Volvo CE Posts 10-Percent Revenue Increase in First Quarter

Volvo Construction Equipment posted growth in sales, earnings, deliveries and order intake during the first quarter of 2014. Much of the improvement came from higher sales of smaller machines, while large machine sales remained relatively modest, Volvo said. The biggest increases came from more mature markets, particularly North America, where sales jumped 21 percent during the period compared to the first quarter of 2013.

Net sales for the first quarter grew 10 percent to SEK 13,371 M (about U.S. $2.03 billion) compared to SEK 12,136 M in the year-ago quarter. When adjusted for currency movements, growth increased 11 percent. Operating income was also up during the period, increasing to SEK 647 M, compared to SEK 500 M in the first quarter of 2013, while operating margin strengthen to 4.8 percent, up from 4.1 percent.

Deliveries increased by 11 percent compared to the same period a year ago, while order intake was 9 percent higher year over year.

Measured in units, Europe grew 15 percent during the first two months of 2014, while North America jumped 7 percent despite a harsh winter. Demand dropped in South America, primarily because of Brazil’s completion of major government-funded projects and lower demand for commodities. The Asian market, excluding China, increased by 4 percent, primarily because of a 38-percent increase in Japan, offset somewhat by declines in India and Southeast Asia. Loader and excavator sales in China increased 7 percent, and there was a continued shift towards compact machines.

For the rest of the year, Volvo expects Europe and North America to grow between zero and 10 percent for the rest of the year, measured in units.

“The seasonably strong first quarter had a positive impact on volumes, which contributed to improved profitability compared with the weak close of 2013,” said Volvo CE Martin Weissburg. “The situation continues to be challenging, particularly for customers and dealers with large exposures to the mining industry. That said, we expect a moderate growth in Volvo CE’s mature markets.”

North American revenue increased 21 percent year over year in the first quarter. Asia increased 12 percent, Europe 6 percent, and South America declined 8 percent. Other markets increased 7 percent.