Volvo Sets Goals to Increase Operating Margin

Growth potential in Volvo Group's existing business, combined with higher cost efficiency, give the company the potential to increase its operating margin by at least 3 percentage points, according to President and CEO Olof Persson.

Volvo Group, based in Sweden, produces the commercial truck brands Volvo Trucks, Renault Trucks, Mack Trucks and UD Trucks.

"In the past decade, the development of the Volvo Group has been fantastic," said Persson at Volvo's Capital Market Day in Stockholm Tuesday. "We have built up a global business portfolio, with strong brands, competitive products and excellent distribution channels. We are now taking the next step to further capitalize on the potential of this business portfolio."

For instance, the company sees major potential in increasing sales in Asia through specially developed and adapted products for the region.

Volvo Group recently announced a new organization for its truck operations, with three new sales and marketing organizations, with the goal of better capitalizing on the global potential in products and brands. An organization also is being be created for product development and purchasing, as well as an organization in which all manufacturing is concentrated.

"My aim with the new organization is for the Volvo Group to also become more cost effective and agile, with clear decision paths and increased customer focus," Persson said.

One of the financial targets, starting in 2012, is that the operating margin for trucks, buses, construction equipment operations and Volvo Penta will be among the two highest compared with their respective competitors.