Volvo Aero.- Reduced sales and lower earnings in first quarter

Continued growth in the components business • Lower volumes and reduced profitability in the aftermarket business • New GEnx engine already a sales success
Decreased profitability in the after market business had adverse effect
During the first quarter, sales amounted to SEK 1,961 M, which was 11% lower than in the corresponding period the preceding year. Adjusted for changes in exchange rates, sales declined by 4%. However, the components business continued to grow.

Operating income amounted to SEK 92 M (210) and the operating margin to 4.7% (9.5). The weaker income is primarily attributable to lower profitability in the aftermarket business, was is primarily the result of lower volumes and lower productivity in the engine maintenance operations at Bromma following the decision to close down the operations. In addition, earnings and the margin were adversely affected by higher prices for materials and an unfavorable currency trend.

In March, the new GEnx engine for the Boeing 787 and 747-8 aircraft had already sold in 830 units, making it the highest sales success ever for General Electric. GEnx represents Volvo Aero’s highest involvement ever in a commercial engine. Serial production is expected to begin in 2008.

Air traffic continues to increase
Growth in air traffic remained strong in the first quarter of 2007. Passenger traffic rose by more than 4% in January and by 3.9% in February. The trend of traffic varied between different parts of the world, with highest airline growth noted in the Asia–Pacific region and Europe. The load factor was further improved in January.

Order bookings for commercial aircraft continued to grow, and at the end of March, manufacturers’ order books totaled 5,074 aircraft. Airbus and Boeing delivered 221 aircraft in the first quarter – an increase of 11%.
Fredrik Fryklund
Vice President, Communications
Phone: +46 (0)70 319 23 96