Volvo Construction Equipment (Volvo CE) put in a strong performance in the fourth quarter of 2017, helping its parent company the Volvo Group achieve the highest sales and operating income in its history. Improved competitiveness coupled with growing demand – especially in Asia – helped Volvo CE deliver strong improvements in sales, operating income, and order intake.
In Q4 2017, net sales increased by 28% to SEK 16,733 M (13,110). When adjusted for currency movements net sales were up even more, to 34%. Operating income amounted to SEK 1,816 M (494), corresponding to an operating margin of 10.9% (3.8). Earnings were positively impacted by higher sales and increased utilization of the industrial system.
For the full year net sales increased by 31%, to SEK 66,497 M (50,731). Adjusted operating income increased to SEK 7,917 M (2,246), corresponding to an operating margin of 11.9% (4.4).
Improving market conditions
Demand in Europe improved during the quarter, and was up 16% by the end of November, helped by growth in the UK, France, Italy, Germany and a rapidly improving Russian market. North America was up by 10% over last year, helped by greater demand for excavators, while South America saw a gain of 17%, from low levels and mostly from markets outside of Brazil. The Middle Eastern market continued to slow, weighed by weak demand from Saudi Arabia. Excluding China, Asian markets were up 11% compared to last year, boosted by an improving mining sector. The Chinese market itself was strongly up, growing by 74% above last year, driven by greater demand for excavators and wheel loaders. The market for large excavators was up 121%, while compact excavators enjoyed an 83% improvement. By the end of November, the market for wheel loaders in China was up by 50%.
Orders and deliveries
During the fourth quarter of 2017 Volvo CE saw net order intake increase by 48%, largely driven by strong demand in China and North America. Deliveries increased by 49% during the period, again boosted by higher volumes in China.
“The performance program to strengthen Volvo CE’s competitiveness combined with increased market demand yielded good results in 2017,” says Melker Jernberg , the new president of Volvo Construction Equipment. “Volvo CE improved profitability and gained market share in several of our stronghold segments of excavators, wheel loaders and haulers.”
Volvo CE has begun 2018 in confident mood. In January the company took another step to further strengthening its customer offer with the announcement that the Volvo brand was entering the rigid hauler market, introducing four new models ranging from 45 to 100 tons.