Thank you, Unger . Shareholders. Colleagues. Once again, I'd like to take the opportunity of welcoming you warmly to the annual general meeting in AB Volvo. I'm going to stick to my manuscript because I was so full of energy, otherwise it's going to go not so well. There's so many impressions, we need to try to be structured. Let's take the opportunity to describe a bit the current situation in the group and a few words on the development in various markets and business areas. After I took on the role as the CEO of 22nd October, it's been a very intense period. I probably spent the absolute lion's share of my time to this fantastic company. It's been really fun. How do you charge a battery has people asked me. I think you do it at work.
It's easier if you do. I've spent a lot of time traveling around seeing customers and associates to get a picture of what it looks like throughout the whole value chain, product development, procurement, production, our sales organization, our service organization, various brands and various business areas. You can see a sample here. There's lots of pictures, it's more fun, right? To get this feel of the people in our organization. If I put it this way, I'm not sleepless when it comes to competency within the Volvo Group. It's fantastic. I'm going to return to this. All these trips and meetings have formed the basis of the prioritization work that we're now carrying out within management. Within this Group Management has also laid the foundation for what we feel is a good future through strengthening our values.
I think what is important, what is the Volvo Group's common values to be successful? Naturally, strategies, focus areas, and also organization with our customer at a focus for all we do. Beginning February this year, we gathered 300 key managers from all parts of the world to discuss these changes, feedback has been fantastic and high energy level. My opinion is that the group is well equipped to increase both profitability and organic growth. Like Chairman said, we've got strong products in most areas, good service network. We're well invested globally within production and also regionally and got a portfolio of exciting development projects both for all product areas but also for important service products and advanced services. Something that's going to be more and more topical, I'm going to describe this part here.
What's inspired me, as I said, all the people that I've met in the company who are strongly committed for how our business is conducted and it can be improved. There's a genuine interest and a fantastic ability. I've received hosts of suggestions for how things can be improved, encouraging words and sympathy through hosts of meetings, discussions, mail, and text messages. Solutions are not amiss. We've got a good base, we now need to ensure that we have continuous improvement at all brands and all product areas and regions can develop and have to develop from their own profitable ability and commercial merits. Essential is clearly a focus on the customer throughout with continuous improvements of daily activities and focus on organic growth. There is room for improvement or a considerable improvement. Areas as product quality, lead times, reduced bureaucracy, overhead cost, utilizing potential synergies.
For instance, thanks to our joint module system where we have well on our way, but we're going to continue to use that force. All examples of areas that always can be improved upon, and that is management's principal task to give our associates the preconditions of being able to carry that out. We're a group. Let's see if this works. We're a group that got activities in more than 190 countries, as I said, and therefore, the ability to handle various regional developments more decisive for our success. With more globalized world, we're going to see bigger and quicker change and in certain parts, more protectionism. Unfortunately, that is part of globalization. Therefore, more decentralization of responsibility and authority to achieve speed and profitability focus, essential part of going forward. 2015 was an eventful year in the world.
Continued major political and financial uncertainty made and still keeps the planning horizon short, and we need to be flexible and to adjust. It's important. In Europe, a slow but steady increase in demand after a relatively weak start of the year when it comes to the order book was relatively weak in the beginning, both for Volvo Trucks and Renault Trucks. This was caught up during the year. The finalization of the launch of the new truck program for Renault Trucks gave a stabilized volume level and recovery in number of key markets, not the least in France. Russia continues low levels because all are affected, given the geopolitical situation there and the low prices of commodities and oil. Volvo Construction Equipment strengthened successfully its market positions, primarily within the heavy segment, but volume-wise, they were weakened in France and Russia.
You should also bear in mind that Volvo Construction Equipment carried out an exit. They left a number of product areas that also affected the volumes, but which is going to strengthen the ability within construction equipment within the Volvo Group. Volvo Buses also increased volumes in Europe and also made further breakthrough when it comes to future environmental technology with, among others, these fully electric buses we talked about. We're going to return to discussing this in a minute. North America had a great year. The truck markets on the market reached its historically third best year. For Volvo Mack, this meant a considerably increased profitability. We see that we have continued successful sale of our powertrains. We have now penetration of our engines when it comes to over 90%.
