Volvo Construction Equipment posted solid second-quarter results thanks to robust trends in most markets, with sales up 32 percent after adjustments for currency movements to SEK 17.52 billion (about U.S. $2.77 billion) from SEK 15.30 billion (U.S. $2.41 billion) in 2Q10. This represents a 15-percent jump in demand.
Operating income in the quarter was SEK 1.89 billion (U.S. $298.8 million), down from SEK 2.09 billion (U.S. $329.2 million) in 2010. Both sales and operating income were negatively affected as a result of the earthquake and tsunami that hit Japan earlier this year. Japanese supplier-related issues resulted in lost sales of approximately SEK 1.20 billion and a reduction in operating income of SEK 300 million. This also had a negative impact on operating margin, which at 10.8 percent was down from 13.6 percent in the same period in 2010.
“These are a solid set of figures given the significant currency headwinds we faced and the consequences of the tragic earthquake and tsunami that struck Japan during the period,” said incoming Volvo CE president Pat Olney. “Due to continued uncertainty in the current macro-economic situation, we are maintaining a high degree of cost flexibility in order to be able to quickly adapt to any potential challenges in market conditions.”
In the quarter, Volvo CE strengthened its market leadership position in wheel loader and excavator sales in China, taking an 11.8-percent share of this important market. Despite an overall softening of demand in the Chinese market, as a result of government measures to curtail inflation, sales at Volvo CE were positively impacted by strong momentum in most markets.
In a sign of improving conditions, the value of Volvo CE’s order book at the end of the second quarter was 38-percent higher than at the same date in 2010. Market conditions for full-year 2011 are expected to remain positive, with a projected growth of 15 to 25 percent. Europe is expected to grow by 15 to 25 percent, North America by 25 to 35 percent, South America 10 to 20 percent, Asia 10 to 15 percent, whereof China is expected to grow between 10 to 15 percent.
Volvo CE is headquartered in Stockholm, Sweden.