Volvo Construction Equipment (Volvo CE) has recorded another strong performance in the third quarter of 2011, with good momentum in many markets having a positive impact on sales and volumes. Net sales in the three months of July-September rose by 18% to SEK 14,958 M (12,710 M). Adjusted for currency movements, net sales increased by 27% during the period. Order bookings were also up considerably, with the value of the order book at September 30 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 M, up from SEK 1,330 M in the same period the year before. This good performance 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 SEK 400 M. This also dented Volvo CE’s otherwise strong operating margin, which at 9.4% was slightly down from the 10.5% achieved in Q3 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, 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.”
Positive outlook for full year
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 between 35-40%. South America meanwhile, is predicted to rise by between 15-20% and Asia (excluding China) is forecast to rise by between 20-25%. China itself is projected to rise 5-10% during 2011.
A highlight of the third quarter was the announcement of an SEK 350 M investment in a new excavator plant in Kaluga, Russia. Production is due to start in early 2013 and will initially manufacture excavators in the 21-46 tonne classes.