Volvo Aero and Buses, which are both facing difficult business climates, are still on the downside. For Volvo Aero, it appears that 2004 will be another difficult year, although the aftermarket segment is showing some signs of recovery. The view for Buses is fragmented, with major variations in demand between markets. Buses decided in December to close the body plant in Aabenraa in Denmark and is continuing to monitor operations, with focus on Europe.
We assess that the truck market in Europe will remain at today's relatively high level of 214,000 trucks, or increase somewhat during 2004. Customer activity rose in North America during the fourth quarter and there are expectations of an increase by 10-15% to a level of about 200,000 trucks.
The growth regions continue to develop favorably. Iran and China accounted for a large share of our growth in Asia during 2003. The Group took many important steps to increase its presence in China.
The level of the Group's activities to enhance efficiency and improve distribution and service will remain high, in established as well as growth markets. With our strong product program and improved cost position, I believe we have favorable conditions for profitable growth.
Leif Johansson
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