Strong results
During 2006, the volume of new financing
Condensed income statement
Operating income amounted to SEK 2,301M,
amounted to SEK 35.3 billion, which was an
SEK M
Net sales Income after financial items
an increase of 13% from SEK 2,033 M in 2005.
increase of more than SEK 2.2 billion, com-
Return on equity of 15.5% (15.3) and an equity
pared with 2005. On December 31, 2006, total
ratio at year-end of 11.5% (11.2) is within the
assets amounted to SEK 84 billion (86), of
framework set for Financial Services. All
which SEK 77 billion was attributable to the
2004
2005
2006
9,598
7,549
8,969
1,365
Income taxes –430 Income for the period 935
2,033 2,301 –609 1,424
–756 1,545
regions within customer finance improved per-
credit portfolio. Adjusted for the effects of for-
formance compared with the preceeding year.
eign exchange movements, the credit portfolio
Distribution of credit portfolio, net
During the year, Financial Services efficiently
increased by 5.3% (9.6) during the year.
%
handled risks in each individual product line
Write-offs in 2006 amounted to SEK 259
while generating a reasonable return. Reduced
M, corresponding to a record low level to an
interest margins caused by rising interest rates
annualized ratio of 0.33% (0.40). On December
were dealt with successfully.
31, 2006, total credit reserves amounted to
In 2006, the market was characterized by
SEK 1,578 M (1,751), giving a credit-reserve
excess liquidity and strong competition from
ratio at year-end of 2.01% (2.17). In seeking
other creditors, which increased the challenge
growth, Financial Services will not compromize
for Financial Services to achieve set goals in
its underwriting criteria.
Operational leasing1 Financial leasing1 Installment contracts Dealer financing Other customer credits
2004
2005
2006
20 25 38 16 1
1 40 41 17 1
0 40 42 17 1
1 The change in 2005 pertains to the impact of IFRS leasing classification.
Credit portfolio by business area, % Volvo Trucks 48%
terms of volume and penetration targets.
Mack Trucks 9% Volvo CE 22% Other 1% Buses 5% Renault Trucks 15%
Ambitions 2006
Outcome 2006
Ambitions 2007
• Expand customer finance operations in growth markets.
• Opened finance company in China, Hungary and Slovakia.
• Improve customer satisfaction.
• Closely monitor and adapt operations to economic conditions.
• Focus on interest margins and risk management.
• Maintain low costs for funding the Group’s operations.
• Financing at very low cost and strong liquidity.
• Enhance employee recruitment, development and retention activities. • Execute on market growth plus fee income opportunities. • Use better technology and processes to improve productivity and customer service. • Continued to sharpen risk management activities.
Business areas 2006
77