1、Geared for GrowthVolvo GroupAnnual Report 2022ContentThe Volvo Group drives prosperity through transport and infrastructure solutions,offering trucks,buses,construction equipment,power solutions for marine and industrial applications,financing and services that increase our customers uptime and prod

2、uctivity.Founded in 1927,the Volvo Group is committed to shaping the future landscape of sustainable transport and infrastructure solutions.The Volvo Group is headquartered in Gothenburg,Sweden,employs 102,000 people and serves cus tom ers in almost 190 markets.In 2022,net sales amounted to SEK 473

3、billion(EUR 44.5 billion).Volvo shares are listed on Nasdaq Stockholm.Shaping the world we want to live inEvery day the Volvo Groups products deliver food and medicine,take children to schools,power irrigation systems and construct roads and buildings.The majority of the Volvo Groups customers are c

4、ompanies within the transportation or infrastructure industries.The reliability and productivity of our products and services are a key factor in their success and profitability.Climate change,population growth and increasing urbanization are shifting the landscape and expectations on transport and

5、infra-structure.In all our actions,we must consider how to reduce climate impact,use the worlds resources more efficiently,and conduct business more responsibly.Together with our customers and supply chain partners,govern-ments,societies and other stakeholders,we are moving quickly to develop and in

6、troduce transport and infrastructure solutions that aim to reach our sustainability targets.Driving prosperity socially,environmentally and financially means that we strive towards our vision of transport and infrastructure solutions that are 100%fossil-free,100%safe and 100%more productive.In this

7、annual report,we will take a closer look at how we are working towards achieving this.The Volvo Groups formal financial reports are presented on pages 42146,204206 and 212214 and have been audited by the companys auditors.Sustainability information is integrated in the sections Strategy and Our Busi

8、ness on pages 619 and 2130,and in Sustainability Notes on pages 147185,and has been subject to limited assurance by the Groups auditors.For information on which pages constitute the Volvo Groups Statutory Sustainability Report,please see page 42.Driving prosperity through transport and infra structu

9、re solutions OVERVIEWA global Group.2 Volvo Group in 2022.4CEO comments.6 STRATEGYDriving prosperity.10Strategic priorities.11Towards a decarbonized future.12Opportunity of a lifetime.13The Volvo Groups journey continues.14 Existing industrial footprint and competence are great assets.18Financial ta

10、rgets.20Climate targets.21 OUR BUSINESSCreating shared value.22We are the Volvo Group.24Driving prosperity for many stakeholders.26 Partnerships to create leadership.28 Shaping the future of transportation and infrastructure.30 BOARD OF DIRECTORS REPORT 2022Financial performance.43 Financial positio

11、n.46 Cash flow statement.50 Changes in consolidated equity.52Financial management.53Segments.54The share.66 Risks and uncertainties.68 NOTES TO THE FINANCIAL STATEMENTS.74 PARENT COMPANY.135 SUSTAINABILITY NOTES.147Climate and environment.150Employees and development.163Safety.167Human rights.170Sup

12、ply partners.176Business ethics and compliance.178Complementary general disclosures.180GRI Index.182 CORPORATE GOVERNANCE REPORTCorporate Governance.186Board of Directors.194Group Executive Board.200 OTHER INFORMATIONProposed policy for remuneration to senior executives.204Proposed disposition of un

13、appropriated earnings.206Audit report for AB Volvo(publ).207 Key Ratios.212Eleven-year summary.215Annual General Meeting.223 Preliminary financial calendar.223more productivesafefossil-free100%100%100%VOLVO GROUP 20221OVERVIEWVolvo Group is one of the worlds leading manufacturers of trucks,buses,con

14、struction equipment as well as marine and industrial engines.The Group also provides complete solutions for financing and service.A global Group.People our most important assetThe Volvo Groups 102,000 employees are our most important asset.In the words of CEO Martin Lundstedt:“This company has an in

15、credible strength thanks to all the fantastic colleagues who work here.People who are prepared to take responsibility for their link in the chain but also for the big picture.”Strong brandsThe Volvo Group sells its products under the Volvo,Volvo Penta,Rokbak,Renault Trucks,Prevost,Nova Bus,Mack and

16、Arquus brands.We also partner in alliances and joint ventures in SDLG,Milence,Eicher,Dongfeng and cellcentric.By offering products and services under different brands,we address many different customer and market segments around the world.Competitive products and leading technologyThe Volvo Groups p

17、roducts have been developed to contribute to efficient transport and infrastructure solutions and to provide our customers with reliable uptime.We drive the development of elec-trified vehicles and machines as well as automated solutions for the benefit of customers,society and the environment.Sales

18、 of vehicles and machines build a population of products that requires spare parts and services.Partnerships and collaborations with leading companiesNew technologies are developing at a faster pace than ever before.Staying at the forefront is vital to be successful,and that is why we work in collab

19、orations and partnerships with other leading companies.We have a strategic alliance with Isuzu Motors.We have partnered with Samsung SDI on batteries.We have estab-lished cellcentric together with Daimler Truck to commercialize fuel cell systems for heavy-duty vehicles and other use cases.We work to

20、gether with Aurora on autonomous vehicles.And we are pioneering a European high-performance charging network for heavy-duty trucks and coaches called Milence together with Daimler Truck and Traton Group.World-class servicesIn addition to vehicles and machines,our offering includes various types of s

21、ervices such as financing,insurance,rentals,spare parts,repairs,preventive maintenance,service agreements and assis-tance services.The range and flexibility of the offering means that solutions can be tailor-made for each customer to secure uptime and productivity.The service business contributes to

22、 balancing the fluctuations in the sales of new products and improving profit-ability over the business cycle.Growing the service business is an area of priority.Strong positions globallyThanks to competitive product programs,strong dealers with extensive service networks and increasingly more compl

23、ete offer-ings,the Volvo Group has established leading positions globally.These positions provide for economies of scale in product develop-ment,production,purchasing and financial services.Vehicles 76%Services 20%Financial Services 4%Europe 40%North America 29%South America 11%Asia 14%Africa and Oc

24、eania 6%NET SALES BY REVENUE TYPENET SALES BY MARKETVOLVO GROUP 20222OVERVIEWThe Volvo Groups total market shares in heavy-duty trucks.with strong positions North America16.2%South Africa18.6%Australia22.0%Europe Total27.8%Europe Electric55.8%Brazil24.6%VOLVO GROUP 20223OVERVIEWVolvo Group in 2022 S

25、trong growth in both vehicle and service sales net sales increased by 29%to SEK 473.5 billion.Continued good profitability despite supply chain challenges adjusted operating income increased to SEK 50,467 M(41,015),excluding a negative impact from provisioning of assets related to Russia in an amoun

26、t of SEK 4,125 M and SEK 630 M relating to costs for claims arising from the European Commissions 2016 antitrust settlement decision.For more information,please see Legal Proceedings in Note 24.Reported operating income amounted to SEK 45,712 M(43,074).Earnings per share of SEK 16.09(16.12).Good ope

27、rating cash flow in the Industrial Operations of SEK 35.3 billion(29.4).Return on capital employed in the Industrial Operations of 27.4%(25.3).High pace in the transformation with a rapid expansion of the offer of electric vehicles and machines.Series-production of heavy-duty,44-tonne electric truck

28、s started.The Board of Directors proposes an ordinary dividend of SEK 7.00 per share and an extra dividend of SEK 7.00 per share.KEY RATIOS 2022 2021Net sales,SEK M473,479372,216 Net sales excluding UD Trucks1,SEK M473,479366,778Adjusted operating income2,SEK M50,46741,015Adjusted operating margin,%

29、10.711.0Operating income,SEK M45,71243,074Operating margin,%9.711.6Income after financial items,SEK M45,07743,190Income for the period,SEK M32,96933,243Earnings per share,SEK16.0916.12Dividend,SEK per share14.00313.00Operating cash flow,Industrial Operations,SEK M35,32729,440Net financial position e

30、xcl.provisions for post-employment benefits and lease liabilities,Industrial Operations,SEK bn73.966.2Return on capital employed,Industrial Operations,%27.425.3Return on equity,Financial Services,%0.318.0Return on equity excluding impacts related to Russia,Financial Services,%15.118.0Return on share

31、holders equity,Volvo Group,%20.723.4Total number of employees102,15595,850Share of women,%2221Share of women,presidents and other senior executives,%2827Energy use per net sales,Industrial Operations,MWh/SEK M5.16.8Total CO emissions per net sales,Industrial Operations,tons/SEK M(scope 1&2)0.71.0Sha

32、re of direct material purchasing spend from suppliers having made a CSR self-assessment,%89971 UD Trucks was divested on April 1,2021.2 For more information on adjusted operating income,please see Key Ratios on page 212.3 Proposed by the Board of Directors to the Annual General Meeting 2023.SEK 7.00

33、 per share in ordinary dividend and SEK 7.00 per share in extra dividend.4 Paid out in July 2021.Unless otherwise stated,all comparisons refer to the same period or the same date of the preceding year.VOLVO GROUP 20224OVERVIEWNet sales,SEK bn 2021191822473.5Adjusted operating income1 and Adjusted op

34、erating margin Operating income,SEK bn Operating margin,%201821221950.510.7Return on capital employed Industrial Operations,%181921202227.4Operating cash flow Industrial Operations,SEK bn202119182235.3Net financial position excl.post-employ ment benefits and lease liabilities Industrial Operations,S

35、EK bn SegmentsNet sales,SEK MShare of Group net sales,%Adjusted operating income,SEK MAdjusted operating margin,%TRUCKSVolvo Trucks,Renault Trucks,Mack Trucks,Volvo Autonomous Solutions,Volvo Energy,VE Commercial Vehicles(45.6%ownership),Dong-feng Commercial Vehicles(45%),cell-centric(50%)and Milenc

36、e(33%).310,5366633,82110.9CONSTRUCTION EQUIPMENTVolvo Construction Equipment and Lingong(70%).100,2612113,24413.2BUSESVolvo Buses and Prevost.18,58343531.9VOLVO PENTAEngines and power systems for marine and industrial applications.18,10242,53014.0FINANCIAL SERVICESProvides financial services to cust

37、omers and dealers.17,35543,416N/AGROUP FUNCTIONS&OTHERNova Bus,Arquus and common business support functions.16,376122,911N/AMore information on the Volvo Groups segments and how they are reported can be found in Note 6 to the Financial Statements.1 For more information on adjusted operating income,p

38、lease see Key Ratios on page 212.2 Including Group eliminations.Volvo Group202119182273.9YearVOLVO GROUP 20225OVERVIEWStrong performance and.VOLVO GROUP 20226OVERVIEWIn 2022,the Volvo Group delivered strong growth as well as good profitability and cash flow.We increased our net sales by over SEK 100

