Improved profitability for Volvo Buses

Volvo Buses reports improved profitability with a profit of SEK 259 M for the second quarter 2010, despite somewhat lower volumes compared with the same period in the preceding year.
During January to May 2010 the number of registered buses in Western Europe was the lowest since 2004, but there are signs that the coach market has reached the bottom. There is high activity in the city bus market in the Nordic countries and Spain while the rest of Europe is characterized by low demand.

The bus market in North America still suffers from the recession, and there are no signs of a recovery for coaches and registrations of city buses are declining. In South America the market for intercity buses and coaches is improving and the activity within city buses is good. In Asia development has overall been very positive and there is an increased demand for heavy buses.

During the second quarter 2,297 buses were delivered, which is a decrease of 7% compared to 2,464 buses during the second quarter in the preceding year. Deliveries increased in North and South America as well as in Australia, while Europe and China shows lower volumes. During the quarter order intake amounted to 3,081 buses, compared to 3,204 buses in the preceding year, which was a decline of 4%.

During the second quarter net sales increased by 12% to SEK 5,253 M (4,676). Adjusted for currency movements, net sales increased by 12%. Operating income amounted to SEK 259 M compared to an operating loss of SEK 118 M during the second quarter of 2009. Operating margin was 4.9% compared to a negative 2.5% during the second quarter of 2009 as a result of cost reductions implemented during 2009 and a positive change in market mix.

With prevailing economic conditions and the varying demand in the different markets there is continued focus on profitability with current volumes and a continued reduction of the overall cost structure. During the second quarter Volvo Buses has begun serial production of hybrid buses in the plant in Poland, and the order backlog is currently about 100 hybrid buses. A number of important contracts were also signed, among them an order for 240 coaches to ADO in Mexico.

Net sales by market area

Second quarter

 

First six months

 

SEK M

2010

2009

Change in %

2010

2009

Change in %

Europe

1,864

2,365

(21)

3,322

4,104

(19)

North America

1,725

1,261

37

3,762

2,572

46

South America

327

190

72

723

472

53

Asia

664

536

24

1,577

941

68

Other markets

673

324

108

936

593

58

Total

5,253

4,676

12

10,320

8,682

19