Volvo Construction Equipment last week reported record sales and profitability in the first quarter of 2012 with sales up 17 percent to SEK 17.99 billion (about U.S. $2.68 billion) from SEK 15.42 billion in the first quarter of 2011, and higher-than-ever operating income and operating margin for a first quarter. Most notably, in North American, Volvo CE grew sales 111 percent to SEK 3.32 billion (U.S. $493.9 million) from SEK 1.57 billion in the first quarter 2011.
The positive results come despite a flat total world market for construction equipment, compared to last year, and a Chinese market that was down by 26 percent. Despite the decline in the Chinese market, Volvo CE maintained sales in China and reinforced its No. 1 position in the Chinese wheel loader and excavator market together with its joint-venture partner, SDLG, the company said.
Volvo CE also demonstrated strong profitability during the period, posting a 21-percent increase in operating income to SEK 2.13 billion (U.S. $317.2 million) from SEK 1.76 billion (U.S. $261.3 million) in the same period a year ago. Operating margin in the quarter was 11.8 percent, up from 11.4 percent in the same period last year. Both measures of profitability are records for the company in a first quarter, and are attributable to sales price realization, currency effects and internal cost reductions.
The value of Volvo CE’s order book on March 31 was also improved — 35-percent higher than the previous year.
“The strong sales growth and high profitability is a combination of growth in all regions, especially in North America, and our success in achieving sales and profitability is on a par with the preceding year in China, despite the significant weakening of that market,” said Pat Olney, Volvo CE president. “Our success in China was due to our continued ability to capture market share, thanks to a strong product portfolio and our efforts to establish stable distribution channels.”
In Europe and North America the market increased by 16 percent and 35 percent respectively, while South America increased by 3 percent, Asia (excluding China) was up by 24 percent and China decreased by 26 percent.
The prospects for the rest of the year remain positive, Volvo officials said. Volvo expects Europe to grow by 10-20 percent, North America by 15-25 percent and South America by 0-10 percent. Asia (excluding China) is expected to grow by between 0-10 percent, while China is forecast to decline by between 15-25 percent.
Volvo CE is a global manufacturer of a comprehensive range of wheel loaders, hydraulic excavators, articulated haulers, motor graders, soil and asphalt compactors, pavers, milling machines and compact equipment. The Volvo Group is a publicly held company headquartered in Gothenburg, Sweden.