Also got a strong growth, very strong growth when it comes to automatic gearbox, I-Shift for Volvo Trucks, where the penetration market share of our own cars is over 80%. We've also got successfully launched the equivalent performance for Mack Trucks, mDRIVE, which is also going to lead to that this penetration and acceptance in the market increases. This simply got a powertrain in gearboxes, which is best in the world. I know it, and the customers know it. The nice thing about this is that it's also going to strengthen our ongoing business in North America through service and spare parts markets. You're never going to hear me call it aftermarket, because that's the customer's main market, isn't it? In South America, the drop continued from the total volume due to the economic and political uncertainty, primarily in Brazil. Continued in the beginning of the year as well.
We relatively strengthened our market positions, though, they all made a fantastic job by being flexible. We, in spite of this situation, managed to have a decent result. That's a fantastic success. In China, there is a major change of the economy going on. As you know, a change from mainly manufacturing an investment-based economy to a more consumer-based economy. I had the opportunity, as I said, to be in China a number of weeks ago in China Development Forum. You can see three main developments are going to strengthen our possibility of grabbing more market share. I clearly so say, or actually, Chinese management say, and this is what they have failed, or they have succeeded in economic growth, and they've done it to the detriment of three areas that they're now correcting, too big a divide between the countryside and city.
They have not managed to bring innovations in product development and brands enough in their economy, and they have created this growth on the cost of enormous environmental damage. The positive is that in the long term, it will lead to that they address the logistics. We see already tendencies in certain segments that leads to that our, so to say, market position is going to be strengthened. It's also going to lead to that our cooperation with Dongfeng is going to have to develop so that we grab a clear position when it comes to the domestic segment and leadership here. Those who suffered the most from this change has been Volvo Construction Equipment, who lost more than 48% of their market, of their volumes, and they were also forced to write off, as we heard here.
We retain a strong market position, however, in all segments, both for Volvo Trucks, Dongfeng, of course, and Volvo Construction Equipment. Japan had a solid demand. UD Trucks carried out a number of additional steps to make the company and the brand more competitive. Some of these industrial restructuring led to some interference with delivery during the second half of the year, and that also led to our partly losing our market position. Now we're counting on these measures preparing us for the future because we need to focus now to generate a more solid position for the future with a new organization where we have clear UD Trucks under Rosenberg's management, and we can create the conditions for that. In India, the positive trend continues under new Prime Minister Modi. We see clear signs of reductions in corruption. The less new rules are less complicated.
They're opening up the Indian economy to the rest of the world. We have a very strong position in India in terms of buses. We have a very strong position in the premium segment, which still is fairly small, but we have an excellent market share there for Volvo Trucks, and we also see a gradual improvement of construction equipment. Our joint venture collaboration with Eicher continues to work well, particularly within a light and medium duty, but we need to strengthen our capacity in the heavy duty segment. I would like to take this opportunity to say it. In Australia, you know that if you drill a hole, you know, right? Then you go to the right? You come to Australia from Sweden. You just drill straight through and turn right. This is what it's about.
Our ability, 26.3%, to use our strength, to use the strength of our brands to introduce them to the market in a fantastic way because I was there a couple of weeks ago, and I was very impressed, and we have excellent profitability there as well, and they always go hand in hand, really. I will now move on to a number of events that took place. As you know, the Volvo Group acquired 45% of the shares in Dongfeng, strengthening our position in China considerably. We know that this will grow in the future, but there will also be some changes. The volume will shift, but we're also going to change in logistics, and this is where partnership will play a role.
How can we make sure that we use the value of our access to this market, networks, volumes, at the same time, have an opportunity to contribute with technology in an intelligent way? With those volumes, getting a carry back of technology to certain other parts of the Volvo Group and its products in the modular system. This is something that we're working on intensely. Of course, it was a tough beginning considering this correction, but the organization has also worked very hard to adapt to the existing demand. Now, Carl-Henric touched upon Eicher
Since July 2008, we've had an excellent partnership in India, where we have a relationship where we see the world from two different perspectives, which enables us to develop both the domestic market, but we can also use parts of that for our global systems. In addition to the actual holdings in this joint venture company, Volvo Eicher Commercial Vehicles, the Volvo Group also had holdings in the parent company that we sold because we could not see any additional value to retaining those holdings, and it was a good share price as well. It also strengthened the balance sheet of the group, which was important, as you well know. That sale does not in any way impact the partnership in Volvo Eicher Commercial Vehicles.
In October 2015, we announced that parts of our IT operation will be sold, and in February this year, we signed an agreement with HCL Technologies. That agreement means that we will sell the external IT operations, IT operations that does not serve the different companies in the Volvo Group, as well as the running of the IT infrastructure. That has been transferred on April the 1st. That means that the Volvo Group also, because a lot of our IT operations is still retained within the group, but they focus now on our core business. We can see that HCL's capacity enables us to reduce our cost for the IT infrastructure because they're a larger company that focus on this solely, and that will lead to a stronger balance sheet. We have SEK 900 million in profit for the first quarter of 2016 here.
