Volvo Buses posted higher profit in 2006

Volvo Buses continues to develop favorably. Operating income for 2006 was SEK 633 M, an increase of 35% compared with a year earlier.

The global bus market is stable but varies between the various markets. Registrations in Europe increased by 7% up until September. The highest growth was in Central Europe due to registration of vehicles with Euro 3 engines. In North America, the coach bus market increased by 20% during 2006, driven primarily by pre-buying effects in anticipation of new environmental regulation in 2007. Intercity traffic was at the same level as in 2005. In Mexico, the coach bus market was at the same level as in 2005. VBC Performance.

During the fourth quarter, order bookings totaled 3,258 buses, compared with 3,764 buses in the same period in the preceding year, a decline of 13%. Order bookings were lower in China, South America and Mexico, while they increased in Europe, the US and Canada.

During the fourth quarter, 2,464 buses were delivered, compared with 3,344 in the same period in 2005, a decline of 26%. Deliveries were higher in Europe than in the preceding year, and it was primarily South America where deliveries were lower than last year, which was due to the large delivery of 1,779 buses to Santiago, Chile in 2005.

Net sales for the fourth quarter amounted to SEK 4,476 M, down 15%, compared with SEK 5,260 M in the preceding year. Adjusted for exchange rate movements, net sales declined by 9%. This primary reason was lower volumes due to reduced deliveries in South America.

Operating income increased to SEK 191 M, compared with SEK 134 M in the preceding year. The result was positively impacted by the good development in the US and Canada, while it was negatively impacted by lower profitability in Mexico and South America. Operating income included a positive effect of SEK 47 M following settlement of a dispute regarding export credits in Brazil. The operating margin amounted to 4.3% (2.5).

For the full-year 2006, net sales increased 2% to SEK 16,856 M (16,589). Operating income improved 35% to SEK 633 M (470), and the operating margin rose to 3.8% (2.8).

Volvo Buses continues to focus on increasing efficiency globally in both the commercial and the industrial system. The introduction and sales of the new products with the new engine generation that was launched during the autumn continues to have high priority.

During the fourth quarter, Volvo Buses received a number of significant orders. Volvo Buses’ subsidiary Nova Bus will deliver 322 articulated buses to Quebec between 2009 and 2012. Nova Bus will also deliver 126 city buses to Vancouver during 2007. The introduction of the Euro 4 engine was very positive. Good order intake of Euro 4 was recorded in the UK, including 110 B7R school buses to be delivered to Northern Ireland.

 

Net sales by market area

Fourth quarter 

    Year 

SEK M

2006

2005

Change

2006

2005

Change

Europe

2,229

1,819

23%

7,509

7,142

5%

North America

1,339

1,246

7%

4,910

4,247

16%

South America

279

1,396

(80%)

1,537

2,641

(42%)

Asia

387

547

(29%)

2,003

1,612

24%

Other markets

242

252

(4%)

897

947

(5%)

Total

4,476

5,260

(15%)

16,856

16,589

2%

 

February 2, 2007

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