Volvo Construction Equipment (359 Volvo CE) said sharply lower global demand, especially in the mining sector, during the first three months of 2013 had caused its 33% net sales decline in the quarter to US$1.829 billion (SEK 12,136mn).
The Swedish construction equipment manufacturing giant’s operating income was also down in Q1 2013 to $75.38 million (SEK 500mn), compared to $314.97 million (SEK 2,089mn) in the first quarter of 2012, while operating margin was 4.1%, down from 11.6% in Q1 2012.
Volvo CE said its earnings were not only impacted by lower sales but also by the product mix, with fewer larger, typically higher margin machines being shipped, particularly to the mining sector.
Despite Volvo CE’s net sales drop by a third from the $2.593 billion (SEK 17,999mn) achieved in Q1 2012, the company has stressed its improved profitability compared to the previous quarter, as well as its retention of the number one sales position in China. With inventories now in balance, Volvo CE said it had increased production to meet the spring selling season.
The latest quarterly results figures released by Volvo CE come amid an across-the-board decline in the construction equipment market. The firm said that, in units, Europe was down 18%, while North America decreased by 7% and South America by 20%. Asia (excluding China) was also down by 7%, while China itself slumped by 42%. Despite the sharp slowing of the Chinese market, Volvo CE has been able to maintain its market leadership position in the country, staking claim to 14.8% of the wheel loader and excavator market.
The prospects for the rest of the year remain modest, according to Volvo CE. Measured in units, Europe is expected to decline by between 5% and 15%, while North America, South America and China are predicted to hover around the minus 5% to plus 5% mark. Asia (excluding China) is forecast to grow in the range from zero to 10%.
“We have been through a challenging couple of quarters but have now got our inventory pipeline in balance and stabilized the business at a lower sales volume,” said Volvo CE president Pat Olney. “We still need to keep a tight rein on costs, as well as improve our geographical and product mix. But I take confidence in the fact that we have improved our margins compared to the last quarter of 2012, despite similar sales revenues.”
Volvo CE continued to invest and innovate during Q1 2013. The $100 million investment program at its North American production hub in Shippensburg, Pennsylvania, passed two important milestones in March, when both a new headquarters building was inaugurated on the site, and the facility began production of the company’s L60-L90 wheel loaders. The company said that this localised production would allow it to be more flexible and responsive to customers in the region, as well as reducing the currency exposure.
The Swedish construction equipment manufacturing giant’s operating income was also down in Q1 2013 to $75.38 million (SEK 500mn), compared to $314.97 million (SEK 2,089mn) in the first quarter of 2012, while operating margin was 4.1%, down from 11.6% in Q1 2012.
Volvo CE said its earnings were not only impacted by lower sales but also by the product mix, with fewer larger, typically higher margin machines being shipped, particularly to the mining sector.
Despite Volvo CE’s net sales drop by a third from the $2.593 billion (SEK 17,999mn) achieved in Q1 2012, the company has stressed its improved profitability compared to the previous quarter, as well as its retention of the number one sales position in China. With inventories now in balance, Volvo CE said it had increased production to meet the spring selling season.
The latest quarterly results figures released by Volvo CE come amid an across-the-board decline in the construction equipment market. The firm said that, in units, Europe was down 18%, while North America decreased by 7% and South America by 20%. Asia (excluding China) was also down by 7%, while China itself slumped by 42%. Despite the sharp slowing of the Chinese market, Volvo CE has been able to maintain its market leadership position in the country, staking claim to 14.8% of the wheel loader and excavator market.
The prospects for the rest of the year remain modest, according to Volvo CE. Measured in units, Europe is expected to decline by between 5% and 15%, while North America, South America and China are predicted to hover around the minus 5% to plus 5% mark. Asia (excluding China) is forecast to grow in the range from zero to 10%.
“We have been through a challenging couple of quarters but have now got our inventory pipeline in balance and stabilized the business at a lower sales volume,” said Volvo CE president Pat Olney. “We still need to keep a tight rein on costs, as well as improve our geographical and product mix. But I take confidence in the fact that we have improved our margins compared to the last quarter of 2012, despite similar sales revenues.”
Volvo CE continued to invest and innovate during Q1 2013. The $100 million investment program at its North American production hub in Shippensburg, Pennsylvania, passed two important milestones in March, when both a new headquarters building was inaugurated on the site, and the facility began production of the company’s L60-L90 wheel loaders. The company said that this localised production would allow it to be more flexible and responsive to customers in the region, as well as reducing the currency exposure.