It's also important for us that our employees who work within these operations, they do a fantastic job, can be transferred with this company because this is an environment where they can work in which their particular skills is the core competency of the business. I would also like to say a few words about Volvo Construction Equipment. We have lost 27% of our volume because of macroeconomic conditions, 48% of our volume in China. China, together with the other BRIC countries, growth countries, possibly with the exception of India, they've seen very comprehensive difficulties in terms of economy. The positive aspects of this is that we continue to strengthen our market positions in heavy equipment or heavy haulers, wheel loaders, excavators, and also particularly through streamlining, Volvo Construction Equipment managed to turn this negative earnings trend and actually improve earnings by SEK 900 million.
Now we need to continue to focus on the right product and market areas. We have carried out a number of exits. We've left a number of product areas, and that has been very important for us. We need to continue our streamlining process, and implementation of Volvo technology, where applicable, is an incredibly important factor for us, and to continue to share opportunities for certain end segment, for example, grapple. For example, next week, Volvo Construction Equipment will be launching a number of very strong products at bauma, Baumaschinen, a very large trade fair in Munich, and that will be a success. We can see that we've improved in terms of results in this regard. Another interesting thing, and this is not a major volume aspect, but the brand Renault Trucks were the first in the world in launching the buying of trucks online.
This is a fairly narrow, specified market for the most common transport, regional and long-distance transport, with a very good optimized customer financing offer and maintenance agreements, et cetera, online. It's important for us to show that this is possible, and we could see more effective sales channels in this regard. It's an excellent supplement to the market to show that there are these customers who need that fairly narrow spec window or perspective can be offered this opportunity. This is an interesting opportunity for the future. Volvo Penta, a few years about this jewel in our crown. A very strong year, both in terms of sales, profitability, and market positions. It's also interesting when you have such a clear P&L as Volvo Penta. It seems to work. A strong focus on innovation. You all know about the Inboard Performance System. You may know about it.
10th year anniversary this year. This is about maneuvering and control and our propulsion systems. This is an additional step in integrating both technology, instruments, powertrain, and propulsion. When we look at one of these trade shows, a large trade show like Miami Boat Show, which is about, say, more exclusive boats, you can see that, and this is one of the largest trade fairs in the world. 68% of all the boats there had Volvo Penta engines. How about that? That's almost worth a warm hand to them. What do you say, Björn? Björn is so proud he can barely speak over there. 87 boats with IPS, the Inboard Performance System that shows that this is becoming more and more common. We continue to invade that market.
We can see how we can use the synergies that we actually have in the group, both in terms of engines, motors, and then also actual knowledge about application in each business area. The Volvo Ocean Race was an amazing contest that ended with a great crescendo in Gothenburg, where we saw a lot of festivities, 2.4 million visitors worldwide. Of course, the end, the final leg of the race, as I've heard, I should say, was a huge success for our customers and meeting our customers, and the opportunity to showcase the Volvo Group's ability when it comes to the products of this group, both to Swedes and the international audience. The next time it will take off is in 2017, and the final leg will end in Gothenburg that time as well. Another thing that was very important last year was the climate summit in Paris.
I was there myself, that was really a huge political success because they managed to come up with actual targets, very tangible targets that will affect the transport sector. As the CEO for Volvo, I am tasked with being one of two chairmen in the UN high-level group for sustainable transport. That is in conjunction with a number of both senior representatives of business around the world and different transport industries and politicians. We're working on this right now, where we will be presenting a very concrete report about what we can do when it comes to transport systems and how we can achieve the climate targets by 2030 that are very important. We can see how the market itself is turning now, not least because of the pressure from consumers, and we think that is incredibly positive.
Sometimes I say in a joking way that the higher the oil price, the better it is for the Volvo Group. What I mean by that is really that the greater the pressure we see from that, the more we have to focus on fuel efficiency, on life cycle cost, et cetera. This is an excellent business opportunity. We have leading technology. We have solutions. We have higher ambitions in terms of climate, and that will improve our competitiveness if we play our cards right. Some examples of developments we've seen is electro-mobility. We'll see that for urban transport, primarily first, and different parts of hybrid technology. We have some very interesting ideas up our sleeve and continue to focus on combustion technology, but also on the design of the entire vehicle, where we have a world-leading position.
