Volvo Group (STO: VOLV-B) reported its best results in history for FY17. The company reached global sales worth SEK334.7 billion (US$42.7 billion), leading to an operating income of SEK 30.3 billion (US$3.9 billion). Compared to results from FY16, this represents an increase of 10.9 percent in sales and 45.7 percent in operating income.
According to Martin Lundstedt, President and CEO of Volvo Group, all business segments including Trucks, Buses, Volvo Penta and Financial Services contributed to these positive results, with Construction Equipment registering the greatest increase in operating income of 252 percent, resulting in SEK 7.9 billion (US$1 billion).
Trucks, however, was the leading market for the group, generating sales of SEK216.5 billion (US$27.6 billion) and operating income of SEK20.4 billion (US$2.6 billion) – up 8 percent and 17 percent compared to 2016, respectively. “Most truck markets are on high levels or in upward trends,” says Lundstedt. “In Europe, good freight environment, low fuel prices and low interest rates provide support to customer profitability and their demand for our trucks.”
Though buses represented the third most important segment for Volvo Group in terms of sales with SEK26.1 billion (US$3.3 billion), it lagged behind Volvo Penta and Volvo Financial Services in operating income. At the end of the year, the bus segment reported SEK928 million (US$118 million). Lundstedt says that while the segment improved its profitability, it did so from a low benchmark in 2016. However, the company is spearheading the transition in the bus market toward electrification and it will now transfer that technology into the truck segment. “Both Volvo Trucks and Renault Trucks will start selling electric medium-duty trucks for city distribution in Europe in 2019,” he says. “The first of these trucks will be put into operation together with selected customers already this year.”
According to the yearly report, Volvo Group spent SEK16.1 billion in R&D operations, representing 4.8 percent of the company’s total sales. “In 2018 we will continue to focus on driving operational efficiency throughout the group and the value chain and on managing the introduction and production ramp-ups of the new trucks in North America,” stated Lundstedt in the group’s report. “It will also be a year when we continue to invest in new and innovative technologies to the benefit of our customers and society.”
The data used in this article was sourced from Volvo Group. If you want to learn more about the Group’s presence in Mexico, check out our feature analysis in Mexico Automotive Review 2017.