Volvo Construction Equipment increased sales in the fourth quarter of 2013 by 3 percent to SEK 13.005 billion (about U.S. $2 billion) compared to SEK 12.572 billion for the same period in 2012. The improved numbers are largely the result of higher sales of smaller equipment, helping to boost deliveries by 9 percent during the quarter. However, demand for larger machines, particularly in the mining segment, remained subdued.
Operating income increased 16 percent during the quarter to SEK 272 million, compared to SEK 235 million in the fourth quarter of 2012. Operating margins also improved from 1.9 percent a year ago to 2.1 percent.
The improved fourth quarter helped Volvo CE’s 2013 overall numbers, with sales decreasing for the full year to SEK 53.4 billion (about U.S. $8.2 billion) compared to SEK 63.6 billion in 2012. Operating income also dropped, a result of tough price competition, weak product mix, low capacity utilization and unfavorable exchange rates, to SEK 2.6 billion, down from SEK 5.7 billion a year ago. Operating margin slipped to 4.9 percent in 2013 compared to 8.9 percent in 2012.
Volvo CE is expecting some improvements in 2014 as global markets recover. The company expects China and Europe to recover up to 10 percent measured in units, with North America, South America and Asia – excluding China – to be in the range of minus 5 percent to plus 5 percent.
“For 2014, we expect a slight improvement in market demand, mainly driven by China and Europe,” said Martin Weissburg, the incoming president of Volvo CE.