For that reason, it is essential for us to focus on our R&D with a clear focus on what can add customer value. One example is public transport. Public transport with the urbanization trend we see around the world will become ever more important. That is about two things, of course, making them climate smart, but also making them efficient and attractive. I know as the mayor of Bogotá told me, a developed city is not a city where poor people can afford to buy cars. A developed city is a city where the wealthy use public transport. That is good, I think, for us. It is also true if you think about it.
It's about real attractiveness and Volvo Buses in this project, together with our technology organization, been able to show what can be done and how you think in terms of system. I thought we'll have a look at a short film to get a feel for what it may look like. This is Route 55, as you know, between the two various campuses for Chalmers University of Technology, Johanneberg and Campus Lindholmen. The outcome is fantastic. If you look at the CO2 level emissions with renewable energies, same levels as rail traffic. A lot less sound levels, attractiveness, as you see, connection, USB connections, indoor stops for buses, we can create in other ways. This is an importance for safety. It's not given that you give your 17-year-old daughter or son stand by a post somewhere in a dark corner along a road.
If we're going to make this for real, we need to look at system thinking. Investments in this, they are fragments of the lead time investments and the same functionality, and also with half automatic solutions going forward. This can be the future.
Goes without saying, we must understand how we think in system thinking. We can't come to a community and say, "Here's a bus, good luck." We need to think about the whole system and create the business opportunity. For likes of drift operations, we're going to see it in waste disposal, in mining, and other areas, energy sector. We've gone from PowerPoint to reality and shown how it looks like in reality. It's been important to launch this first route. Preconditions is connected vehicles. That is that our vehicles have got communication equipment.
Like you make a mobile phone, where there's a black box, which is not interesting, but can take and process various signals from our vehicles, and either use it directly in the vehicle in the interaction between the driver and the vehicle, or directly to make things within the vehicle, or send these data to various data layers that we then can use to create various types of services and possibilities. We've got a strong position, really strong, that we're going to use even more. We've got 500,000 connected vehicles that makes us world-leading. It's the largest population of commercial vehicles. Already today, we may use it for a main host of services, driver coaching to optimize fuel consumption and reduce wear of our vehicles, and therefore more accessibility for our customers, diagnosing software and potential correction measures if they're needed.
Overall driver contact make specifications for the next car or bus or construction vehicle even more optimal. I would like to say, when I traveled around our American organization is fantastic in producing service. We'll see in other areas, here we've got enormous possibility of connecting even more to our customers. The thrust into optimized arrangements with electro-mobility would not have been possible without connected vehicles and various levels of automation. You see in this vehicle column that's gone through Europe. The future is here and now. This is it. Where the first vehicle is driving and the others just follow suit. Naturally wouldn't have been possible without connectivity. We're going to see increased levels of automation. The future is here, and we've got an incredible position here to increase revenue both for our customers and for ourselves. A few words on profitability and development.
This is a central part. Very good work has been carried out and continuous improvement is on the horizon. We could during the year, as you see, improve profitability considerably from SEK 8.4 billion to SEK 25.7 billion, if you exclude the major one-offs in various directions, the underlying improvement was SEK 12.2 billion to SEK 20.3 billion, which is a result of currency effect and primarily the streamlining program of the group. The operating cash flow was improved from SEK 6.4 billion to SEK 18.3 billion, with an improvement of the balance sheet as a result. This is incredibly important for the maneuverability of the group and also for the future cost when it comes to financing and borrowing costs. On the truck front, let's have a little look. The result will improve from SEK 5.6 billion to SEK 21.5 billion, the underlying improvement were equivalent to the same.
That is, you exclude one-offs from SEK 9.4 billion to SEK 16.1 billion, the increase came in spite of unchanged volumes. Major differences as already touched upon when it comes to market conditions, weaker in Latin America, strong in North America, weak in Russia, et cetera. The positive outcome in the same way comes from currency and streamlining programs to continue being good and flexibility when it comes to both swings up and down, important for us. Volvo Construction Equipment I talked about. An improvement for a number of different reasons, currency, better product mix, and heavier vehicles. We've got finished a number of product areas that were not profitable and made efficiency measures. This equivalent of a 4.1% operating margin in a very adverse market. It's also gratifying to have seen improvement in all our business areas. In other words, Volvo Buses from SEK 98 million to SEK 882 million.
