Continued high order bookings for Volvo Buses

Volvo Buses reports higher order bookings but lower sales in the third quarter of the year compared with the year-earlier period. The decline in sales is attributable primarily to the very large delivery of buses to Santiago, Chile posted by the company in the third quarter of 2005.

The global bus market remains at a stable and high level, with an element of slowing in certain markets. Registrations in Europe increased during the first half of the year, due partly to the effect of customers purchasing buses prior to October 1, when the new, more restrictive emissions legislation becomes effective. After this, the rate of increase slowed.

In North America, the coach market is developing well and has also be stimulated by operators pre-buying buses before new emissions standards become effective in January 2007. The market remained strong in South America, with the exception of Brazil. The Asia market continues to develop positively.

Order bookings during the third quarter amounted to 2,374 buses, compared with 2,120 buses in the year-earlier period, up 12%. The order backlog at the end of the third quarter totaled 5,133 buses, compared with 4,301 buses in the preceding year (+19%).

   During the third quarter, 2,181 buses were delivered, compared with 2,358 buses in the corresponding period in the preceding year, down 8%. Primarily deliveries in South America were lower than a year earlier, which is explained by the large delivery of 1,779 buses to Santiago, Chile in 2005.

Net sales in the third quarter amounted to SEK 3,687 M, a decline of 6%, compared with SEK 3,914 M in the preceding year. Adjusted for changes in currency rates, net sales declined by 4%.

   Operating income declined to SEK 132 M, compared with SEK 144 M a year earlier. Operating margin was sustained at 3.6% (3.7), despite significantly lower deliveries.


 The main explanations for the lower volumes are fewer deliveries in South America and delivery disruptions in the European production plants in conjunction with the changeover to a new product range.

Volvo Buses’ efficiency enhancement program continues undiminished in all regions. The new engine generation that meets Euro 4/5 standards is in production and being launched during the autumn. This work has continued high priority.

In September, Volvo Buses launched new coaches, the 9700, 9900 and B9R on the European market. The buses were very well received. Volvo Buses also launched a new Euro 3 engine in China.

During the quarter, Volvo Buses announced an agreement with Jaico Automobiles to establish a joint company in India to manufacture bus bodies built on Volvo Buses’ body technology. With an ownership interest of 70%, Volvo Buses will be the majority owner in the new company, which plans to build a plant with a capacity of 1,000 bus bodies per year.

During the quarter, Volvo Buses received a substantial order for 499 buses to Santiago. Production will begin in 2007 for delivery in 2008. The buses are a follow-on to the order for 1,779 buses delivered in 2005.

 

Net sales by market area

Third quarter

 

First nine months

 

SEK M

2006

2005

Change

2006

2005

Change

Europe

1,539

1,712

(10%)

5,280

5,323

(1%)

North America

1,124

957

17%

3,571

3,001

19%

South America

381

581

(34%)

1,258

1,245

1%

Asia

425

466

(9%)

1,616

1,065

52%

Other markets

218

198

10%

655

695

(6%)

Total

3,687

3,914

(6%)

12,380

11,329

9%

 

October 24, 2006

For further information, please contact Per-Martin Johansson, press officer, +46 31 322 52 00, per-martin.johansson@volvo.com