Volvo Construction Equipment posted a strong fourth quarter, with market share gains in larger, more profitable machine segments and net order intake increasing by 35 percent, while deliveries increased by 19 percent to 10,639 machines. Order intake increased in all markets, most notably in China and Europe.
Net sales increased 20 percent in the fourth quarter to SEK 13,110 million (about U.S. $1.5 billion) up from SEK 10.967 million a year ago.
Earnings were positively impacted by a favorable product mix, higher sales volumes, lower costs for credit losses in China and reduced operating expenses. Earnings were also positively impacted by improved capacity utilization.
For the full year, sales decreased by 1 percent to SEK 50,731 million (about U.S. 5.8 billion). Adjusted operating income increased to SEK 2,246 million, from SEK 2,090 million in 2015, a 6.9-percent jump.
Volvo posted a 46-percent order increase, with improvements in most countries including Russia, and for all product segments. Volvo reported a 35-percent order intake increase from low levels in 2015. Order intake increased by 29 percent in China with a recovering excavator market. Market growth was solid in India. SDLG branded products increased sales in China and Southeast Asia.
In the fourth quarter, Volvo realized higher volumes in Europe and Asia. China, India and Southeast Asia all contributed.
For the full year, the North American market dropped 2 percent with a decline for larger units. The market for compact equipment was positive, with growth driven mainly by increased demand for compact excavators.
The South America market declined for Volvo, especially in Brazil where sales plunged 44 percent.
“Global demand for construction equipment was largely flat in 2016,” said Martin Weissberg, president of Volvo Construction Equipment. “However, there were signs of progress in Asia. Volvo shows positive signs of growth in our stronghold segments of excavators, wheel loaders and articulated haulers. The ongoing work to improve Volvo CE’s competitiveness is yielding results.”
During the fourth quarter a new and more efficient R&D organization was introduced and it was also announced that the company will fit its in-house-produced eight-liter engine into its mid-size excavators and wheel loaders, replacing externally sourced engines.
Volvo CE also announced its headquarters will be transferred to Gothenburg, Sweden, from Brussels, to facilitate closer cooperation with the group’s other business areas and operations.
