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Robust trends in most markets help Volvo CE post solid Q2 results, with sales up 32%

Strong momentum in most markets underpinned a confident quarter for Volvo Construction Equipment, one that saw the company strengthen its leadership position in the Chinese wheel loader and excavator market.

The global construction equipment industry continues to demonstrate strong market conditions, evidenced by Volvo Construction Equipment’s (Volvo CE) solid set of second quarter 2011 financial results. The period also saw the company strengthen its market leadership position in wheel loader and excavator sales in China, taking an 11.8% share of this important market.

Despite an overall softening of demand in the Chinese market, as a result of government measures to curtail inflation, sales at Volvo CE were positively impacted by strong momentum in most markets. Net sales in the second quarter amounted to SEK 17,520 M (SEK 15,295 M in Q2 2010). This represents a 15% jump in demand, and when adjusted for currency movements, this increased further, to 32%. Operating income amounted to SEK 1,893 M, down from 2,086 M in 2010. Both sales and operating income were negatively affected as a result of the earthquake and ensuing tsunami that hit Japan earlier this year. Japanese supplier-related issues resulted in lost sales of approximately SEK 1,200 M and a reduction in operating income of SEK 300 M. This also had a negative impact on operating margin, which at 10.8% was down from 13.6% in the same period in 2010.

Commenting on the results, Mr. Pat Olney, the incoming president of Volvo CE said: “These are a solid set of figures given the significant currency headwinds we faced and the consequences of the tragic earthquake and tsunami that struck Japan during the period. Due to continued uncertainty in the current macro-economic situation, we are maintaining a high degree of cost flexibility in order to be able to quickly adapt to any potential challenges in market conditions.”

Postitive Outlook
In a sign of improving conditions, the value of Volvo CE’s order book at the end of the second quarter was 38% higher than at the same date in 2010. Market conditions for the full year 2011 are expected to remain positive, with a projected growth of 15-25% (previous forecast 20-30%). Europe is expected to grow by 15-25% (previous forecast 10-20%), North America by 25-35% (unchanged), South America 10-20% (previous forecast 5-15%), Asia 10-15% (previous forecast 10-20%), whereof China is expected to grow between 10-15% (previous forecast 20-30%).

Notable events for Volvo CE during the second quarter included ‘Volvo Days’, a four week-long event held in May and June in Sweden that saw over 10,000 customers from more than 70 countries become acquainted with the 50 new Tier 4i/Stage IIIB machines that Volvo CE has launched this year.

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

2011

2010

2011

2010

Europe

5,225

    4,557

9,208

7,632

North America

2,149

    1,756

3,725

3,137

South America

1,105

    1,083

2,012

1,884

Asia

8,231

    7,125

16,659

12,379

Other markets

810

      774

1,675

1,411

Total

17,520

15,295

33,279

26,443

 

Ends.

July 2011

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

Or contact:

Clare Gittins
Interim Director, External Communications 
Volvo Construction Equipment 
Avenue du Hunderenveld 10  
B-1082 Brussels, Belgium 
Tel: int + 32 24825021 
Email: clare.gittins@volvo.com

Brian O'Sullivan
SE10
London
UK
Tel: int +44 207 107 2000
Email: osullivan@se10.com