Increased order bookings for Volvo Buses

Volvo Buses recognized increased order bookings and improved profitability for the first quarter of 2011. As a result of stricter environmental requirements and high fuel prices, demand for hybrid buses is increasing globally.

The trend in the bus market differs significantly in the various parts of the world –
from continued decline to strong upswing. The European market is at a generally low
level, but a slight increase is anticipated for the total market in 2011. During the first
quarter, the city bus market in the UK recovered, while activity in the Nordic region was high.

In North America, the coach market is increasing, while demand for city buses continues to decrease since the cities’ weak economy has resulted in the postponement
of new vehicle purchases. In Mexico, activities for both coach and city buses have
increased somewhat, while interest in BRT systems is considerable.

In South America, demand remains stable at a high level and in Brazil there are clear
indications of prebuy effects ahead of Euro V, the new emission regulations coming into effect on January 1, 2012. In China, Asia Pacific and the Middle East, tender activities are generally high. Based on the rising environmental requirements and high fuel prices, an increase in global demand for hybrid buses was noted.

Deliveries during the first quarter of 2011 amounted to 2,533 buses, compared with
2,552 in the same quarter of 2010. The market mix has changed with higher deliveries in North America and South America and lower volumes in Europe and Asia.
During the first quarter, the order intake rose 17% to 2,369, compared with 2,033
buses in the year-earlier period.

During the first quarter, a number of significant orders were signed, including one for 180 buses for public transport in New York City, of which 90 were Prevost and 90 Nova buses. In addition, Volvo Buses received an order for 463 bus chassis for BRT systems in Curitiba in Brazil.

In the UK, an order was received for 240 vehicles to First Group, comprising double-deckers, single-deckers and 38 hybrid buses, which is the single largest order of hybrids to date.

In the first quarter, net sales dropped 4% to SEK 4,859 M (5,067). However, in local currencies, net sales rose 2%. Operating income for the first quarter of 2011 amounted to SEK 281 M (145).

The operating margin was 5.8% (2.9). The improvement was attributable to cost reduction efforts mainly in the industrial system as well as a positive impact of SEK 80 M from recognition of VAT credits in Brazil relating
to previous years.

The long-term improvement program, which displayed favorable results on profitability in 2010, as well as on cost and capital efficiency, continues. To improve profitability in 2011, the focus will be on profitable growth and continued cost reduction.

Capacity increases will be implemented in South America, Mexico, North America and India. In April, it was announced that Volvo Buses’ together with its joint-venture partner SAIC will invest in a new development center for the installation of drivelines for hybrid and electric buses in China.

Net sales by market area
                                                        First quarter                Change in %

 

 

SEK M

2011

2010

 

Europe

1,420

1,458

(3)

North America

1,657

2,037

(19)

South America

351

396

(11)

Asia

907

913

(1)

Other markets

524

263

99

Total

4,859

5,067

(4)