39、 billion to SEK 473.5 billion and our adjusted operating income rose to SEK 50.5 billion(41.0),with an adjusted operating margin of 10.7%(11.0).Several transformation milestones to decarbonize the transport system were also passed.This transition is not only vital for a sustainable future,it also de

40、livers on our customers commitments to reduce their CO2 emissions and it drives growth for the Volvo Group.Transport and infrastructure vital for sustainable growthThe transport and infrastructure industries are vital parts in driving sustainable growth.Our customers use our products and services to

41、 move goods and materials,help people get to work or school and build and maintain the infrastructure we all rely on every day.We drive prosperity,in advanced economies and developing coun-tries,across the globe and around the clock.With a growing world population,an ongoing urbanization and growing

42、 e-commerce,demand for transport and infrastructure will continue to increase.We will meet this demand with solutions that are considerably more sustainable,productive and safer than today.We have already started on this journey together with a growing number of customers,and the shift to a decarbon

43、ized transport system is a unique growth opportunity for us as a Group,while at the same time enabling us to have a positive impact on our customers businesses and society.While the long-term growth trend is clear,short-term demand for our products will naturally continue to fluctuate with the busi-

44、ness cycle.Following the economic rebound after the covid-19 pandemic,our customers have continued to operate with high activity levels.In 2022,this translated into strong demand for both products and services.At the same time,the supply of critical components was a limiting factor.In this situation

45、,with disruptions,unpredictability and the almost unthinkable scenario of war in Europe becoming a tragic reality,it has been fantastic to see how colleagues across the Group have taken responsibility,supported each other and worked together with our supply partners and in dialogue with our cus-tome

46、rs to try to deliver on our promises despite all challenges.Our organizations,teams and colleagues are empowered to take deci-sions,and they have responded by finding new,faster,and more agile ways of working.I would like to thank all colleagues and busi-ness partners in the extended Volvo Group fam

47、ily for their hard work,dedication,and outstanding professionalism.Succeeding in this industry is all about people,and our people are truly fantastic.Good growth in all business areasThroughout the year,we focused on flexibility to be able to respond quickly to changes in demand.Costs related to ene

48、rgy,materials and supply chain disruptions increased at a high pace and we worked proactively to compensate for these effects.Despite the challenges in the supply chain,our truck business delivered 232,558 vehicles which was an increase of 15%com-pared with 2021 and an all-time-high.Our brands captu

49、red the good demand for both new and used trucks as well as for spare parts and services,resulting in net sales in the truck business of SEK 310.5 billion,for the first time above SEK 300 billion.Trucks maintained a good adjusted operating margin of 10.9%(11.1).Thanks to our strong product and servi

50、ce offer and our ability to deliver trucks,we continued to gain market shares in most regions.Construction activity was high in Volvo Construction Equip-ments(Volvo CE)key markets in Europe and North America,while demand in China continued to be weak.Towards the end of the year,interest rate increas

51、es made customers in some markets more cautious about the near-term future.In the longer term,there is a need to renew and expand an aging infrastructure in many countries across the world,and the investments needed to drive the green transformation in society is also a big opportunity.Volvo CE incr

52、eased net sales by 9%to SEK 100.3 billion,for the first time above SEK 100 billion,and maintained a good adjusted operating margin of 13.2%(13.3).We continued the rollout of electric machines and moved up to the 20-ton class with the EC230 Electric excavator.In the latest step on the path towards ne

53、t-zero,Volvo CE became the first manufacturer to deliver a con-struction machine an A30G articulated hauler built using fos-sil-free steel to a customer.Volvo Buses net sales increased by 36%to SEK 18.6 billion,which was an improvement from low levels as demand for trans-port and services began to i

54、ncrease as societies opened up after covid-19.Profitability improved,but the adjusted operating margin of 1.9%(0.4)was still low and continues to be a focus area.On the city bus side of the business,the transition to electric buses continued to accelerate.Volvo Pentas sales of both engines and servi

55、ces grew,with net sales increasing by 25%to SEK 18.1 billion.The adjusted operat-ing margin amounted to 14.0%(14.5).Electrification projects for both marine and industrial applications are gaining momentum.“In 2022,we delivered solid profitability,good return to our shareholders and accelerated our

56、transformation in yet another challenging year with geopolitical turmoil,supply chain constraints and high inflationary pressure.”VOLVO GROUP 20227OVERVIEWsame time invest in the transformation of our industries.The Board of Directors proposes an ordinary dividend of SEK 7.00 per share and an extra

57、dividend of SEK 7.00 per share.Good performance a platform for the transformationOur good performance provides the platform for transformation.And we transform today to continue to perform tomorrow.In 2022,we saw an exponential increase in the number of compa-nies that have committed to ambitious ta

58、rgets for reduction of greenhouse gas emissions.As they embark on their journey towards net-zero,many companies find that transports make up a substantial part of their CO2 footprint.This creates a positive pressure for change in the value chains and provides us with an opportunity to grow.Acting as

59、 advisors and solution providers,we work together with our customers and sometimes with their customers to help them decarbonize their transport systems.The shift is happening now and it is accelerating.In May,Arctic tourism operator Hurtigruten Svalbard started oper-ations with a vessel powered by

60、a hybrid electric solution from Volvo Penta in one of the worlds most extreme maritime environ-ments.The high activity level at many of our customers was also reflected in low credit provisions in our customer-financing busi-ness,Volvo Financial Services.The adjusted operating income increased to SE

61、K 3,416 M(3,279)and return on equity was 15.1%(18.0),excluding a negative effect from provisioning of assets related to Russia.In addition to delivering good profitability and a return on capital employed in the Industrial Operations that increased to 27.4%(25.3),we also generated a strong operating

62、 cash flow of SEK 35.3 billion(29.4).We ended the year with a net cash position of SEK 73.9 billion in the Industrial Operations,pension and lease liabilities excluded.Our strong finances mean that we can con-tinue to provide a good return to our shareholders and at the.accelerated transformation“I

63、would like to thank all colleagues and business partners in the extended Volvo Group family for their hard work,dedication,and outstanding professionalism.Succeeding in this industry is all about people,and our people are truly fantastic.”VOLVO GROUP 20228OVERVIEWWe were early out in the transformat

64、ion,starting with electric city buses more than 10 years ago.Since then,we have step-by-step introduced electric offerings across product segments in all business areas,from compact excavators and wheel loaders to electric drivelines for industrial and marine applications,and trucks for waste collec

65、tion,city distribution and regional haulage.In 2022,we passed yet another important milestone with the start of series production of heavy-duty electric Volvo trucks in the Tuve plant,in Gothenburg.These trucks are designed for city-to-city haulage,regional assignments and urban construction.They ha

66、ve gross combination weights of up to 44 tonnes,power of up to 490 kW/666 hp,and operating ranges of up to 300 km depend-ing on application.We are producing them on the same lines where we assemble our fuel-efficient conventional trucks.This enables us to utilize our existing industrial footprint,an

67、d to build on the vast experience and knowledge of our colleagues within operations,also for electric trucks.This year,Renault Trucks will follow,complementing their successful electric light-and medi-um-duty trucks with a heavy-duty electric offering for regional transport and construction.A great

68、opportunity for the GroupThe transformation to electric products goes hand in hand with our strategy to offer our customers complete solutions that bring both value and peace of mind.It is about truly understanding our customers business and providing a complete package with equipment,financing,serv

69、ice contracts,insurance,uptime and productivity services and in the case of electric solutions also charging capabilities and battery optimization.This is a great opportunity for us to deepen our engagement with our customers business and to build true partnerships over time.The transformation will

70、also lead to increased revenues for the Volvo Group with the main driver being the higher value of the electric vehicles and machines.Today,electric trucks,buses and construction machines are part of our core business and I am very proud that we have earned the trust of companies like Maersk,DFDS,Ca

71、rlsberg,Coca-Cola and Amazon.We have leading posi-tions in electric trucks in Europe and North America,with esti-mated market shares of over 50%albeit based on small volumes.The Volvo Group has been instrumental in creating a market for electric trucks and construction equipment that did not exist o

72、nly a few years ago.And to accelerate the rate of change even further,we are working with partners in a number of key areas,ranging from our strategic alliance with the Isuzu Motors to cellcentric our joint venture with Daimler Truck on fuel cells.When it comes to charging infrastructure,the partner

73、ship with both Daimler Truck and the Traton Group in the newly formed company Milence will set an example with the establishment of at least 1,700 high-performance charging points for trucks and buses along public roads in Europe.Batteries are crucial for the electrification journey.In 2022,we conti

74、nued to increase our engagement upstream in the value chain.We are already assembling battery modules into battery packs in-house and we will in the future take further steps in the value chain with the start of production of battery modules.Furthermore,we have started the process to establish batte

75、ry cell production in Mariestad,Sweden.Ambition to be at the forefrontOur ambition is to be at the forefront,to lead this transformation and to run a responsible business.Already today,a large part of our R&D activities are related to low-and zero-emission technol-ogy and it will continue to grow.We

76、 have set climate targets that are in line with what the latest climate science deems necessary to keep global warming at a maximum 1.5 C,and our pathway to reach the goals of the Paris Climate Agreement have been vali-dated by the Science Based Targets initiative.And we have further strengthened ou

77、r work with the principles of the UN Global Com-pact regarding climate,resources and people.In 2022,we delivered solid profitability,good return to our shareholders and accelerated our transformation in yet another challenging year with geopolitical turmoil,supply chain constraints and high inflatio

78、nary pressure.We have a strong foundation in terms of our strong financial position,customer relations,indus-trial backbone,technology,products and services and most importantly people.These qualities and capabilities will be equally important as we move forward,working together with our customers a

79、nd partners shaping the world we want to live in.Martin LundstedtPresident and CEOVOLVO GROUP 20229OVERVIEWOur mission driving prosperityEvery company exists for a reason it has a purpose.Our purpose and our solutions to global challenges are driven by our mission to drive prosperity through transpo

80、rt and infrastructure solutions,and our vision to be the most desired and successful transport and infrastructure solution provider in the world.We continuously develop our products and services to create value for our customers and contribute to sustainable societies and the well-being and safety o

81、f people.By doing so,we also provide value for our shareholders.Creating customer value and showing the way forwardWe aspire to having leading customer satisfaction for all brands in their segments;to be the most admired employer in the industry and to have industry-leading profitability.The Groups

82、values,Customer success,Trust,Passion,Change and Performance,serve as a guide to our day-to-day behavior and drive decisions on all levels of the organization.Our Code of Conduct outlines how we do business in the Volvo Group:ethically and in compliance with the law.The foundation of our strategy is

83、 to create value by supporting our customers profitability.There are many paths to pursue to take on opportunities and challenges and our seven strategic priorities focus on areas with large benefits for both customers and Volvo Group.ASPIRATIONSVALUESCODE OF CONDUCTVISIONMISSIONVOLVO GROUPDriving p

