Volvo (Truck) Group: Report on Operations 2009

STOCKHOLM - February5, 2010: In the fourth quarter, the Volvo Group continued to have substantial costs in connection with its effort to adjust the cost structure to a considerably lower level of demand in the wake of the financial crisis, something that contributed to an operating loss of slightly more than SEK 2 billion in the quarter. The main focus during the quarter was on cash flow and the Group created a positive cash flow of SEK 8.6 billion, which is one of the best cash inflows ever for a single quarter.

• In the fourth quarter net sales decreased by 23% to SEK 59.8 billion (78.0). For the full year net sales decreased by 28% to SEK 218.4 billion (304.6)

• The fourth quarter operating loss amounted to SEK 2,316 M (Loss SEK 999 M) including restructuring and layoff-related costs, residual value write-downs and inventory write-downs of in total SEK 1.4 billion. The full year operating loss amounted to SEK 17.0 billion (Income SEK 15.9 billion)

• In the fourth quarter basic and diluted earnings per share amounted to a negative SEK 0.99 (Negative SEK 0.67). Full-year earnings per share amounted to a negative SEK 7.26 (Positive SEK 4.90)

• In the fourth quarter, operating cash flow in the Industrial Operations was positive in an amount of SEK 8.6 billion (1.8). Cash flow was positively impacted by SEK 5.6 billion from a reduction of inventories

• During the quarter, net debt in the Industrial Operations was reduced by SEK 8.9 billion

• The Board of Directors proposes that no dividend is distributed for the year 2009 (SEK 2.00 per share)

”As we have left 2009 behind us, I can say that, although demand remains at historically low levels, we have reduced our cost base significantly, we have reduced our inventory and lowered our capital tied-up, and that we are financially stable thanks to low refinancing requirements combined with good liquidity. We have also continued to invest in research and development to be able to launch competitive products in the next few years. Therefore I have a very positive view on the Group’s possibilities to strengthen its positions on the world market.” Leif Johansson, President and CEO.