For the nine months ended Sept. 30, 2006, Volvo Construction Equipment reported a net-sales increase of 9 percent to US $7.8 billion in the third quarter compared with $7.2 billion in 2005.

Income for the 3Q period rose 34 percent to US $538.1 million, from $400.9 million a year ago, and basic earnings per share rose to US $1.32, from 99 cents last year.

Construction equipment net sales rose by 22 percent to US $1.3 billion, from $1.1 billion in the year-ago period.

“During the third quarter, demand was stronger than expected in Europe and remained high in North America,” said Leif Johansson, Volvo CE president and CEO. “The group increased sales 9 percent and again improved profitability compared with the preceding year. With an operating margin of 9.3 percent after nine months, we are at an historically record level.”

The total world market for heavy and compact construction equipment increased by 5 percent during the third quarter compared to the same period the preceding year. In North America, the market was down 6 percent. Europe grew by 11 percent and Other markets was up 10 percent. The Asian market was up 10 percent, strongly driven by China with a growth of 29 percent.

Overall market conditions for the rest of 2006 are expected to remain favorable. The softer North American market, driven by lower housing starts, is expected to be marginally down, with a decrease of up to 5 percent compared with the preceding year. The European market is expected to grow around 10 percent for the full year 2006 and Asia and Other markets 15 percent for the full-year 2006.

On Sept. 27, Volvo CE signed an agreement to make an equity investment of 70 percent in Shandong Lingong Construction Machinery. Lingong is a major Chinese construction equipment manufacturer with a comprehensive network of 170 dealers throughout China. China is the second-largest market in the world for construction equipment in general and the largest for wheel loaders. The Chinese market is expected to grow and Volvo CE intends to actively participate in this growth. The investment is subject to regulatory approval.