84、rosperity through transport and infrastructure solutionsBe the most desired and successful transport and infrastructure solution provider in the worldCustomer successTrustPassionChangePerformanceWe respect and care for one anotherWe earn business fairly and lawfullyWe safeguard company information a

85、nd assets We separate personal interests from business activities We communicate transparently and responsiblyHave leading customer satisfaction for all brands in their segments Be the most admired employer in our industryHave industry leading profitabilityVOLVO GROUP 2022STRATEGY10Seven strategic p

86、rioritiesTo be successful,the key is to create value for our customers by improving their bottom-line profitability.By understanding our customers needs,priorities and challenges,we can provide products and services that grow customers revenues and decrease customers cost.This is the foundation of o

87、ur strategy.Creating value by supporting customer profitabilityDevelop robust profitability throughout the decentral-ized regional value chains by leveraging global scale,digitalization,a purpose-fit footprint and continuous improvement using the Volvo Production System.Read more about how we drive

88、synergies by having the same truck platform and manufacturing the trucks in the same factory regardless of driveline on page 18.Selectively capture,accelerate and scale-up new businesses and develop competencies and capabili-ties needed.We have together with Daimler Truck a joint venture in fuel cel

89、ls,cellcentric,(page 34)and together with Daimler Truck and the Traton Group we will install and operate a high-performance public charging network for battery-powered heavy-duty long-haul trucks and long-distance buses across Europe called Milence(page 35).Reinforce value-based leadership and ways

90、of work-ing where all colleagues are empowered to take action and are accountable for the results.Read more about how some of our employees work in differ-ent parts of the value chain on page 24 and more about employee development on page 163.Grow in Asia and the US:In Asia through JVs,alliances and

91、 by strengthening the Volvo Group footprint in China.In the US by significantly improving the Groups market position.We have a strategic alliance with Isuzu Motors(page 28)and own 45%in Chinese Dongfeng Commercial Vehicles.In the US,we are rolling out electric trucks and more and more customers are

92、coming on board for the journey(page 33).Information on the development in North America is also available starting on page 54.4567 Transform the Volvo Group to become a leading end-to-end integrator and offer easy-to-integrate prod-ucts and services through strong brands.An over-view of our strong

93、position in the world market can be found on page 3.Read more about our business model and how we create value for customers and through the entire value chain starting on page 22.1Grow the service business and target selected industry verticals offering a portfolio of tailor-made solutions.Service

94、sales including Financial Services rose by 22%in 2022 and accounted for 24%of the Groups sales.2Secure a desirable and sustainable product and ser-vice portfolio with the right quality,leveraging new and well-known technologies,CAST,partnerships,and digital innovation accelerating electromobility so

95、lutions.Read more about our modular CAST system on page 18 and about our partnerships on page 28.More information about the roll-out of electric trucks and machines and our journey towards fossil-free trans-port and infrastructure solutions starts on page 30.3In addition to the mission,vision,aspira

96、tions,values and Code of Conduct we have decided on seven strategic priorities for the Volvo Group to capture growth opportunities and improve under-lying performance.The strategic priorities will guide our decision making and result in action but should not be seen as a detailed action plan.The ord

97、er in which the priorities are presented does not reflect relative importance.VOLVO GROUP 202211STRATEGYMoving towards a decarbonized future.The transport of people and goods are essential for economic and social development.With a growing global population,urbanization and e-commerce,demand for tra

98、nsportation and infrastructure is expected to continue to increase.We need to meet this demand with products and services that are considerably more sustainable than those of today.It is our long-term ambition to offer solutions that are 100%safe,100%fossil-free and 100%more productive.Safe because

99、we cannot accept a situation where,every year,people are killed and injured on roads and job sites.Approximately 1.3 million people die in traffic accidents alone,according to the World Health Organiza-tion.Fossil-free because climate change is the challenge of our generation.More productive because

100、 that will help us meet the growing demand for transport while staying within the natural boundaries of what our planet can sustain.Rapid shift in the transportation industry The transportation industry has an important role to play in the decarbonization of society,and the shift towards electrifica

101、tion is taking place here and now,with the pace of change increasing.Just as the Volvo Group has set ambitious targets on green-house gas emission reductions in line with the Paris Agreement approved by the Science Based Targets initiative(SBTi),many of our customers and their customers are also com

102、mitting to their own sustainability goals.This is driving them to phase out vehicles and machines running on fossil fuels and replace them with electric products.In 2015,there were 116 companies taking action with the SBTi.By the end of 2022,that number had grown to more than 4,200.More and more com

103、panies are taking their first steps on this journey together with the Volvo Group.Our electric vehicles and machines,based on well-proven technology within the Volvo Group,are serving in real operations.The electrified transport and infrastructure solutions are helping transport operators and custom

104、ers in the construction sector to significantly reduce emis-sions and noise.Already today,electric trucks and construction machines are viable options from a total cost of ownership perspective in certain segments in some markets.This transformation will continue to develop segment by segment and re

105、gion by region,with demand for electric trucks and machines expected to increase.This is exemplified by the illustration below with the expected develop-ment for trucks.With improvements in battery and hydrogen fuel cell technology and the fast development of charging networks,the Volvo Group is con

106、vinced that there will be a transformation of the entire trans-port and infrastructure industries in the near future.TAKING ACTION WITH SCIENCE-BASED TARGETSEXPECTED TRANSFORMATION TO ELECTRIC TRUCKS201520251164,2002022EV marketTotalDistributionWasteRegionalConstructionLong haulCompanies taking acti

107、on with SBTi on climate change mitigation.Electrification will happen segment by segment and region by region.12VOLVO GROUP 2022STRATEGY.creates the opportunity of a lifetimeThe shift to electric equipment drives system thinking,where the truck or machine is only one part of a total solution encompa

108、ssing charging infrastructure,battery optimization,maintenance,financing and other value-adding services.For the Volvo Group,the transition to a fossil-free society brings a deeper,broader,and more long-term engagement in our customers business,and a significant opportunity for growth.The Volvo Grou

109、p estimates that there is a potential to increase the revenues by more than 50%over the lifecycle when compar-ing an electric vehicle to a conventional version.This is primarily based on the increased sales value of an electric vehicle but also on increased revenues from autonomous solutions,new dig

110、ital services and services connected to energy solutions.Other factors expected to drive growth are increased service contract penetra-tion and an increase in the duration of the contracts.The Volvo Group started series production of electric trucks up to 27 tons already in 2019 and has established

111、leading market shares both in Europe and North America.In September 2022,Volvo Trucks started series production of heavy electric 44-tonne trucks.With the addition of electric versions of its most important product range,the Volvo FH,Volvo FM,and Volvo FMX,Volvo Trucks has six electric truck models

112、in series production.Furthermore,in early October we announced that Renault Trucks would open for pre-orders of heavy electric trucks for regional transport and urban construction.Production will start at the end of 2023.Read more on page 31 and 32.In 2022,Volvo Trucks had a market share of 31.6%in

113、heavy-duty electric trucks in Europe and Renault Trucks had a market share of 24.2%.Also in North America,Volvo Trucks and Mack Trucks have a strong position in heavy-duty electric trucks with a combined market share of over 50%,according to our assessment.However,it must be emphasized that the volu

114、mes are still small.With a continued global roll-out of electric machines across markets in Europe,North America and Asia in 2022,Volvo Con-struction Equipment supports the journey towards emission-free job sites in a growing number of markets.Autonomous solutions tapping into new revenue poolsWe al

115、so believe that autonomous solutions has the potential to bring a wide range of benefits to society.The introduction of self-driving vehicles and machines opens the way to transport systems that have a significantly reduced impact on the climate,are more productive,more energy efficient and safer.Si

116、nce 2020,the Volvo Group has a business area focused on developing and commercial-izing industrial autonomous transport solutions:Volvo Autono-mous Solutions.Although autonomous solutions are in relatively early phases,we believe that they may offer a significant growth opportunity for the Volvo Gro

117、up as they tap into substantial revenue pools that have not previously been addressed.Instead of selling a truck or machine,we can provide customers with complete transport sys-tems,driving productivity for them and revenues for the Group.Read more about autonomous solutions on page 37.GEARED FOR GR

118、OWTHAmbition for tomorrowTodayYesterday10%Operating marginSalesCAGR%3%last ten yearsClear opportunity Capturing industry growth Untapped service potential Electric vehicles and machines higher sales value increased market shares increased service contract penetration and duration Autonomous solution

119、s Energy services Digital servicesVOLVO GROUP 202213STRATEGYThe Volvo Groups journey continuesThe Volvo Groups strategy is a continuation of a journey the Group has been on for the last two decades.Since the divestment of Volvo Cars in 1999,the Volvo Group is focused on commercial vehicles.From 1999

120、 until 2011,the Groups strategy primarily targeted growth,not least through acquisitions.From 2012 to 2015 the Volvo Group underwent a restructuring program aimed at reorganizing the company to take out overlaps,reduce structural costs and increase efficiency and profitability after the period of ac

121、quisition-driven growth.During this period,there was one major acquisition 45%of Dongfeng Commercial Vehicles in China in 2015.The period between 2016 and 2018 was characterized by a reinforcement of the performance culture with a more decentral-ized organization and a regionalized value chain appro

122、ach.In 2019,the Groups performance had improved significantly and the importance of accelerating the transition towards more sustainable products and operations was manifested when Trans-form was added.A further strengthening of the customer focus and continuous performance improvements continue to

123、be import-ant parts of Perform and Transform,which are not sequential events,but are run in parallel.To stay relevant and profitable,driving both current business performance and the transformation to meet future demands are our key focus areas.Over the last decade,the Volvo Group has established an

124、 indus-try-leading level of profitability and is now taking the next step on its strategic journey.Growth is expected to accelerate with the main driver being the higher value of electric vehicles and machines.ACQUISITION-DRIVEN GROWTHScale,synergies and geographical expansion.MAJOR ACQUISITIONS2001

125、 Renault Trucks and Mack Trucks2007 Nissan Diesel(UD Trucks)2007 70%of Lingong(SDLG)2007 Ingersoll Rand Road Development2008 VECV(joint venture with Eicher)19992011CLOSINGTHE GAPProduct renewal,restructuring and cost efficiency.20122015IMPROVED PERFORMANCECustomer focus,simplicity,speed,continuous i

126、mprovement and organic growth.20162018PERFORM AND TRANSFORMCustomer-centricity,continuous perfor-mance improvement,accelerate solutions and partnerships for sustain ability.2019The continuous streamlining of the Groups business portfolio has also involved the divestment of e.g.Volvo Aero(2012),Volvo

127、 Rents(2014),75.1%of Wireless Car(2019)and UD Trucks(2021).Improved performanceEveryday performance is the foundation for our business,here and now,as well as in the future.We need to be agile and flexible in terms of production volumes,use our common architecture and shared technology(CAST,see page

