Construction Equipment GLOBAL

Improved profitability at Volvo CE despite significant market headwinds

Second quarter 2015 revenues up 5% and profitability jumps 80%, despite significant declines in major markets. Earnings were positively impacted by currency and favorable product mix.

Favorable currency developments and product mix, combined with ongoing efficiency measures have helped bolster Volvo Construction Equipment’s second quarter 2015 financial results, with the company posting a 5% improvement in sales and its best profit margin for three years. This was despite continued strong economic headwinds in many of its principle markets, which saw deliveries decrease by 24% in the second quarter, mainly driven by lower demand in China and Russia, impacting both the Volvo and SDLG brands.

Net sales in the second quarter increased by 5%, amounting to SEK 15,419 M (SEK 14,624 M in Q2 2014). Operating income increased by 80%, to SEK 1,353 M, from 751 M in the same period during 2014. Operating margin, at 8.8%, was significantly up compared to the 5.1% achieved in same period last year, marking a three year high. Currency exchange rates had a positive impact of SEK 427 M on operating income compared to the second quarter in 2014.

“The second quarter saw Volvo CE continue its targeted sales activities and the implementation of the restructuring program we launched in 2014,” commented Martin Weissburg, president of Volvo Construction Equipment. “With the exception of North America, demand was down across-the-board, resulting in a decline in equipment deliveries by almost a quarter. That said, our products are well received by the market and operating margin improved significantly during the quarter, to 8.8%, thanks to the efficiency program, favorable product mix and positive currency effects.

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

Net sales by market area Second quarter First six months 
SEK M 2015  2014 2015 2014
Europe 5,108 5,144 9,177 8,842
North America 3,823  2,943 6,398 5,318
South America 572 834 1,254 1,520
Asia 5,099 4,861 9,781 10,782
Other markets 818 843 1546 1,535
Total 15,419 14,624 28,157 27,996

FOR FURTHER INFORMATION

Jacqueline Reid

Interim Director, External Communications
Volvo Construction Equipment
E-mail: jacqueline.reid@volvo.com

Brian O'Sullivan

SE10
London
Tel: +44 7733350307
E-mail: osullivan@se10.com