Volvo - Nine months ended September 30, 2004

Volvo - Nine months ended September 30, 2004 Third quarter First nine months 2004 2003 2004 2003 Net sales, SEK M 45,870 40,511 144,383 126,035 Operating income, SEK M* 2,792 1,617 8,736 4,267 Revaluation of shares - - 820 - Dividend received from Scania - - - 501 Operating income, SEK M 2,792 1,617 9,556 4,768 Income after financial items, 1,412 1,298 8,020 4,098 SEK M Net income, SEK M 1,002 956 5,861 3,184 Income per share, SEK* 2.40 2.30 12.00 6.40 Income per share, SEK 2.40 2.30 14.00 7.60 Return on shareholders' equity during most recent 4.1 5.0 12 months period, % * Excluding revaluation of shares in Scania and Henlys Group in 2004 and dividend received from Scania in 2003. · Net sales for the third quarter 2004 increased by 16%, adjusted for currency effects and amounted to SEK 45,870 M (40,511). · Net income increased to SEK 1,002 M (956) in the quarter. · Income per share for the third quarter was SEK 2.40 (2.30). · Improved earnings in all business areas. · Volvo acquires Prévost and Nova Bus and a write-down attributable to Henlys Group of SEK 1,310 M has been charged against income in the third quarter of 2004. · Operating income for the third quarter of 2004 includes costs amounting to approximately SEK 400 M related to industrial relocation in Renault Trucks. · Cash flow after net investments excluding Financial Services was a negative SEK 2.9 billion (negative: 0.8). Aktiebolaget Volvo (publ) 556012-5790 Contacts Investor Relations, VHQ Investor Relations: SE-405 08 Göteborg Fredrik Brunell +46 31 66 11 91 Sweden Christer Johansson +46 31 66 13 34 Tel +46 31 66 00 00 Patrik Stenberg +46 31 66 13 36 Fax +46 31-53 72 96 John Hartwell +1 212 418 7432 www.volvo.com Comments by the Chief Executive Officer The third quarter is characterized by strong growth, improved profitability and settlements within vital structural and financial areas. Compared with the third quarter of 2003, Group sales rose by 16 percent, adjusted for currency effects. With more than SEK 193 billion in annualized sales, the Group has reached historically high sales levels. Compared with the third quarter of 2003, operating income increased 73 percent to SEK 2.8 billion. The result includes non-recurring costs of about SEK 400 M within the truck operations for more measures to enhance efficiency in the production of Renault Trucks' Kerax model. In addition, we have reached an agreement with ArwinMeritor covering the future supply of axles. Accordingly, all decisions and costs for the major structural changes that we announced in 2001 related to the acquisition of Renault Trucks have been implemented. I am very satisfied with the fact that the total structural cost was significantly lower than we estimated. All business areas report significantly improved earnings during the third quarter. The truck operations nearly doubled operating income compared with the year-earlier period, clearly driven by Volvo Trucks, which developed very strongly in all regions. Also Mack Trucks showed improved profitability in North America. The global upturn has resulted in successively increasing pressure on raw material and component prices. The high oil prices mainly affect the truck and aviation industries. The high steel prices impact mainly within Volvo CE. Order bookings remained strong during the third quarter. We expect that capacity utilization at the Group's plants will remain at a high level. The high utilization has resulted in distinctly improved productivity and, combined with prior efficiency enhancement measures, contribute to improved profitability. We have eliminated a number of bottlenecks that arose in the rapid shift to higher volumes, among other measures through increased flexibility in the plants. As previously, we remain firm in our line to deal with the upturn without any major investments. In addition, we have placed very strong focus on the link between cost developments and the pricing of our products. Within the bus business, we have settled on a reconstruction of the Henlys Group together with a bank consortium. The solution is that we take over Henlys' 50-percent interest in the North American bus companies Prévost and Nova Bus. Consequently, they become wholly owned subsidiaries of the Volvo Group. In itself, the acquisition is favorable. Prévost is a profitable and well-managed company that manufactures highly well positioned luxury coaches as well as city buses under the Nova brand. It will become a strategically important part of our bus operations. The settlement also means that the Volvo Group becomes part-owner, with a 42.5-percent interest, of the US-based school bus manufacturer Blue Bird, which was part of the Henlys Group. My opinion is that through this solution we handle the Group's and the shareholders' interest in the best manner in an undesirable situation. The market looks stronger than we could anticipate at the beginning of the year. We have raised the forecast for the heavy truck market in North America to about 240,000 trucks in 2004 and another 15 to 20 percent in 2005. In Europe we are making a slight upward adjustment to 254,000 trucks and in 2005 we expect Europe to increase by another 5 percent. We have also upgraded the forecast for heavy construction equipment slightly, expecting an increase of 30 percent in North America and 10 percent in Europe in 2004. For 2005, growth rates are expected to level off at historical high levels in both markets. The Group's product renewal programs continue as planned. During the third quarter, Volvo Penta launched a new series of engines for marine applications. Volvo CE introduced a series of compact excavators with short swing radius for working in confined areas. In the soft products area, Volvo Trucks launched a new GPS-based navigation system. Based on order bookings, we expect continued favorable demand and growth. Leif Johansson President and CEO ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2004/10/22/20041022BIT20050/wkr0010.pdf The full report

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The Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment and marine and industrial engines. The Group also provides complete solutions for financing and service. The headquarter is located in Gothenburg, Sweden.

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