Higher order bookings for Volvo Buses

Volvo Buses reported higher order bookings during the first quarter of 2008 compared with the corresponding period in the preceding year. Deliveries were at the same level but the result was negative.

The bus market in Europe is relatively stable, with a somewhat increasing share within the city bus segment in France and the UK. In North America, the market trend from 2007 continues, with the coach bus market showing a decline, while the city market continues to grow. Despite an increase in the beginning of the year, the Mexican coach market is still weak. The activity in the market for Bus Rapid Transit systems is high and the number of deliveries is expected to increase in 2008.

In South America, the market for intercity and city buses continues to be strong. In Venezuela, which accounts for about 20% of Volvo Buses’ volume in South America, the market is obstructed as a result of new import restrictions on complete buses. The market in Asia continues to rise, but at a slightly slower pace. The greatest increases are in China and India. Increasingly more Chinese manufacturers are exporting to a greater extent to markets outside Asia.

In the first quarter, order bookings totaled 2,608 buses, an increase of 8% compared with 2,403 a year earlier. Order bookings rose on most markets except South America and China. During the quarter, 2,214 buses (2,228) were delivered. Deliveries were at the same level as the preceding year, with increases in the Middle East and Africa. The order backlog at the end of the first quarter was 5,114 (5,812), a decline of 12%.

Net sales in the first quarter declined 2% to SEK 3,672 M, compared with SEK    3,741 M a year earlier. Adjusted for currency movements, net sales were up 2%.

In the first quarter Buses posted an operating loss of SEK 122 M compared with an operating income of SEK 90 M a year earlier. Operating margin was a negative 3.3% (positive 2.4). During the first quarter, earnings were charged with a provision amounting to SEK 120 M for the adjustment of the production capacity. Changes in currency rates also had a sharply adverse impact on Volvo Buses’ total earnings.  

During the first quarter, Volvo Buses has continued efforts with the global profitability program, with focus on reducing production costs and optimizing the industrial system. Volvo Bus Finland is now undergoing a restructuring in which the plant in Tampere is to be closed at the end of August.

Volvo Buses has received an order from BMTC for 240 city buses to Bangalore, India. The buses will be produced in Volvo’s plant in Bangalore, which was inaugurated in January 2008, and are designed after the Volvo 8700 European model. In April, Volvo Buses received its largest order so far in Europe. Jointly with the bodybuilder Wrightbus, Volvo Buses will deliver buses in the coming years in the UK valued at SEK 1.5 billion. Volvo’s share of the order value is about 35-40%.

 

Net sales by market area

First quarter

 

SEK M

2008

2007

Change

Europe

1,721

1,726

(0%)

North America

1,104

1,088

1%

South America

209

221

(5%)

Asia

478

521

(8%)

Other markets

160

185

(14%)

Total

3,672

3,741

(2%)