128、 18)wherever appropriate,and in having continuous introductions instead of major launch projects.Our quality work is crucial in achieving customer satisfaction and the work of regionalizing our value chain is necessary to secure access to key components and give our people the right prerequisites to

129、 support our customers with short lead times.The performance of the Volvo Group has improved substantially during the last few years.Our focus has been on gradual and con-sistent earnings improvement,reduced volatility in earnings and cash flow,as well as allocating capital in a disciplined way.We h

130、ave great assets in our people,products,and services,as well as production sites,well-established dealer networks and customer relations.We have strong finances and are in a good position to be able to invest further in new technologies.Our aim is to excel on the basics as well as building resilienc

131、e.Building resilience is key to our long-term profitability.There are close to 3 million trucks,buses,and machines,produced by the Volvo Group in the last ten years,operating on or off-road.VOLVO GROUP 202214STRATEGYOf those,almost 1.4 million are connected.With this as a base we can extend our serv

132、ice offer and increase the uptime to the benefit of our customers.A stronger service relation and growing service business also improve our resilience throughout the business cycle.Transform to provide valueThe need for transportation is increasing as are the investments in infrastructure,and the dr

133、ivers of transformation within our indus-tries are clear.We transform our business to provide even greater value to our customers and respond to the need for transport and infrastructure solutions that are safe,fossil-free and more productive.Todays trucks and construction machines are not used to t

134、heir full capacity due to e.g.congestion,insufficient route planning and low fill rates.However,with current infrastructure,a fully-loaded truck operating on diesel is one of the most energy-efficient ways of transporting goods on our roads.The same is true for construc-tion equipment.Our view thoug

135、h is that battery-electric and fuel cell-electric vehicles and machines as well as products with inter-nal combustion engines running on different types of renewable fuels are the future.These offers will be further developed to meet upcoming stringent CO2 regulations and our customers increased dem

136、and for sustainable alternatives.When it comes to safety aspects,it is a fact that people die in traffic and human error is by far the main reason.It is also a fact that people and goods spend a lot of time in congestion.Our daily life pattern and non-optimized infrastructure and logistics models re

137、sult both in temporary congestions and at other times heavily unutilized road networks.In the last couple of years we have con-tinuously invested in new business models and new technologies to be able to offer safer,more sustainable and more productive solutions to our customers,with Volvo Autonomou

138、s Solutions and Volvo Energy as two examples.The Volvo Group has a good market position in electric vehicles and machines and the focus is on accelerating the commercializa-tion of new technologies and business models to get traction and impact.This is when the real change happens.STRONG FINANCIAL P

139、OSITIONThe Groups financial position is strong with a net cash position in the Industrial Operations of SEK 73.9 billion excluding post-employment benefits and lease liabilities at year-end 2022.Net financial position Industrial Operations,SEK bn1819202122 Year4362756674IMPROVED THROUGH-CYCLE EARNIN

140、GS RESILIENCE1819202122 Year4148411011112985011 Adjusted operating income,SEK bn Adjusted operating margin,%Profitability has improved in recent years.In 2022,the adjusted oper-ating margin amounted to 10.7%(11.0).In 20182022 the average adjusted operating margin was 10.3%.GOOD SHAREHOLDER RETURNSIn

141、 the calendar years 20182022,AB Volvo distributed SEK 109 billion to the shareholders with a dividend yield of 711%each year,except the pandemic year of 2020.The extra dividend in 2021 included SEK 9.50 relating to the distribu-tion of the proceeds from the sale of UD Trucks.2022 is according to the

142、 Boards proposal.1820212219Year901187506.567501697DELIVERING ON OUR FINANCIAL AMBITIONS AND STRATEGIC DIRECTIONOver the last decade,the Volvo Group has established an industry-leading level of profitability and is now taking the next step on its strategic journey.Growth is expected to accelerate wit

143、h the main driver being the higher value of electric vehicles and machines.Gradual and consistant earnings improvementReduced volatility in earnings and cash flowDiscipline in capital allocation/investmentsContinuous investments in new business models by inno-vation and new technol-ogiesTransformati

144、on accelerating growth Extra dividend,SEK/share Ordinary dividend,SEK/share Dividend yield,%VOLVO GROUP 202215STRATEGYTransforming towards decarbonizationThe Volvo Group has committed to the Science-Based Targets ini-tiative(SBTi)call for action campaign Business Ambition for 1.5C.The campaign requi

145、res greenhouse gas emissions to be net-zero across the Groups value chain by 2050 at the very latest,but our target is to reach this already by 2040 in order to help our customers to reach net-zero by 2050.The Groups targets were validated by the SBTi in June 2021.The expected economic life of the V

146、olvo Groups products is about ten years.What we offer to the market in 2040 will thus still be in use until 2050,and therefore the ambition is that all Volvo Group products delivered from 2040 should avoid fossil fuel GHG emissions.We expect the shift into battery-electric vehicles,fuel cell-electri

147、c vehicles and vehicles with internal combustion engines running on biofuels to be gradual.Our ambition is that by 2030,electric vehicles should account for at least 35%of our vehicle sales globally.Even when most of the vehicles are electric,we foresee use cases for internal com-bustion engines(ICE

148、)running on sustainable biofuels or other fossil-free fuels in some markets.We base the product plan and therefore our research and development on these basic prerequi-sites.We have the competence and the financial resources required to invest in several different techniques.On the road towards deca

149、rbonized transport,there will be legis-lative milestones when it comes to CO2 across the globe.We therefore continue to invest in combustion engines and aftertreat-ment systems to increase fuel efficiency,meet the legislative mile-stones and stay competitive.On our pathway to net-zero we set strateg

150、ies to reduce emis-sion in all relevant scopes.According to our latest emission inven-tory,the use of our products make up approximately 95%of GHG emissions from the product lifecycle.Hence,this is where we emphasize our work and find most opportunities.Individual targets are set for our operating s

151、egments Trucks,Buses,Construction Equipment and Volvo Penta.In our work we focus on three main technologies:More efficient combustion technology in combination with lower carbon fuels.This is key to reduce emissions in rolling fleets here and now.Rapid introduction of battery electric technology to

152、enable zero tailpipe emissions.The bus segment has been at the forefront of this rollout,medium-duty and heavy-duty trucks are in series production and followed by Construction Equipment and Volvo Penta.The main volumes of fully electric vehicles and its associ-ated GHG emissions reduction of the ro

153、lling fleets are expected to be seen at the second half of this decade.Development of fuel cell technology for heavy transports.This will enable zero tailpipe emissions for transport segments where battery electric solutions are not suitable.The ambition is to offer fuel cell-electric vehicles in th

154、e latter part of this decade.The increasing pace in the transformation is already evident in the Volvo Groups deliveries and order intake.In 2022,the Groups deliv-eries of electric trucks increased by 226%,albeit from low volumes.At the same time,order intake for electric trucks increased by 242%.Th

155、e share of research and development expenses targeted at low-carbon solutions were 26%.This transition is associated with a range of risks and opportuni-ties.Investments in research and development will increase in the transition phase as we accelerate to help customers switch to low emission.Over t

156、ime the investments into combustion technology are expected to decrease.Investments in property,plant and equipment will increase in connection with the Group building up capacity for battery-electric and fuel cell-electric vehicles.How-ever,thanks to the Groups modular product architecture(CAST,rea

157、d more on page 18)both electric trucks and trucks with com-bustion engines can be produced on the same assembly lines,thus limiting the investments needed for this transition in the industrial system.The Group also invests in joint ventures and partners with strategic suppliers to accelerate the tra

158、nsition.Read more about this scenario and climate-related risks and opportunities on page 150.Volvo Groups ambition is to reach net-zero GHG emissions by 2040.This will enable our customers to have net-zero rolling fleets by mid-century as it takes approximately ten years to renew a rolling fleet.Th

159、e Volvo Group has a three-pronged approach to the decarbon-ization of the product offer and customers fleets of vehicles and machines:Battery-electric Fuel cell-electric Internal combustion engines running on lower carbon fuels.THE GROUPS PATH TO DECARBONIZATION100%0%2030204020502020Fossil-based ene

160、rgy Fossil-free energyShare of new vehiclesFuel cellBioLNGHVO,electrofuels,hydrogen etc.BatteryElectricInternalCombustionEngineAt least 35%electric vehicles 2030Volvo Group net-zero value chain GHG emissions Customers rolling fleets net-zeroVOLVO GROUP 202216STRATEGYOne global agenda drives developm

161、entThe Sustainable Development Goals(SDGs)were set in 2015 by the United Nations General Assembly and signed by all member states and the SDGs are therefore referred to as one global agenda for 2030.This global agenda impacts the technological and regulatory development as well as expectations from

162、cus-tomers,investors,employees and other stakeholders where we operate.Our commitment to achieving social and economic development without exceeding the planetary boundaries spans across many of the SDGs.Several topics,such as equality and fighting corruption are universal.Beyond these responsibilit

163、ies,we identify closer connections and impacts from our business and operations in a number of goals.Read more about our activi-ties and the most impactful connections to the SDGs in the Sustainability Notes on pages 147185.Our commitment to achieving development without exceeding the planetary boun

164、daries connects to many of the 17 the UNs Sustainable Development Goals.2030VOLVO GROUP 202217STRATEGYExisting industrial footprint and competence are great assets In the shift to electric vehicles and autonomous transports,the Volvo Groups modular vehicle architectures will continue to serve the Gr

165、oup well.They create flexibility as well as cost and capital efficiencies in research and development and in the industrial system as we go through the transformation.CAST the Volvo Groups modular systemThe Volvo Group and its partners can benefit from the Groups modular platform Common Architecture

166、&Shared Technology(CAST).The ambition with CAST is to develop a competitive set of modular products and services that are easy to integrate,meet future legal,market and society needs,as well as meeting cus-tomer expectations.The CAST system is modular,scalable and cost-efficient.We secure an aggrega

167、ted view on needed common architecture and platform solutions,consolidate and support activities on new enabling technology development and strive for continuous devel-opment of standardized interfaces for both hardware and software.Through well-defined performance steps and continuous reduc-tion of

168、 complexity,the CAST ecosystem supports our different brand strategies across disruptive technology trends while captur-ing synergies for the Volvo Group and its joint ventures and alli-ance partners.Trucks with different drivelines on same assembly line The Volvo Groups modular vehicle architecture

169、 creates advantages in both the development and manufacturing phase.For example,the architecture allows us to put either an internal combustion engine or an electric driveline in the same truck chassis.In this way,we can reduce time and costs in the development phase and bring new offers to the mark

170、et faster.In addition,we can manufacture the different variants on the same assembly line in existing plants,leveraging our skilled workforce and invested capital,which again reduces cost and enables us to scale up volumes quickly when required.Increased depth of engagement in the battery value chai

