Despite a sharply reduced global demand leading to a slowdown in the fourth quarter, Volvo Construction Equipment rounded off a solid 2012 by extending its market position in the Chinese wheel loader and excavator segments to about 15 percent, the company said. Volvo CE also protected its profitability through inventory management and sold its second-highest ever number of machines. Volvo CE sold 78,491 machines in 2012.
For the full year, Volvo CE posted SEK63.56 billion (about U.S. $9.9 billion), a 0.9-percent increase, despite a 23.1.-percent fourth-quarter decline to SEK12.6 billion (about U.S. $1.95 billion), caused by a plunge in global demand. Operating income declined 15.2 percent in 2012, a result of lower sales and negative product mix, to SEK 5.77 billion, down from SEK 6.8 billion a year ago.
Operating margin remained positive at 2.9 percent thanks to rapid and significant cuts in production and a consequent reduction in inventories.
“Taken as a whole, 2012 was a reasonable year,” said Pat Olney, president of Volvo Construction Equipment. “We sold over 78,000 machines, recorded the company’s second-highest ever revenues and our proactive downturn management helped protect cash flow and profitability. We recognized the turn in the industry early, and the work undertaken to reduce pipeline inventories was successful. Stock levels have been reduced by around 30 percent since late spring and are now in balance with current demand.”
Volvo CE expects 2013 to be essentially flat, with unit sales in Europe predicted to decline by 5 to 15 percent, with Asia — excluding China — likely to decline by between zero and 10 percent. China, North America and “other markets” are forecast between a 5-percent increase and 5-percent decrease.
Volvo CE is based in Stockholm, with U.S. headquarters in Shippensburg, Pa.
