Reduced profit for Volvo Buses

Volvo Buses recorded a profit of SEK 72 M for the fourth quarter of 2008, which is somewhat lower than the year-earlier period. The bus industry has been affected by the recession, but to a considerably lower degree than the rest of the automotive industry.

In Europe the coach market continues to decline whereas the city bus market is maintained by demand for environmentally adapted buses and hybrid buses.

The downturn in the North American economy has had a substantial negative impact on the market for coaches and motor homes, while the transit market shows no signs of weakening and continues to grow. There is great interest in hybrid solutions.

In Mexico the total bus market increased by 48% during the year from very low levels, largely due to prebuying ahead of the new emission standards in 2009. The financial crisis now affects the coach market which is declining. On the other hand there is still an interest in Bus Rapid Transit solutions.

In South America the city and intercity bus market remains strong. In Brazil there are signs of a weaker market for heavy buses. The Asian bus market continues to grow but at a lower pace. During the first nine months of the year the market in China increased by 20%, primarily driven by city buses.

During the fourth quarter, order intake amounted to 2,238 buses and chassis, a decrease of 18% compared to 2,717 in the preceding year. Order intake rose in Europe and North America while other markets showed lower order intake. During the quarter 3,080 buses were delivered (3,412) a decrease of 10% compared with the fourth quarter of 2007.

During the fourth quarter net sales increased by 6% to SEK 5,481 M (5,173). Adjusted for changed exchange rates net sales increased by 2%. Operating income amounted to SEK 72 M (93) and the operating margin was 1.3% (1.8). The lower operating income was primarily an effect of changes in currency exchange rates and continued high activity within research and development.

Volvo Buses’ global profitability program with focus on cost reductions continues with undiminished force and is now beginning to have positive effects. However, the global recession has resulted in a lower order intake which necessitates further cost and capacity reductions and a strong focus on cash flow.

In the beginning of 2009 Volvo Buses introduced the Volvo 9700 for line haul traffic in the North American market. The buses are manufactured in Mexico.

Volvo Buses’ hybrid project took another step towards serial production, and shortly there are field tests with six double-deckers in London and one bus in Gothenburg, Sweden.

A number of important orders were announced during the quarter, among them Volvo Buses’ first order for hybrid buses, six Volvo 7700 Hybrid to Luxemburg.