Sales at Volvo Construction Equipment jump 58% in Q3 as general market recovers

With recoveries in all major markets, Volvo Construction Equipment (Volvo CE) recorded a strong performance in the third quarter of 2010, with sales in SEK rising almost twice the amount of the general world market in units. Net sales rose by 55% to SEK 12,710 M (8,176 M) during the period. Adjusted for currency movements, net sales increased by 58%. Order bookings were also substantially up, with the value of the order book at September 30 being 81% higher than on the same date in 2009.

The good news was also reflected in operating income, with Volvo CE enjoying a substantial recovery to SEK 1,330 M in the third quarter, compared to a loss of SEK 787 M in the same period the year before. There was also a complete turnaround in the fortunes of the operating margin, which was a healthy 10.5% – compared to a negative 9.6% in Q3 in 2009.

“We are seeing sales increases in all markets, led by a recovery in mature markets and continued strong demand in emerging economies,” said Olof Persson, president and chief executive of Volvo CE. “Profitability has improved as a result of higher sales volumes, strict control over costs as well as better capacity utilization and productivity in our industrial systems.”

BRIC leads the way

Measured in units, the total world market for heavy, compact and road machinery equipment increased by 31% in the third quarter of 2010. This was strongly driven by growth in the ‘BRIC’ markets of Brazil, Russia, India and China, who together rose by 44% during the period. In Europe the market rose by 16%, North America increased by 25% and Asia rose by 29% Other International markets saw an increase of 57% – boosted by a fast recovering Russian market, which grew by 486%, albeit from a very low base.

The outlook for the full year is expected to see the European market rise by 10% while North America is expected to increase by between 5-10%. Asia and International markets are expected to increase by 50% this year, which is up from previous forecasts that predicted that Asia would rise by between 30-40% and International by 40% this year.

A highlight of the third quarter was Volvo CE gaining Tier 4i emission certification from the Environment Protection Agency (EPA) in the US for its low emission D11, D13 and D16 heavy duty engines. This followed a similar EU endorsement earlier in the year stating that the engines met the requirements of Europe’s Stage IIIB legislation.