Improved profitability at Volvo CE despite significant market headwinds

Favorable currency developments and product mix, combined with ongoing efficiency measures have helped bolster Volvo Construction Equipment’s second quarter 2015 financial results, with the company posting a 5% improvement in sales and its best profit margin for three years. This was despite continued strong economic headwinds in many of its principle markets, which saw deliveries decrease by 24% in the second quarter, mainly driven by lower demand in China and Russia, impacting both the Volvo and SDLG brands.

Net sales in the second quarter increased by 5%, amounting to SEK 15,419 M (SEK 14,624 M in Q2 2014). Operating income increased by 80%, to SEK 1,353 M, from 751 M in the same period during 2014. Operating margin, at 8.8%, was significantly up compared to the 5.1% achieved in same period last year, marking a three year high. Currency exchange rates had a positive impact of SEK 427 M on operating income compared to the second quarter in 2014.

“The second quarter saw Volvo CE continue its targeted sales activities and the implementation of the restructuring program we launched in 2014,” commented Martin Weissburg, president of Volvo Construction Equipment. “With the exception of North America, demand was down across-the-board, resulting in a decline in equipment deliveries by almost a quarter. That said, our products are well received by the market and operating margin improved significantly during the quarter, to 8.8%, thanks to the efficiency program, favorable product mix and positive currency effects.