Here, currency, better product and market mix, and industrial efficiency. Volvo Penta developed well, also through volumes, organic growth, profitability SEK 1.1 billion and 11.7% of operating margin. You need to bear in mind, you think it's not too big volumes compared to others, if you take certain segments like 16 liter engines, Volvo Penta is incredibly important bearer of possibility and has got a competitive offer for the heaviest and image-wise best segment for our trucks as well. Volvo Financial Services, which is a very important part you should remember, not naturally just for the money, but also for the customer loyalty, create contact and make it possible to enter various markets, also had a very good year with a profit of SEK 2 billion and return on equity of 13.4%. Structural efficiency program was concluded with the finish of 2015.
We reduced cost level 2016 versus 2012 by SEK 10 billion in local currency. The program has been reducing number of consultants and associates, white collar workers, focused product portfolio optimization on sales channels, and the global truck structure. Further cost reductions in Volvo Construction Equipment, and further during 2015, strong optimization of the sales organization for trucks, and sale of the various parts of the IT business. The total structuring charges has been SEK 6.2 billion, whereof SEK 2.3 billion during 2015. It's been a very tough period with difficult but necessary decisions that have had major impact on various parts of the company, not the least on individual associates, where unfortunately also a large number of people have been forced to leave the company. I would like to turn my respect for this work to management, managers, trade unions, and associates to carry out this necessary work.
With this new cost level, the group leaves basically the mode operation with big restructuring process and goes into a phase where there's continuous improvements of all areas in the value chain, quality, lead time, delivery precision, simplification of organization. We've got a strong basis, as I said, but we've also got areas that we need to continue further improvement, strategic direction, where are we heading to? Why do we exist in the form we are today? How can we make sure that we develop things on their own merit, et cetera? Ensure simply that we use the assets that we have. I'm going to position myself here now. I'm going to finish now using two more minutes. This is the way it is. We are well-equipped, and the fantastic thing is that we are in a future industry.
I always go out there and talk to people when it comes to schools, customers, various contexts. I usually ask two questions. Do we believe that the world needs more or less mobility? Increasing population, increased high standard of living in various parts of the world. Do we that that has to be much more sustainable, this mobility? I personally think that the answers to those questions are both yes and yes. There's going to be much more mobility of humans and goods, and that connects people, right? You're also going to need much more sustainable solutions for this. We've got the assets around the world to create this. We also need to focus our operations and use what we have in a good and clear manner. That's why we carry out clear, focused efforts that we do. Focus on the customer.
Money doesn't fall down from the sky. It starts and ends with the customer. When the customer is profitable, our customers are going to grow quicker than their relative market and also make us profitable. That's a partnership. That's why this business is so much fun. It's business to business. It's humans you're dealing with, where you can success create a lifelong relationship because it's good for both parties. Focus on the customer. The second issue is, how do we make sure that the brands in our business areas can stand on their own commercial and business merit? Since 1st of March, we run an organization with 10 clear business areas. I've got two principles. Principle number one, be responsible for developing your business, your success and your volume.
Principle number two, be responsible for drawing upon those possibilities that there are being part of Volvo Group in order to improve principle one. It doesn't have to be more difficult with that. That's what we're working with. Also work with continuous improvements. We've built a fantastic base in our industrial structure, in our product development portfolio, our service networks. To work with this continuous improvement close to the business, that's going to lead to clearer focus on improvements. Decentralization. It's more fun to do than to play business. We're not going to play business, we're going to make business. We've got super staff. We said that if the customer success is one of our most important values, what's then important? Edward Deming, a quality professor in the 1950s in the U.S., he created a lot of good quality methods, et cetera.
He said one thing which is, for my own leadership, very important. If there's fear, you're never going to get the right figures. One, you're not going to produce them in the company, show them what deviations and possibilities you have. Number two, you're not going to have the right figures. We work with trust, transparency. If you have that and you feel that you can have that dialogue, you get passion. Simply, you sit and look at TV, sports channel, whatever you do on Sunday, "What a great weekend I've had." Now it's Monday tomorrow. Now let's go. If you've got that, you can also embrace change, because you have to change. Urbanization, new legislation, new taxation. There is flexibility with the market. The customers doesn't want to buy what we thought. We need to be flexible. You know how it is.
When you feel that safety and passion you want to, and you say that that change is a possibility as well, then you're going to get the results. I can just say one thing like this. When I meet with our staff, that clarity is sought after and wanted for. We got fantastic people in our organization. I'm not going to blame anything else than anyone else in leadership than myself. We've got fantastic staff. I'm not going to blame anyone else. Two thanks. Thanks to all the associates in the Volvo Group. One, fantastically good reception of me, and then for fantastic and super good work to make the improvements we've done. Thank you to you for investing in our great company. We're going to hit the bricks to make it a success. Thank you very much.