Volvo CE sales dip 2% in third quarter
Operating margin improves despite flat sales volumes in the three months to the end of September
AN improvement in the European market and order intake up by 17% failed to offset continued weakness in other markets, sending Volvo Construction Equipment (Volvo CE) sales down 2% in the third quarter of 2016, when adjusted for currency movements.
Net sales in the third quarter decreased by 3% to SEK11,539 million (Q3 2015: SEK11,884 million). Adjusted for currency movements, net sales were down by 2%, while adjusted operating income increased to SEK601 million (SEK576 million), corresponding to an operating margin of 5.2% (4.8%).
Net order intake in the third quarter increased by 17% compared with the same quarter in 2015, although from low levels. Order intake increased across all regions.
In Europe, higher order intake in France and Germany was counterbalanced by lower orders in Norway and Russia.
The increase in North America was partly driven by the launch of compact equipment with Tier IV final compliant engines. In South America the increase in order intake was largely related to SDLG in Brazil.
Order intake in Asia (including China) was 24% higher. This was driven by increased order intake for the Volvo brand in China, mainly for excavators, and the continued strong growth in India as well as increases for SDLG-branded products in China and South-East Asia. In the third quarter, deliveries were at a similar level to last year.
Higher deliveries in Europe, as well as of SDLG-branded products in export markets and in the stabilizing Chinese excavator market, were counterbalanced by lower Volvo-branded machine sales in the Middle East and the Americas.
‘Despite continued low demand operating margin improved slightly in the third quarter to 5.2%. Further positives were that orders increased slightly across all regions, from low levels in the BRIC regions,’ commented Martin Weissburg, president of Volvo CE.
‘We see no immediate increase in demand and continue the internal work to focus on Volvo CE’s strongholds.’
During the third quarter Volvo CE displayed a range of innovations such as a hybrid wheel loader with the potential to improve fuel efficiency by up to 50% and autonomous wheel loader and hauler prototypes.
