Volvo - Report on Operations 2006.

STOCKHOLM, Sweden -- Volvo:

* Net sales for the full year increased by 7% to SEK 248,135 M (231,191) Net sales in the fourth quarter amounted to SEK 65,065 M (65,287)

* For 2006, income for the period rose 24% to SEK 16,318 M (13,108) In the fourth quarter, income for the period

* Basic earnings per share rose to SEK 40.20 (32.22) for the full year Basic earnings per share for the fourth quarter rose to SEK 9.13 (7.37)

* Operating income rose to SEK 22,1111) M for the full year (18,153) In the fourth quarter, operating income increased to SEK 5,170 M (4,262)

* The Brazilian Supreme Court decided in AB Volvo's favor in an export credits dispute, which had a positive effect of SEK 357 M on operating income in the fourth quarter. This was offset by costs for capacity reductions in North America and reserves for the closure of Volvo Aero's operations in Bromma, Sweden, totaling SEK 358 M

* Operating cash flow, excluding Financial Services, amounted to SEK 12.6 billion for the full year (6.8) including transfers to pension foundations of SEK 3.3 billion (4.4)

* The Board of Directors proposes an ordinary dividend of SEK 25 per share and an extraordinary dividend through a share split 6:1 where the sixth share will be redeemed by AB Volvo for an amount of SEK 25 per share

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As of January 1, 2005 AB Volvo complies with International Financial Reporting Standards (IFRS), previously known as IAS, as adopted by the European Union. In the comments on earnings on pages 1-22 however, Volvo Financial Services is reported in accordance with the equity method. Financial information with Volvo Financial Services reported in accordance with the purchase method as it is stipulated by IFRS begins on page 23.

(http://wpy.observer.se/wpyfs/00/00/00/00/00/09/27/24/wkr0001.pdf)

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