171、nIn May 2022,Volvo Group opened its very first battery pack assem-bly plant.Located in Ghent,Belgium,the plant supplies ready-to-install batteries for Volvo Trucks full electric heavy-duty trucks.In the new battery plant,cells and modules from Samsung SDI are assembled into battery packs that are ta

172、ilor-made for the Volvo Groups products.ConstructionequipmentJoint venturesand alliancesBusesTrucksVolvo PentaCASTCommon Architecture Shared TechnologyThe Volvo Groups modular platform.Combustion engineElectricdrivelineBatterypackFuel cellpackFuel cellelectricCombustion enginePre-assembly stationsMa

173、in assembly lineBatteryelectricCOMMON ARCHITECTURE&SHARED TECHNOLOGYTRUCKS WITH DIFFERENT DRIVELINES ON SAME LINEDriving synergies and reducing cost.VOLVO GROUP 202218STRATEGYEach battery pack has a capacity of 90 kWh,and in a truck a cus-tomer can choose to have up to six battery packs(540 kWh).The

174、 number of batteries depends on each customers specific range,load capacity demands and access to charging infrastructure,etc.When our customers invest in electric trucks,we help them plan their routes and operations.Done effectively,this makes for a smooth transition to electric trucks and extends

175、the trucks range.Volvo Groups batteries are designed so that they can later be remanufactured,refurbished,and reused.In October,it was announced that in 2025,the plant in Ghent will start to produce battery modules.The investment decision to install battery mod-ule manufacturing capacity is an impor

176、tant step for the Volvo Group to shape its future value chain for battery systems.Another important step is the initiation of the process to estab-lish a large-scale production plant for battery cells in Mariestad,Sweden.The proposed site is close to the Volvo Groups current main powertrain plant in

177、 Skvde.It will benefit from the regions existing industrial and logistics infrastructure and build on a strong Ghent plant toproducebatterymodulesBUILD-UP OF A BATTERYVolvo Group is gradually increasing its vertical integration towards cell production.CELLMODULEPACKENERGY STORAGE SYSTEM(BATTERY)heri

178、tage and world-class competence in advanced,high-volume manufacturing,while having access to Swedens rich supply of fossil-free energy.The Volvo Group plans to gradually increase capacity and reach large-scale series production by 2030.The battery cells will be designed specifically for commercial v

179、ehicle applications,supporting the global roll-out of electric trucks,buses,construction equipment and electric drivelines for different applications.Establishment of the production site is subject to approvals from relevant authorities.The battery module manufac-turing line in Ghent will be able to

180、 use battery cells both from part-ners and from the planned battery cell plant in Sweden.VOLVO GROUP 202219STRATEGYFinancial targets fulfilling our ambitionsThe current financial targets were decided on by the Board of Directors in 2017.A clear and straightforward operating margin target supports th

181、e efforts to drive performance across the Group through the business cycle.The target also aligns with the way the Group is challenged and measured internally.A debt-free industrial balance sheet,excluding pension and lease liabilities,enables the Volvo Group to better manage cyclicality in a capita

182、l-intensive industry and to secure competitive cost of funds for the Financial Services operation.OPERATING MARGIN FOR THE VOLVO GROUP,%2021202220182020201905151011.69.78.88.111.5NET FINANCIAL POSITION INDUSTRIAL OPERATIONS,excl.post-employment benefits and lease liabilities,SEK bn202120222018202020

183、1980200604066.243.974.762.673.9RETURN ON EQUITY IN FINANCIAL SERVICES,%18912156302021202220182020201918.015.18.315.00.315.1*Target:The Volvo Groups operating margin shall exceed 10%measured over a business cycle.Outcome:In 2022,the operating margin amounted to 9.7%(11.6).In 20182022 the average oper

184、ating margin was 9.9%.In 2022,the adjusted operating margin amounted to 10.7%(11.0).In 20182022 the average adjusted operating margin was 10.3%.For more information on adjusted operating margin,please see Key Ratios on page 212.Target:The Industrial Operations shall under normal conditions have no n

185、et financial indebtedness excluding provisions for post-employ ment benefits and lease liabilities.Outcome:At the end of 2022,the Industrial Operations had a net financial asset position of SEK 73.9 billion.Target:Financial Services target is a return on equity of 1215%at an equity ratio above 8%.Ou

186、tcome:In 2022,return on equity amounted to 0.3%at an equity ratio of 8.0%.In 20182022 the average return on equity was 11.2%.In 2022,return on equity excluding a negative effect from provisioning of assets related to Russia amounted to 15.1%.In 20182022 the average return on equity excluding the adj

187、ustment related to Russia was 14.3%.For more information on adjustments,please see Key Ratios on page 212.*Excluding a negative effect from provisioning of assets related to Russia.VOLVO GROUP 202220STRATEGYClimate targets towards net-zeroThe Volvo Group has committed and set targets in line with th

188、e Science-Based Targets initiative(SBTi)campaign Business Ambition for 1.5C,and we have set ambitious milestone targets in our value chain along the way.As the most significant emissions are in the customers use-phase,the Volvo Group sees significant opportunities in helping to decarbonize their ope

189、rations.The transition towards lower emissions in our industries is at an early stage but is expected to accelerate with increased electric vehicle sales and also with the support of fuel-efficiency improvements.The Groups own operations(Scope 1 and 2)make up less than 1%of total emissions.The use-p

190、hase(Scope 3.11)makes up over 95%of lifecycle emissions and this is our main focus of decarbon-ization.Consequently,we have established targets per segment.For Trucks and Buses the targets are set in emission per vehicle-kilometer.For Construction Equipment,Volvo Penta and our own operations,the tar

191、gets are set as total absolute reductions.These targets are approved by the SBTi as science-based.Tracking of emissions in remaining scopes,representing approximately 4%of the total,is under development.On an aggregated level,the total calcu-lated emissions amounted to 287 million tons 2022 compared

192、 with 323 million tons in 2019.The result in total GHG emissions is a combination of energy efficiency,sales volumes and product mix.The reported emissions for the year in scope 3.11 use phase make up the vast majority of the total emissions footprint and is calculated by including expected lifetime

193、 emissions from all products sold in the reporting year.As such,annual sales volumes have a significant impact on results from one year to the next.The Volvo Group is operating in cyclical industries,which are linked to economic activity,and consequently sales volumes and utilization of the rolling

194、fleet of products vary over time.See detailed information on GHG emissions,measurements and targets on page 154156.SBTI APPROVED TARGETS,FROM BASELINE 2019Status 20224%Status 20227%Status 202211%Status 2022+5%Status 202213%Scope 3 use phaseTRUCKSTarget 203040%emissions per vehicle kmScope 3 use phas

195、eBUSESTarget 203040%emissions per vehicle kmScope 12OWN OPERATIONSTarget 203050%absolute emissionsScope 3 use phaseCONSTRUCTION EQUIPMENTTarget 203030%absolute emissionsScope 3 use phaseVOLVO PENTATarget 203437.5%absolute emissionsGREENHOUSE GAS EMISSIONSMton19202122323241286287YearVOLVO GROUP 20222

196、1STRATEGYCreating shared value across the value chainOur strategy responds to a range of sustainability-related issues.This means considering the impact on the world around us as part of how we look at the long-term success of our business.CustomersOur aim is to support our customers by providing of

197、fers that increase their productivity,secure uptime and increase fuel and GHG efficiency,which improve their financial performance and reduce their impact on the environment.As 95%product life-cycle emissions occur in the use phase,we see great opportunities in helping to reduce these emissions and

198、by doing so reducing our climate-related impacts and risks.Sustainability focus areas Traffic and site safety example,page 41.Science-based targets,scope 3 use phase,page 155.Climate strategy,opportunities,risk and governance,page 150.We focus on three key areas where our products,services and opera

199、tions are particularly important for sustainable development:People focusing on health,empowerment,business ethics and human rights,striving for 100%safe products and operations.Climate focusing of reducing greenhouse gas emissions from our business and operation,striving for 100%fossil free.Resourc

200、es using natural resources in the most efficient way and contributing to 100%productivity improvement of our customers logistics operations.Reuse We strive to increase material efficiency and reduce energy use by incorporating more recycled materials,recovering heat and recycling waste.We also work

201、to optimize and extend product life and by doing so extend customer contracts,which can lead to both resource 16 tons)197,249 167,290Medium duty(716 tons)15,475 13,136Light duty(10 tons,wheel loaders engine power 120 hp,articulated haulers,rigid haulers and road machinery products.2 Excavators 10 to

202、ns,wheel loaders engine power 90daysTotalNot due130days3190days90daysTotalCustomer-financing receivables,gross186,75510,0902,9991,014200,858141,2817,9154,803813154,812Whereof not credit impaired185,9589,7672,455326198,506140,4417,4154,390113152,359Whereof credit impaired7973235446882,352840500413700

203、2,45415:1Non-current customer-financing receivablesDec 31,2022Dec 31,2021Installment credits64,60049,081Finance leases38,12232,279Other receivables2,3422,026B/S Non-current customer-financing receivables105,06483,386The effective interest rate for non-current customer-financing receivables amounted

204、to 5.90%(4.92)as of December 31,2022.15:2Non-current customer-financing receivables maturities,SEK M20242025202620272028 or later3,54840,66731,46520,1409,244 15:3Current customer-financing receivablesDec 31,2022Dec 31,2021Installment credits35,67726,183Finance leases21,27820,823Dealer financing28,86

205、318,952Other receivables3,0462,160B/S Current customer-financing receivables88,86468,118The effective interest rate for current customer-financing receivables amounted to 5.88%(4.77)as of December 31,2022.15:4Credit risk in customer-financing receivablesDec 31,2022Dec 31,2021Customer-financing recei

206、vables gross200,858154,812Allowance for expected credit losses for customer-financing receivables6,9303,308Whereof allowance for credit impaired 573617Whereof allowance for not credit impaired 6,3572,691Customer-financing receivables,net of allowance193,928151,50415:5Change of allowance for expected

207、 credit losses for customer-financing receivables20222021Not credit impairedCredit impairedNot credit impairedCredit impairedOpening balance 2,6916172,289611New valuation allowance charged to income3,574103519238Reversal of valuation allowance charged to income 115806576Utilization of valuation allo

208、wance related to actual losses01250386Movements between not credit impaired/credit impaired12424188188Translation differences 3278212943Reclassification2111Syndication transactions and other144104Allowance for expected credit losses for customer-financing receivables as of December 316,3575732,69161

209、71 When a receivable becomes credit impaired a transfer of allowance is made to allowance for credit impaired receivables.2 Change in accounting treatment for operating leases within Financial Services in 2021.VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS107ACCOUNTING POLICYReceivables are measu

210、red at amortized cost.The Volvo Group is applying the simplified expected credit loss model for accounts receivables,under which the loss allowance is measured at an amount equal to lifetime expected credit losses.The allowance is recorded at initial recognition and is reassessed during the contract

