10/25/2013

Volvo CE sees sales dip in third quarter as markets continue to seek direction



by PRESS INFORMATION

In spite of weak demand, especially in the mining sector, and unfavorable currency development, Volvo Construction Equipment (Volvo CE) showed good operating margin in Q3, thanks to effective cost control and inventory management.

 

With no clear sign of a global recovery in the sector in sight, Volvo Construction Equipment (Volvo CE) saw its third quarter results reflect the general downward trend in market conditions, declining 7% compared to the same period in 2012. That said, efficiency enhancements in the global industrial system, cost control measures and an inventory level that is in balance with demand helped Volvo CE record a positive operating margin of 4%.

Net sales in the three months of July-September decreased by 7% to SEK 12,278 M (13,272 M). Adjusted for currency movements, net sales were down by 5% during the period. Sales were negatively impacted by lower activities in the global mining industry, which particularly hit sales of larger and more expensive products.

This slowdown of global demand in the third quarter of 2013 also weighed on profitability, with operating income at SEK 496 M down from the SEK 602 M reported in the same period the year before. This also dented Volvo CE’s operating margin, which at 4% was – despite a billion SEK fewer sales – only slightly below the 4.5% achieved in the same period in 2012.

“While there is still no clear sign of a global market recovery in the construction equipment sector, we did see an uptick in China, driven by sales of smaller equipment, and a slight increase in the European market,” said Pat Olney, president of Volvo CE. “Our base scenario for 2014 is that the markets will remain at largely the same level as we have seen in 2013.”

Unchanged outlook
Market conditions for the full year 2013 show few signs of revival in the short term, and the outlook remains the same as the previous forecast. The European market is expected to be down by 5-15% (measured in units), while North America, South America, Asia (excluding China) and China itself are all expected to be in the range of minus 5% to plus 5%. For 2014 these markets are expected to be in the range of minus 5% to plus 10%, with the exception of China, which is forecast to range from flat to plus 10%. 

Table 1. Volvo Construction Equipment, net sales by market area, in millions of Swedish Krona (SEK)

 

Net sales by market area

Third quarter

First nine months

SEK M

2013

2012

2013

2012

Europe

4,124

3,803

12,220

12,656

North America

1,892

2,684

6,206

10,054

South America

821

931

2,479

3,027

Asia

4,485

4,718

16,793

21,890

Other markets

957

1,136

2,733

3,359

Total

12,278

13,272

40,431

50,986

Ends.

October 2013

For further information, please visit: www.volvoce.com/press

Or contact:

Thorsten Poszwa    
Director, External Communications  
Volvo Construction Equipment             
Tel: int +32 2482 5021               
Email: thorsten.poszwa@volvo.com             
Twitter: http://twitter.com/VolvoCEGlobal

Brian O’Sullivan
SE10
London
Tel: int +44 77 333 50307
Email: osullivan@se10.com

 

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