Volvo CE sales up

Volvo Construction Equipment reported net third quarter sales of SEK14.9 billion (€1.6 billion) - an 18% increase year-on-year, rising to 27% when adjusted for currency movements.

Operating income increased 6% in the third quarter to SEK1.4 billion (€154 million), but the company's operating margin slipped to 9.4%, compared to 10.5% in the third quarter of 2010. Volvo CE said this was down to a SEK400 million (€44 million) impact from exchange rate changes.

The company also said it expected market conditions for the rest of 2011 to be softer than had been forecasted earlier in the year. Volvo CE now forecasts that the total construction equipment market will grow between 15% and 20% in 2011, compared to its previous forecast of between 15% and 25%.

While the forecast for Europe and North America have improved - Europe is now expected to grow by between 20% and 25% (previous forecast 15% to 25%) and North America is forecast to grow between 35% and 40% (previous forecast 25% to 35%) - a slowdown in China's equipment market is expected, with growth now put at between 5% and 10%, compared to Volvo CE's previous forecast of between 10% and 15%.

Volvo group president and CEO Olof Persson said, "The markets for our construction equipment operation continued to expand, with the exception of China, where we noted a slowdown in demand resulting from the austerity measures introduced by authorities to restrain inflation."

Nevertheless, Volvo CE strengthened its position as market leader in China with a 12.4% share of the wheeled loader and excavator market during the first nine months of 2011.

"Since the financial crisis, recovery in the mature markets has been quite modest and we are still far from what can be viewed as normal levels. Based on this, we forecast continued growth in demand in most mature markets in 2012, albeit modest," Mr Persson added.