211、 period.Changes to the allowance for expected credit losses for accounts receivables are recognized in other operating income and expense.Read more in Note 30 Financial instruments in section derecognition of financial assets,about receivables subject to discounting activities.16ReceivablesTable 15:

212、6 represents the gross credit exposure on customer-financing receivables within the Volvo Group per age interval.The lifetime expected credit loss allowance for customer-financing receivables not credit impaired amounted to SEK 6,357 M(2,691)and allowance for customer-financing receivables credit im

213、paired amounted to SEK 573 M(617),included in tables 15:4 and 15:5.The remaining exposure was secured by liens on the financed commercial vehicles and equipment and,in certain circumstances,other credit enhancements such as personal guarantees,credit insurance,liens on other property owned by the bo

214、rrower etc.Col-laterals taken in possession that meet the criteria for recognition in the balance sheet amounted to SEK 202 M(104)as of December 31,2022.Concentration of credit riskCustomer concentrationThe ten largest customers within Financial Services account for 6.5%(5.7)of the total asset portf

215、olio.The rest of the portfolio is attributable to a large number of customers and the credit risk is therefore spread across many customers.During 2022 SEK 12.2 billion(9.8)of customer financ-ing receivables were syndicated in order to reduce concentration risks.Concentration by geographical marketG

216、raph 15:7 discloses the concentration of Financial Services portfolio divided into geographical markets.Read more in Note 4 Goals and policies in financial risk management about credit risks.Read more in the Board of Directors report about Financial Services development during the year.SOURCE OF EST

217、IMATION UNCERTAINTY AND CRITICAL JUDGMENTSAllowance for expected credit lossesAccounts receivables are short term by nature and consequently the risk assessment horizon is short.A collective assessment is made on accounts receivables not credit impaired.Historical information regarding credit loss e

218、xperience is used to forecast future losses,adjusted for current and fore-casted conditions.An individual assessment is made on credit impaired accounts receivables based on the financial condition of the customer.The past years have been affected by the covid-19 pandemic.Most countries have now eas

219、ed their restrictions and made changes to the gov-ernment support programs previously implemented.However,the duration and future development of the pandemic is still unknown.In addition to this the past year has also been affected by the war in Ukraine and the ensuing sanctions as well as high infl

220、ationary pressure in many regions which might increase the risk for customer default.Based on this the assessment pro-cess for valuation allowances for expected credit losses for accounts receivables continues to be in focus in order to ensure allowances are in alignment with the new phase of the ec

221、onomic environment.15:7Geographic market,percentage of customer-financing portfolio(%)Europe,37.0%North America,37.5%Asia,5.9%South America,15.1%Africa and Oceania,4.5%VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS10816:4Age analysis of accounts receivablesDec 31,2022 Dec 31,2021Not Due130319090T

222、otalNot Due130319090TotalAccounts receivables,gross43,0232,2792,0862,33449,72137,1731,8131,2581,37741,622Allowance for expected credit losses on accounts receivables67865547041,5012415953493846B/S Accounts receivables,net42,3452,2142,0321,63048,22036,9321,7531,20588540,776Risk management practices C

223、redit risks are managed through active credit monitoring and follow-up routines in accordance with the Volvo Group Credit management direc-tive.This directive includes different steps to perform when an invoice is not paid at due date.When an increased credit risk is verified,for example through a b

224、ankruptcy,or when an allowance has been unchanged for two years and it can be demonstrated that all required steps have been per-formed,the allowance is reversed and the accounts receivables are writ-ten off.Apart from certain exceptions the Volvo Group continues to engage in enforcement activity ev

225、en after a write-off in order to recover the contractual amount not previously received.Due to the prevailing business model in the construction equipment industry in China,with longer payment terms to customers,a substantial part of the Volvo Groups accounts receivable is related to customers in th

226、is market.The weakened Chinese construction equipment market is currently impacting customers and dealers profitability negatively.This might affect their ability to honor their obligations to the Volvo Group and may consequently have a material adverse effect on the Volvo Groups financial result an

227、d position.Renegotiated receivables are on a slightly lower level than last year,with the majority of the exposure related to renegotiated receivables within Construction Equipment in China.Renegotiated receivables con-tinue to be closely monitored for on-going payment performance and signs of impai

228、rment.As of December 31,2022,the total allowance for expected credit losses for accounts receivables amounted to 3.02%(2.03)of total accounts receivables.The increase in allowances is primarily due to the weaker con-struction equipment market in China this year compared to last year.Read more in Not

229、e 4 Goals and policies in financial risk management,regarding credit risk.16:1Non-current receivablesDec 31,2022Dec 31,2021Other interest-bearing receivables 1676436Interest and currency risk derivatives 24,9912,090Contract and right of return assets34,0364,195Other receivables3,1224,257Non-current

230、receivables 12,82510,9781 The amount is the non-current part of other interest-bearing receivables in note 30 Financial instruments,table 30:1.2 The amount is the non-current part of interest and currency risk derivatives in note 30 Financial instruments,table 30:1.3 Read more in Note 7 Revenue,abou

231、t contract and right of return assets.16:2Current receivables Dec 31,2022Dec 31,2021Other interest-bearing receivables 15,0621,255Tax assets2,0591,708Accounts receivables48,22040,776Prepaid expenses and accrued income3,6243,225VAT receivables5,9174,205Interest and currency risk derivatives2760840Con

232、tract and right of return assets31,8221,641Other receivables7,8527,526Current receivables,after deduction of allowance for expected credit losses on accounts receivable s75,31661,1761 The amount is the current part of other interest-bearing receivables in note 30 Financial instruments,table 30:1.2 T

233、he amount is the current part of interest and currency risk derivatives in note 30 Financial instruments,table 30:1.3 Read more in Note 7 Revenue,about contract and right of return assets.16:3Change of allowance for expected credit losses on accounts receivables20222021Opening balance 846771New allo

234、wance charged to income991433Reversal of allowance charged to income162177Utilization of allowance related to actual losses94144Translation differences5361Reclassifications,etc113399Allowance for expected credit losses on accounts receivables as of December 311,5018461 Whereof reclassification to ot

235、her non-current receivables of SEK 127 M(104).VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS10917InventoriesACCOUNTING POLICYInventories are measured at the lower of cost and net realizable value.The cost is established by using the first-in,first-out principle(FIFO)and is based on a standard cos

236、t method,including costs for all direct manufac-turing expenses and the attributable share of capacity and other manu-facturing-related costs.The standard costs are reviewed regularly and adjustments are made based on current conditions.Manufacturing costs are based on normal capacity utilization wh

237、ich are allocated to inventory while unabsorbed cost due to changes in production volume are recog-nized in the income statement as incurred.Costs for research and develop-ment,selling,administration and financial expenses are not in cluded.Net realizable value is calculated as the selling price les

238、s costs attribut-able to the sale.SOURCE OF ESTIMATION UNCERTAINTY AND CRITICAL JUDGMENTSWrite-down of inventoriesThe calculation of net realizable value involves estimation of a future sales price,which is dependent on several parameters,such as market demand,model changes and development of used p

239、roducts prices.If the esti-mated net realizable value is lower than cost,a write down of invent ories is made.17:1InventoriesDec 31,2022Dec 31,2021Finished products37,85432,297Production materials etc.37,83531,619B/S Inventories75,68963,916The total value of inventories,net after write-downs,was SEK

240、 75,689 M(63,916)as of December 31,2022.Inventories recognized as cost of sold products during the period amounted to SEK 346,539 M(273,872).17:2Change in write-down of inventories20222021Opening balance3,5813,452Change in write-down of inventories charged to income380334Scrapping259373Translation d

241、ifferences322171Reclassifications etc.33Write-down of inventories as of December 314,0213,581 VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS110ACCOUNTING POLICYCash and cash equivalents include highly liquid interest-bearing securities that are considered easily convertible to cash.These include

242、market able securities,with a date of maturity less than three months at the time of investment.Interest-bearing securities with a date of maturity exceeding three months at the time of investment are recognized as marketable securities.Read more in Note 30 Financial instruments,about accounting pol

243、icies for financial instruments.18:1Cash and cash equivalentsDec 31,2022Dec 31,2021Cash in banks54,63646,286Marketable securities with original duration less than 3 months15,1091,803Time deposits in banks24,14114,038B/S Cash and cash equivalents83,88662,1261 Additionally the Volvo Group recognized o

244、utstanding marketable securities with original duration exceeding 3 months of SEK 93 M(167)in government securities as of December 31,2022.18Cash and cash equivalents Cash and cash equivalents as of December 31,2022,include SEK 2.3 billion(2.8)that is not available for use by the Volvo Group and SEK

245、 14.5 billion(8.7)where other limitations exist,mainly cash and cash equivalents in countries where exchange controls or other legal restrictions apply.There-fore,it is not possible to immediately use these cash and cash equivalents in other parts of the Volvo Group,however there is normally no limi

246、tation to use them for the Volvo Groups operation in the respective country.VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS11119:1Change in other reserves Holding of shares at fair valueOpening balance 20228Remeasurements of holdings of shares at fair value45DisposalBalance as of December 31,20223

247、719:2Information regarding number of sharesDec 31,2022Dec 31,2021Own Series A sharesOwn Series B sharesTotal own sharesOwn shares in%of total registered sharesOutstanding Series A shares444,987,875444,987,946Outstanding Series B shares1,588,464,2091,588,464,138Total outstanding shares2,033,452,0842,

248、033,452,084Total registered Series A shares444,987,875444,987,946Total registered Series B shares1,588,464,2091,588,464,138Total registered shares2,033,452,0842,033,452,084Average number of outstanding shares2,033,452,0842,033,452,084ACCOUNTING POLICYDividend resolutions are approved at the annual g

249、eneral meeting or,in certain cases,during an extraordinary general meeting.When the deci-sion has been approved,equity is reduced and the dividend is reported as a liability to the shareholders in the balance sheet until the payment has taken place.Earnings per share before dilution is calculated as

250、 income for the period,attributable to the owners of AB Volvo,divided by AB Volvos aver-age number of outstanding shares for the fiscal year.Diluted earnings per share is calculated as income for the period attributable to the owners of AB Volvo,divided by AB Volvos average number of outstanding sha

251、res after dilution for the fiscal year.If during the year there were potential shares redeemed or expired,they are included in the average number of shares used to calculate the earnings per share after dilution.The Annual General Meeting,held on April 6,2022,resolved that an ordi-nary dividend of S

252、EK 6.50(6.00)per share and an extraordinary dividend of SEK 6.50(18.50)per share,totaling SEK 13.00(24.50)per share should be paid to shareholders.During 2022,the Volvo Group distributed SEK 26.4 billion(49.8)to the shareholders.The share capital of the Parent company amounted to SEK 2,562 M(2,562)o

253、n December 31,2022 and is divided into two series of shares,A and B.Both series carry the same rights,except that each Series A share carries the right to one vote and each Series B share carries the right to one tenth of a vote.The shares quota value is SEK 1.26(1.26).During 2022 AB Volvo converted

