Construction machinery major Volvo CE has announced a 2% slide in sales for the third quarter of the year, while maintaining an increase in its operating margin.
The Swedish giant said in a statement that a spike in order intake from the European market failed to offset continued weakness in other markets, sending its net sales in the third quarter of the year down by 3% to SEK11.5 billion ($1.2bn). Adjusted for currency movements, net sales were down 2% while adjusted operating income increased to $67.3m, corresponding to an operating margin of 5.2%.
Net order intake in the third quarter increased by 17% compared with the same period in 2015, although from low levels, the company’s statement said. In Europe, France and Germany reported higher order intakes, which was counterbalanced by lower orders in Norway and Russia.
The increase in North America was partly driven by the launch of compact equipment with Tier IV final compliant engines. In South America the increase in order intake was largely related to Volvo CE’s Chinese subsidiary SDLG in Brazil, Volvo CE said.
Order intake in Asia (including China) was 24% higher, driven by increased orders for the Volvo brand in China, mainly for excavators, and the continued strong growth in India, as well as increases for SDLG branded products in China and South-East Asia, the statement added.
Deliveries in the third quarter were at a similar level to last year, with Europe reporting higher figures. Deliveries of SDLG branded products in export markets and in the stabilising Chinese excavator market were counterbalanced by lower Volvo branded machine sales in the Americas, said the statement.
“Despite continued low demand, operating margin improved slightly in the third quarter to 5.2%,” said Martin Weissburg, president, Volvo CE. “Further positives were that orders increased slightly across all regions, from low levels in the BRIC regions. We see no immediate increase of demand and continue the internal work to focus on Volvo CE’s strongholds.”
During the quarter, Volvo CE displayed a range of innovations such as a hybrid wheel loader with the potential to improve fuel efficiency by up to 50% and autonomous wheel loader and hauler prototypes.
