Volvo CE sales up 73% in second quarter
SIGNIFICANTLY improved second-quarter 2010 financial results indicate that the global construction equipment industry is recovering faster than earlier predicted, according to Volvo Construction Equipment.
Strongly driven by the BRIC markets of Brazil, Russia, India and China – which increased by 63% during the quarter – the total world market for heavy, compact and road equipment increased by 43% during the period when compared with last year.
This sharply rebounding market had a positive impact on Volvo CE’s) financial performance during the quarter with net sales up 67% to SEK15,295 million (up 73% when adjusted for currency movements).
Operating income also improved strongly, increasing to SEK2,086 million from a loss of SEK1,259 million in the same period in 2009. In addition, the company posted an operating margin of 13.6% in the period (up from a negative 13.8% in 2009).
In another sign of improving conditions, the value of Volvo CE’s order book at the end of the second quarter of 2010 was 78% higher than at the same date in 2009.
Commenting on the results, Olof Persson, president of Volvo CE, said: ‘The spring selling season is traditionally the most active period in our industry, and so it is encouraging to see momentum building stronger than expected during this important period, particularly in Asia and South America. This puts us in good shape for the rest of the year.
‘It is also encouraging to note that our increased sales have been accompanied by considerably increased profitability – a result of cost-reduction measures implemented during the recession, improved cost absorption in our factories and better productivity.’
The encouraging second-quarter results have prompted Volvo CE to revise the outlook for the full year 2010. They say the European market is now expected to increase by 10% for the full year, up from the previous forecast of 0–10%. Similarly, North America is now predicted to grow by between 5-10% in 2010, up from the previous expectation of 0–10%.
However, the biggest upward revisions are in Asia and other international markets, with Asia now predicted to rise by 30–40% and other markets by 40% – a jump from earlier forecasts of 20% for both regions.
Volvo CE say notable events for during the second quarter included the announcement of a SEK144 million investment in a new excavator manufacturing facility in Bangalore, India, and an agreement that will see Ferronordic Machines take responsibility for distribution of Volvo CE products throughout the Russian Federation.
Strongly driven by the BRIC markets of Brazil, Russia, India and China – which increased by 63% during the quarter – the total world market for heavy, compact and road equipment increased by 43% during the period when compared with last year.
This sharply rebounding market had a positive impact on Volvo CE’s) financial performance during the quarter with net sales up 67% to SEK15,295 million (up 73% when adjusted for currency movements).
Operating income also improved strongly, increasing to SEK2,086 million from a loss of SEK1,259 million in the same period in 2009. In addition, the company posted an operating margin of 13.6% in the period (up from a negative 13.8% in 2009).
In another sign of improving conditions, the value of Volvo CE’s order book at the end of the second quarter of 2010 was 78% higher than at the same date in 2009.
Commenting on the results, Olof Persson, president of Volvo CE, said: ‘The spring selling season is traditionally the most active period in our industry, and so it is encouraging to see momentum building stronger than expected during this important period, particularly in Asia and South America. This puts us in good shape for the rest of the year.
‘It is also encouraging to note that our increased sales have been accompanied by considerably increased profitability – a result of cost-reduction measures implemented during the recession, improved cost absorption in our factories and better productivity.’
The encouraging second-quarter results have prompted Volvo CE to revise the outlook for the full year 2010. They say the European market is now expected to increase by 10% for the full year, up from the previous forecast of 0–10%. Similarly, North America is now predicted to grow by between 5-10% in 2010, up from the previous expectation of 0–10%.
However, the biggest upward revisions are in Asia and other international markets, with Asia now predicted to rise by 30–40% and other markets by 40% – a jump from earlier forecasts of 20% for both regions.
Volvo CE say notable events for during the second quarter included the announcement of a SEK144 million investment in a new excavator manufacturing facility in Bangalore, India, and an agreement that will see Ferronordic Machines take responsibility for distribution of Volvo CE products throughout the Russian Federation.
