Volvo Construction Equipment See Q1 Sales Jump 10 Percent

Fri May 02, 2014 - National Edition

Much of the improvement during the 1st quarter came from higher sales of smaller machines.
Much of the improvement during the 1st quarter came from higher sales of smaller machines.

Volvo Construction Equipment experienced growth in sales, earnings, deliveries and order intake during the first quarter of 2014. Much of the improvement during the period came from higher sales of smaller machines, while larger machine sales remained relatively subdued. The biggest sales increases came from more mature markets, particularly North America, where sales were up 21 percent during the period, compared to the same three months in 2013.

During the first three months of 2014 Volvo Construction Equipment saw net sales grow by 10 percent. When adjusted for currency movements, growth increased by 11 percent. Operating income also was up during the period, while operating margin strengthened to 4.8 percent, up from 4.1 percent. Deliveries increased by 11 percent compared to the same period a year ago, while the order intake was 9 percent higher than in the same quarter in 2013.

Market Situation

These results come amid a gradual improvement in the market situation. Measured in units, Europe grew by 15 percent during the first two months of 2014, while North America was up by 7 percent despite a harsh winter. South America saw demand fall, caused mainly by Brazil, where most of the large government-funded projects have been delivered, as well as reduced demand for commodities. The total Asian market, excluding China, strengthened by 4 percent compared to 2013, due largely to a 38 percent improvement in Japan. This was offset somewhat by further declines in India and South East Asia. Compared to the low levels seen in 2013, China saw growth in the first two months of the year; its loader and excavator segment increased by 7 percent and there was a continued shift towards compact equipment.

The prospects for the rest of the year remain modest. Measured in units, Europe and North America are both expected to grow by 0 to10 percent, while South America and Asia (excluding China) are forecast to decline by up to 10 percent. China, meanwhile, is expected to develop in the region of minus 5 percent to 5 percent during 2014.

“The seasonally strong first quarter had a positive impact on volumes, which contributed to improved profitability compared with the weak close of 2013,” said Volvo CE’s president Martin Weissburg. “The situation continues to be challenging, particularly for customers and dealers with large exposures to the mining industry. That said, we expect a moderate growth in Volvo CE’s mature markets.”

Notable Events During the Period

The construction equipment industry’s largest event of the year, ConExpo 2014 in Las Vegas, saw Volvo CE unveil an overhaul of its core product range. Some of the new machines include the H-Series wheel loaders, E-Series excavators, G-Series articulated haulers and C-Series motorgraders, as well as a host of emissions-compliant road machinery introductions. All new machines meet, where necessary, the low emission requirements of Tier IV Final/Stage IV legislation, which came into force in North America and the EU in January 2014.