2010 strong year for Volvo Buses

2010 was a strong year for Volvo Buses, with more buses sold than in the preceding year and significantly improved earnings. The order intake rose 22% during the fourth quarter.

The global bus market displayed a split trend. Europe is characterized by continued weak demand, however, some positive signs were noted in the coach market. In North America, the coach market remained weak, but there are signs that the market has bottomed out. For city buses, the trend remained negative.

The market in Mexico largely corresponded to the trend in the US, with low activity in general but major interest in the Bus Rapid Transit systems (BRT). In South America, demand rose in the market for city buses and coaches.

The total bus market in Asia and Africa displayed a strong increase. It is primarily China and India that account for the largest increase.

During 2010, 10,229 buses were delivered, which is an increase from 9,857 in the preceding year. Deliveries during the fourth quarter were on the same level as the year-earlier, 3,230 buses compared with 3,272 in 2009.

During the fourth quarter, order intake totaled 3,677 buses, compared with 3,003 buses in the year-earlier period, an increase of 22%. South America and Asia Pacific accounted for the largest increase. Included in the fourth quarter is an order from Perth, Australia for 650 buses over 10 years.

During the quarter, the largest order to date in India was signed, 100 coaches, which will be delivered in 2011. At the same time, Volvo Buses announced that it had acquired the remainder of the shares (30%) from the joint-venture partner, Azad Group, in India.

Volvo is the leading supplier of buses for the BRT systems in Latin America. During the quarter, Volvo Buses received orders for 463 bus chassis, of which 383 for the major BRT system in Curitiba, Brazil and 80 for articulated buses for Quito, Ecuador.

Net sales in the fourth quarter declined by 3% to SEK 5,602 M (5,793). Adjusted for currency fluctuations, net sales decreased by 1%.

In 2010, the operating income improved significantly to a profit of SEK 780 M, compared with a loss of SEK 350 M in 2009. Operating income during fourth quarter amounted to SEK 221 M, compared with a loss of SEK 46 M in the fourth quarter of 2009.

The operating margin was 3.9% compared with a negative 0.8% in the fourth quarter of 2009. The income improvement was primarily due to increased sales volume, improved market mix and cost savings.

Despite weak markets in North America and Europe, Volvo Buses reported improved profitability and capital efficiency as a result of its long-term, global improvement program. Furthermore, the concentration on profitable growth will be added to the improvement program, with a continued strong focus on cost and capital efficiency.

Net sales by market area

Fourth quarter

 

Year

 

SEK M

2010

2009

Change in %

2010

2009

Change in %

Europe

1,581

2,014

(21)

6,242

7,707

(19)

North America

1,885

1,924

(2)

7,200

5,673

27

South America

582

566

3

1,737

1,235

41

Asia

947

967

(2)

3,299

2,749

20

Other markets

607

322

89

2,038

1,101

85

Total

5,602

5,793

(3)

20,516

18,465

11