Volvo - nine months ended September 30, 2001

Volvo - nine months ended September 30, 2001 First nine months 2001 2000 Net sales, SEK M 131 982 87 155 Operating income excluding 2 413 4 998 restructuring costs, SEK M* Operating income, SEK M* (312) 4 998 Income after financial items, SEK M (1 319) 4 859 Net income, SEK M (980) 3 522 Sales growth, % 51 4 Income per share excluding 5.30 11.90 restructuring costs, during most recent 12 months period, SEK Return on shareholders' equity, 2.4 5.4 excluding restructuring costs, % * Volvos operating income during the first nine months 2001 was favorably affected in the amount of SEK 1,458 M attributable to capitalization of development costs. Operating income in the third quarter was adversely affected by a deficit of SEK 472 M in Volvo's Swedish pension foundation. See "Accounting principles", on page 20. · Extensive adaption to the changing market situation within all business areas, however with continued focus on product renewal · Continued positive cash flow within all business areas in the third quarter but earnings remain unsatisfactory · Operating loss in the third quarter, excluding restructuring costs, was SEK 212 M (income: 691), and included a charge of SEK 472 M relating to a deficit in Volvo's Swedish pension foundation · The integration of the acquired companies Mack and Renault V.I. is developing according to plan, operating income for Global Trucks charged with restructuring costs of SEK 1,280 M in the third quarter · Global Trucks, Volvo CE and Volvo Penta report increasing market shares in declining markets · Comments by the Chief Executive Officer The operations of Volvo Group continue to be characterized by measures to adapt its operations to economic conditions, while the long-term effort to create an effective industrial structure proceeds undiminished. At the same time as we focus on cost efficiencies, we are prioritizing renewal of the product portfolio, and thereby strengthening our market positions. During the third quarter, Renault V.I. launched a new long haulage truck: Renault Magnum, Buses launched a luxury coach: Volvo 9900, and Aero delivered for the first time a gas turbine for a biogas plant. Volvo Penta reported a strong performance and introduced the new KAD300 in the third quarter. The recession in North America continued and worsened to some extent, as a result of the terrorist attacks in September. In Europe, the situation was mixed. The downturn in central and northern Europe continued, while sales in southern Europe remained stable. The market in western Europe decreased, as a total. The difficult market conditions resulted in unsatisfactory profitability for the Group. However, despite the weak earnings trend, our efforts to improve cash flow showed results, and the Group reported positive cash flow for the period. In order to strengthen Volvo's profitability and earnings potential, a number of actions are now being taken in all parts of the organization. These actions are intended to adapt costs to lower demand and to improve the company's commercial and industrial structure. Volvo Buses is reducing the number of employees in Mexico by 900 employees and in the US by 100 persons. Volvo CE is reducing personnel by 950 employees, and rationalizes its industrial structure in both the US and in Europe. Global Trucks is closing Mack's assembly plant in Winnsboro in the US. All assembly of trucks in the US will thus be concentrated to the two remaining facilities in New River Valley and Macungie. These measures are a part of the restructuring program intended to create a more competitive industrial structure for Volvo Global Trucks. The sharp decline in air travel will affect Volvo Aero, which initiated reductions in North America during the third quarter, and anticipates further adjustments. These measures will result in a large number of employees leaving the company, and as of September, a total of 5,200 persons have already left. These decisions, however painful, are necessary to strengthen the Group's competitiveness. Combined with the continued focus on product renewal, I am convinced that Volvo will have a stronger competitive position and be among the first to benefit when economic conditions improve again. Leif Johansson ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00130/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00130/bit0001.PDF The full report