Volvo CE sales up 27% in third quarter

Stronger than expected increases in demand in Europe and North America help boost third-quarter sales

VOLVO Construction Equipment say good momentum in many markets had a positive impact on sales and volumes in the third quarter of 2011, with net sales in the three months from July to September up by 18% to SEK14,958 million (2010: SEK12,710 million). When adjusted for currency movements, net sales increased by 27% during the period.

Orders were also up considerably, with the value of the order book at 30 September 2011 being 30% higher than on the same date in 2010.

The third quarter of 2011 also saw healthy levels of profitability, with the company posting a 6% improvement in operating income, to SEK 1,403 million, up from SEK1,330 million in the same period the year before. Volvo CE say this was achieved despite having to absorb the negative impact of currency movements (primarily the weakening of the US dollar), which reduced profitability in the period by SEK400 million. This also dented the company’s otherwise strong operating margin, which at 9.4% was slightly down from the 10.5% achieved in the third quarter of 2010.

‘The markets for our construction equipment continue to expand, even in China where we have strengthened our position as market leader despite a government-induced slowdown that is designed to curtail inflation,’ said Pat Olney (pictured), president and chief executive of Volvo CE. ‘The recoveries in Europe and North America are especially pleasing, and market conditions for the remainder of 2011 continue to be favorable.’

Market conditions for the full year 2011 are projected to increase by between 15–20%, down slightly from the company’s previous forecast of 15–25%. The European market is expected to rise by 20–25%, while North America is expected to increase by 35–40%. Meanwhile, South America, is predicted to rise by between 15–20%, and Asia (excluding China) is forecast to rise by between 20–25%. China is projected to rise 5–10% during 2011.

A highlight of the third quarter was the announcement of an SEK350 million investment in a new excavator plant in Kaluga, Russia. Production is due to start in early 2013 and will initially manufacture excavators in the 21- to 46-tonne classes.