254、 a total of 71 Series A shares to Series B shares.Unrestricted equity in the Parent company as of December 31,2022 amounted to SEK 59,504 M(61,311).For the year 2022,the Board of Directors proposes an ordinary divi-dend of SEK 7.00 per share and an extraordinary dividend of SEK 7.00 per share,a tota

255、l of SEK 14.00 per share amounting to SEK 28.5 billion.Read more in Changes in equity in the Parent company about AB Volvos share capital.19Equity and number of shares19:3Series A sharesSeries B sharesTotalOutstanding shares202220212022202120222021Outstanding shares opening balance444,987,946448,113

256、,3461,588,464,1381,585,338,7382,033,452,0842,033,452,084Converting Series A shares to Series B shares713,125,400713,125,400Outstanding shares as of December 31444,987,875 444,987,946 1,588,464,2091,588,464,138 2,033,452,0842,033,452,08419:4Information regarding shares20222021Number of outstanding sh

257、ares,December 31,in millions2,0332,033Average number of shares before dilution in millions2,0332,033Average number of shares after dilution in millions2,0332,033Average share price,SEK179.32208.80Net income attributable to owners of AB Volvo,SEK M32,72232,787Basic earnings per share,SEK16.0916.12Dil

258、uted earnings per share,SEK16.0916.12VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS112ACCOUNTING POLICYThe Volvo Groups post-employment benefits,such as pensions,health-care and other benefits are mainly settled by means of regular payments to independent authorities or bodies that assume pension

259、 obligations and administer pensions through defined contribution plans.For defined con-tribution plans,expenses for premiums are recognized in the income statement as incurred.Part of the post-employment benefits are defined benefit plans where the obligations remain within the Volvo Group and are

260、secured primarily by proprietary pension foundations.The Volvo Groups largest defined benefit plans relate to subsidiaries in the USA and comprise both pen-sions and other benefits,such as healthcare.Other large-scale defined benefit plans apply to white collar employees in Sweden(mainly through the

261、 ITP pension plan)and employees in Great Britain,Belgium and France.Actuarial calculations are made for all defined benefit plans,subject to materiality,in order to determine the present value of the obligation for benefits vested by its current and former employees.The actuarial calcu-lations are p

262、repared annually and are based upon actuarial assumptions that are determined at the end of the reporting period.Changes in the present value of obligations due to revised actuarial assumptions and experience adjustments constitute remeasurements.Provisions for post-employment benefits in the Volvo

263、Groups balance sheet correspond to the present value of obligations at year-end,less fair value of plan assets.All changes in the net defined liability(asset)are recognized when they occur.Service cost and net interest expense(income)are recog-nized in the income statement,while remeasurements such

264、as actuarial gains and losses are recognized in other comprehensive income.Special payroll tax is included in the pension liability in pension plans in Sweden and Belgium.SOURCE OF ESTIMATION UNCERTAINTY AND CRITICAL JUDGMENTSAssumptions when calculating post-employment benefits Provisions and costs

265、 for post-employment benefits,mainly pensions and health care benefits,are dependent on actuarial assumptions.The actuarial assumptions and calculations are made separately for each defined benefit plan.The most significant assumptions are discount rate and inflation.Inflation assumptions are genera

266、lly set as a long term assumption based on an evaluation of external market indicators.A sensitivity analysis is included in graph 20:6 and shows the effect on the defined benefit obligations if significant assumptions are changed.There are also other assumptions made such as salary increases,retire

267、ment rates,mortality rates,health care cost trends rates and other factors.The salary increase assumptions reflect the historical trend,the near-term and long-term outlook and assumed inflation.Retirement and mortality rates are based primarily on officially available mortality statistics.Healthcare

268、 cost trend assumptions are based on historical data as well as the near-term outlook and an assessment of likely long-term trends.The Volvo Group has engaged a global actuary in order to ensure that a professional assessment is made and that assump-tions are consistently developed across jurisdicti

269、ons.The actuarial assump-tions are reviewed annually by the Volvo Group and modified when deemed appropriate.A sharp rise in actual and expected inflation has led to tighter monetary policy actions by central banks globally,with few exceptions.Long and short term interest rates have generally experi

270、enced sharp upward move-ments during the year,and in many cases with speed and volatility not seen in several decades.The value of risk assets has been negatively impacted given the circumstances.Funding levels for the Volvo Groups pensions plans remain strong despite challenging financial market co

271、nditions.20Provisions for post-employment benefitsThe following tables disclose information about defined benefit plans.The Volvo Group recognizes the difference between the obligations and the plan assets,adjusted for potential asset ceilings,in the balance sheet.The disclosures refer to assumption

272、s applied for actuarial calculations,recog-nized costs during the financial year and the value of obligations and plan assets at year-end.The tables also include a reconciliation of obligations and plan assets during the year.20:1Assumptions applied for actuarial calculationsDec 31,2022Dec 31,2021Sw

273、edenDiscount rate,%13.952.00Inflation,%22.001.75Expected salary increase,%2.652.40Assumed life expectancy on retirement at age 65(Male/Female)Retiring today(member age 65),year22.2/24.420.9/23.5Retiring in 25 years (member age 40 today),year24.6/26.822.7/24.6USADiscount rate,%1,35.005.351.152.81Infl

274、ation,%2.502.20Expected salary increase,%3.683.50Assumed life expectancy on retirement at age 65(Male/Female)Retiring today(member age 65),year20.5/22.420.5/22.3Retiring in 25 years (member age 40 today),year22.4/24.222.4/24.1Great BritainDiscount rate,%14.951.80Inflation,%3.153.30Expected salary in

275、crease,%0.000.00Assumed life expectancy on retirement at age 65(Male/Female)Retiring today(member age 65),year22.2/23.922.1/23.8Retiring in 25 years (member age 40 today),year24.3/26.723.9/26.4BelgiumDiscount rate,%14.171.21Inflation,%2.001.50Expected salary increase,%2.862.51FranceDiscount rate,%14

276、.191.19Inflation,%2.001.50Expected salary increase,%3.012.501 The discount rate for each country is determined by reference to market yields on high quality corporate bonds.In countries where there is no functioning market in such bonds,the market yields on government bonds are used.The discount rat

277、e for the Swedish pension obligation is determined by extra polating current market rates along the yield curve of mortgage bonds.2 The long term inflation assumption is 2.00%.The pension obligations in Sweden have been adjusted for short-term inflation for the year 2023.3 For all plans except three

278、 the discount rate used is within the range 5.155.22%(2.472.81).VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS11320:2Summary of provisions for post-employment benefitsDec 31,2022Dec 31,2021Obligations52,86265,122Fair value of plan assets46,84455,317Net provisions for post-employment benefits 6,01

279、89,80520:3Pension costs20222021Current year service costs1,5531,943Interest costs1,3251,062Interest income1,255917Past service costs1367Gain/loss on settlements2251Pension costs for the period,defined benefit plans1,6141,971Pension costs for defined contribution plans3,6532,958Total pension costs fo

280、r the period5,2674,92820:4Costs for the period,post-employ-ment benefits other than pensions20222021Current year service costs106110Interest costs134104Interest income3128Past service costs04Gain/loss on settlementsRemeasurements99148Total costs for the period308338The analysis in graph 20:6 present

281、s the sensitivity of the defined benefit obligations when changes in the applied assumptions for discount rate and inflation are made.The sensitivity analysis for the discount rate is based on a change in the assump tion while holding all other assump-tions constant.In practice,this is not probable,

282、and a change in the assumption may be correlated.The sensitivity analysis for a change in long-term inflation correlates with other inflation linked assumptions.Depending on specific plan and benefit design,the sensitivity effect on the obligation differs for the respective assumptions.20:5SwedenPen

283、sionsUSAPensionsGreat BritainPensionsBelgiumPensionsFrancePensionsUSA Other benefitsAverage duration of the obligations,years19.88.812.610.211.28.5VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS11420:7Obligations in defined benefit plansSwedenPensionsUSA PensionsGreatBritainPensionsBelgiumPensions

284、FrancePensionsUSA OtherbenefitsOtherplansTotalObligations opening balance 202126,67720,2737,5333,7502,6803,3633,64467,920Acquisitions,divestments and other changes06306656Current year service costs8615470213170512112,053Interest costs385459123312470741,165Past service costs69551060191Settlements1,14

285、021,142Employee contributions295382Remeasurements1:Effect of changes in demographic assumptions59023371 Effect of changes in financial assumptions3,2551,1551791861091721305,185 Effect of experience adjustments238375911115227267Exchange rate translation2,15474273523481353,505Benefits paid5511,3892861

286、061063382883,064Obligations as of December 31,202123,94819,8197,9343,6072,6003,4803,73565,122of whichFunded defined benefit plans23,51719,0887,9343,579152,56756,699Acquisitions,divestments and other changes000065Current year service costs819225205167392031,659Interest costs475581144443295891,460Past

287、 service costs2501212Settlements9341431,077Employee contributions000205879Remeasurements1:Effect of changes in demographic assumptions60217200598 Effect of changes in financial assumptions6,5165,0343,0271,00281077780017,967 Effect of experience adjustments590209426165106136201,234Exchange rate trans

288、lation3,0472763162255243124,701Benefits paid5871,306287132733642032,953Obligations as of December 31,202219,35716,1905,4653,2032,2643,1323,25252,862of whichFunded defined benefit plans18,98415,5425,4653,203122,26845,4751 Out of the total remeasurement of the defined benefit obligation,SEK 16,227 M(5

289、,601)has been recognized in Other Comprehensive Income,and 92 M(148)in the Income Statement.20:6+2,015831361155123132141020104311451,979Effect on obligation,SEK MSweden PensionsUSA PensionsUSA Other benefitsOther plansFrance PensionsGreat Britain PensionsIf inflation decreases 0.5%If inflation incre

290、ases 0.5%Sweden PensionsUSA PensionsUSA Other benefitsOther plansFrance PensionsGreat Britain PensionsBelgium PensionsSENSITIVITY ANALYSIS 2022 If discount rate decreases 0.5%Belgium PensionsIf discount rate increases 0.5%1,8136283311371141151301,76902171030395VOLVO GROUP 2022NOTES TO THE FINANCIAL

291、STATEMENTS11520:8Fair value of plan assets in funded plansSwedenPensionsUSA PensionsGreatBritainPensionsBelgiumPensionsFrancePensionsUSA OtherbenefitsOtherplansTotalPlan assets opening balance 202117,89220,9177,4802,80415332,06351,203Acquisitions,divestments and other changes03015147Interest income2

292、6447812323056944Settlements1,0901,090Remeasurements12,3681195611710461,813Asset ceiling46416479Employer contributions32265163215766Employee contributions305484Exchange rate translation2,1887405403853,070Benefits paid11,387286102002232,000Plan assets as of December 31,202120,84521,0138,0243,11314372,

