Volvo CE’s Sales Rise 32 Percent in 3Q07

Nov. 5, 2007
Volvo Construction Equipment last week credited a strong product portfolio with helping the company continue its rapid growth, despite a slowdown in the North American market.

Volvo Construction Equipment last week credited a strong product portfolio with helping the company continue its rapid growth, despite a slowdown in the North American market.

Volvo CE delivered another strong performance in the third quarter of 2007, with net sales rising in the period by 32 percent to SEK 12.96 billion (U.S. $2.03 billion) — up from SEK 9.81 (U.S. $1.54 billion) in the same period of 2006. Order bookings are also substantially up, with the value of the order book at Sept. 30, being 76-percent higher than on the same date in 2006 (excluding Lingong and the newly acquired road machinery business line).

Operating income fell slightly in the quarter by 4 percent to SEK 839 million (U.S. $131.6 million) compared with SEK 872 million (U.S. $136.8 million) in the year-ago period, a result of increased production costs, exchange rates and reduced production of excavators caused by an industrial dispute in Korea.

The total world market for construction equipment within Volvo CE’s product range increased by 8 percent during the quarter compared to the same period in 2006. This increase in unit sales was lead by heavy machinery, which rose by 12 percent in the period, compared to compact equipment’s 5 percent during the third quarter.

The European market increased by 8 percent, while Asia grew by 11 percent, boosted particularly by China, which was up 28 percent. Other international markets were up by 29 percent. The North American slowdown continues, albeit at historically high levels, declining 7 percent during the quarter — largely as a result of lower housing construction activity.

Despite the slowdown in North America — which is expected to decline by 10 percent in 2007 — the overall picture is expected to continue positive for the rest of the year. The European market is expected to grow by 10 percent in 2007, while Asia is set to grow 15 percent and other international markets are expected to see growth of approximately 20 percent.

A highlight of the third quarter was the launch of five pipelayers from 20 to 150 metric tonne lift capacity. With these machines Volvo CE is particularly targeting customers in the on-shore oil and gas industry. The patented adaptation of excavator-based machines combined with modern lifting technology is already being regarded as a major technical advance over the traditional tracked tractors with side booms, which have been used largely unchanged since the 1930s.