293、27155,317Acquisitions,divestments and other changes0001002Interest income417617146390671,286Settlements9011541,055Remeasurements12,2745,4843,34948023911,826Asset ceiling48114495Employer contributions1561666158328411Employee contributions3405893Exchange rate translation3,225281275152023,989Benefits p

294、aid11,30228713211441,867Plan assets as of December 31,202218,83117,2185,3622,97215422,40346,8441 Out of the total remeasurement of the plan assets,SEK 11,331 M(2,292)has been recognized in Other Comprehensive Income.20:9Net provisions for post-employment benefitsSwedenPensionsUSA PensionsGreatBritai

295、nPensionsBelgiumPensionsFrancePensionsUSA OtherbenefitsOtherplansTotalNet provisions for post-employment benefits as of December 31,20213,1021,194914942,5863,4431,4649,805of which reported as:B/S Net pension assets2,234104342,372B/S Provisions for post-employment benefits3,1021,040134942,5863,4771,4

296、6412,177Net provisions for post-employment benefits as of December 31,20225251,0291032312,2493,0898496,018of which reported as:B/S Net pension assets3892,00525422662,727B/S Provisions for post-employment benefits9149761282312,2493,1321,1158,745foundation are mainly invested in interest-bearing secur

297、ities and in alterna-tive assets,in accordance with a strategic allocation that is determined by the foundations Board of Directors.As of December 31,2022,the fair value of the foundations plan assets amounted to SEK 18,810 M(20,822),of which 6%(35)was invested in equity instruments.At the same poin

298、t in time,retirement pension obligations attributable to the ITP plan amounted to SEK 18,970 M(23,496).SwedenThe main defined benefit plan in Sweden is the ITP2 plan which is based on final salary.The plan is semi-closed,meaning that only new employees born before 1979 enters the ITP2 solution.The V

299、olvo Groups pension foundation in Sweden was formed in 1996 to secure obligations relating to retirement pensions for white collar workers in Sweden in accordance with the ITP plan.The plan assets in the Volvo Groups Swedish pension VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS116Swedish compani

300、es can secure new pension obligations through balance sheet provisions or pension fund contributions.Furthermore,a credit insurance policy must be taken out for the value of the obligations.In addition to benefits relating to retirement pensions,the ITP plan also includes,for example,a collective fa

301、mily pension,which the Volvo Group finances through an insurance policy with the Alecta insurance company.According to an interpretation from the Swedish Financial Reporting Board,this is a multi-employer defined benefit plan.For the fiscal year 2022,the Volvo Group did not have access to informatio

302、n from Alecta that would have enabled this plan to be recognized as a defined benefit plan.Accordingly,the plan has been recognized as a defined contribution plan.The Volvo Group estimates it will pay premiums of about SEK 210 M to Alecta in 2023.The collective consolidation level measures the appor

303、tion-able assets in relation to the insurance commitment.According to Alectas consolidation policy for defined benefit pension insurance,the collective consolidation level is normally allowed to vary between 125%and 175%.Alectas preliminary consolidation ratio amounts to 172%(172).If the consolidati

304、on level falls short or exceeds the normal interval,one measure may be to increase the contract price for new subscription or to introduce premium reductions.The Volvo Groups share of the total saving premiums for ITP2 in Alecta as of December 31,2022 amounted to 0.23%(0.24)and the share of the tota

305、l number of active policy holders amounted to 1.77%(1.72).All employees in Sweden benefit from a jubilee awards plan according to which they receive a certain number of shares after they have rendered 25,35 and 45 years of services.This plan is accounted for as a share-based payment program,where th

306、e fair value of the equity-settled pay-ments is determined at the grant date.The plan is recognized as other liabilities.USA In the USA,the Volvo Group has tax qualified pension plans,post-retirement medical plans and non-qualified pension plans.The tax qualified pension plans are funded while the o

307、ther plans are generally unfunded.There are five funded defined benefit plans,whereof all are closed to new entrants.Three out of five plans are open for future accruals.The Volvo Groups subsidiaries in the USA mainly secure their pension obligations through transfer of funds to pension plans.The US

308、 Retirement Trust manages the assets related to the five funded plans.The strategic allocation of plan assets must comply with the investment policy as decided by the Board of Directors of the Trust.All members of the board are nominated by the company although each member is subject to strict regul

309、atory require-ments on fiduciary responsibility.As of December 31,2022,the total value of pension obligations secured by pension plans of this type amounted to SEK 15,542 M(19,088).At the same point in time,the total value of the plan assets in these plans amounted to SEK 17,218 M(21,013),of which 8

310、%(13)was invested in equity instruments.The regulations for securing pension obligations stipulate certain mini-mum levels concerning the ratio between the value of the plan assets and the value of the obligations.During 2022 and 2021 no contributions were made by the Volvo Group to the USA pension

311、plans.20:10Cash and cash equivalents,509(1%)Equity instruments,2,985(6%)Debt instruments,38,450(82%)Real estate,2,057(5%)Assets held by insurance company,2,274(5%)Other assets,623(1%)Plan assets by category as of December 31,2022Cash and cash equivalents,869(2%)Equity instruments,11,274(20%)Debt ins

312、truments,38,771(69%)Real estate,1,682(3%)Assets held by insurance company,2,658(5%)Other assets,584(1%)Plan assets by category as of December 31,202120:11Fair value of plan assetsDec 31,2022Dec 31,2021Cash and cash equivalents509869With a quoted market priceEquity instruments5538,476Debt instruments

313、38,01338,413Real estate020Derivatives 1315Other1,0921,001With an unquoted market priceOther6,7177,074Total146,89855,8381 Excluding asset ceiling of SEK 54 M(521).VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS117Great Britain In Great Britain,the Volvo Group has five defined benefit pension plans,

314、which are all funded.The pension funds are set up as separate legal enti-ties,which are governed by a professional trustee.All plans are closed to new entrants and closed for future accruals to existing members.The allo-cation of plan assets must comply with the investment strategy agreed between th

315、e company and the professional trustee.For three of the plans,if a net surplus is recognized in the balance sheet when the pension scheme runs-off,the Volvo Group has an unconditional right to the sur-plus of that plan or plans.For two plans this is not strictly legally the case and therefore an ass

316、et ceiling is applied.As of December 31,2022,the total value of pension obligations amounted to SEK 5,465 M(7,934).At the same point in time,the total value of the plan assets in these plans amounted to SEK 5,362 M(8,024),of which 4%(5)was invested in equity instruments.During 2022,the Volvo Group c

317、ontributed SEK 66 M(65)to the Great Britain pension plans.BelgiumIn Belgium,the Volvo Group has four traditional defined benefit pension plans based on final salary,whereof all are closed to new entrants.All plans are open for future accruals.Two plans are funded via an external pension fund with a

318、legally ringfenced Volvo section and two are funded via the group insurance product referred to in Belgium as Branch 21.Benefits are paid as a lump sum at retirement.There is also an open defined contribu-tion pension plan as well as a local profit sharing program whereby any pay-outs are contribute

319、d to a defined contribution pension plan managed by the own pension fund or through a group insurance.All defined contribu-tion pension plans in Belgium have a statutory minimum return guarantee and are therefore accounted for as defined benefit plans.The strategic asset allocation of plan assets mu

320、st comply with the investment policy as proposed by the Volvo Group and formally adopted by the Board of Direc-tors of the pension fund.As of December 31,2022,the total value of pen-sion obligations amounted to SEK 3,203 M(3,607).At the same point in time,the plan assets of these plans amounted to S

321、EK 2,972 M(3,113),of which 9%(27)was invested in equity instruments.During 2022,the Volvo Group contributed SEK 158 M(163)to the Belgium pension plans.France In France,the Volvo Group has two types of defined benefit plans,Indemnit de Fin de Carrire(IFC)and jubilee awards plan.The plans are unfunded

322、.The IFC is compulsory in France.The benefits are based on the Collective Bargaining Agreement applicable in the company,on the employees seniority at retirement date and on the final pay.The benefit payment is due only if employees are working for the company when they retire.The jubilee award plan

323、 is an internal agreement and the benefit is based on the employees seniority career at 20,30,35 and 40 years.As of December 31,2022,the total value of pension obligations amounted to SEK 2,264 M(2,600).Investment strategy and risk managementThe Volvo Group manages the allocation and investment of p

324、ension plan assets with the purpose of meeting the long term objectives.The main objectives are to meet present and future benefit obligations,provide sufficient liquidity to meet such payment requirements and to provide a total return that maximizes the ratio of the plan assets in relation to the p

325、lan liabilities by maximizing return on the assets at an appropriate level of risk.The final investment decision often resides with the local trustee,but the investment policy for all plans ensures that the risks in the investment portfolios are well diversified.The primary risk mitigating activity

326、in the long run is to close defined benefit plans to new entrants or to future accru-als for existing members and replace these plans with defined contribution plans when and where possible.The risks related to already accrued pension obligations,e.g.longevity and inflation,as well as buy out premiu

327、ms and matching strategies are monitored on an ongoing basis in order to further limit the Volvo Groups exposure where and when possible.In the last couple of years,some of the defined benefit plans have been closed to new entrants and replaced by defined contribution plans in order to reduce risk f

328、or the Volvo Group.In Sweden,the minimum funding target is decided by PRI Pensions-garanti.This is mandatory in order to stay in the system and get insurance for the pension liability.The contributions usually represent one years new accrued benefits plus any shortfall towards the minimum funding ta

329、rget unless there is a surplus according to local scheme valuation principles.In the USA,the minimum funding target is decided by the company in order to avoid penalties,keep flexibility and avoid extensive filing with the Internal Revenue Service and participants in the pension plan.The mini-mum co

330、ntributions usually represents one years accrued benefits plus a seventh of any deficit unless a scheme is showing a surplus according to local scheme valuation principles.In Great Britain,there is no minimum funding ratio.There is a regulatory requirement for each scheme to perform triennial valuat

331、ions whereby any scheme showing a deficit must develop a recovery plan that returns the scheme to a fully funded basis within a reasonable time frame.The recovery plan shall be agreed with the company and submitted to the regulator for approval.In Belgium,the minimum funding level is regulated by la

332、w and monitored by the financial supervisory authority,FSMA.The framework for the mini-mum funding requirement is based on a discount rate,which is based on the expected return of the plan assets.The pension fund must be fully funded on this basis at all times.The contribution policy of the pension

333、fund is designed to provide stability in contributions over the duration of the plan.In 2023,the Volvo Group estimates to transfer an amount of SEK 300500 M to pension plans.VOLVO GROUP 2022NOTES TO THE FINANCIAL STATEMENTS118ACCOUNTING POLICYProvisions are recognized in the balance sheet when a legal or construc-tive obligation exists as a result from a past event,it is probable that an outflow o