Despite improvement in the European market and a 17-percent order intake increase, softness in North and South America led Volvo Construction Equipment to a 2-percent sales decrease in the third quarter. Net sales in the third quarter decreased by 3 percent to SEK 11,539 million (about U.S. $1.29 billion) compared to SEK 11,884 million for the same period a year ago.
Adjusted for currency movements, net sales dropped 2 percent. Adjusted operating income increased to SEK 601 million (about U.S. $67 million), corresponding to an operating margin of 5.2 percent.
Net order intake in the third quarter leaped 17 percent compared with the third quarter of 2015, although the increase was from low levels. Order intake increased in all regions. In Europe, higher order intake in France and Germany was counter-balanced by lower orders in Norway and Russia. The increase in net order intake in North America was partly driven by the launch of compact equipment with Tier IV final compliant engines.
In South America, the increase in order intake was largely led by SDLG in Brazil. Order intake in Asia – including China – was 24 percent higher, driven by increased order intake for the Volvo brand in China, particularly for excavators. Continued strong growth in India as well as increases for SDLG branded products in China and Southeast Asia also were contributing factors.
In the third quarter, deliveries were at a similar level as a year ago. Higher deliveries in Europe, as well as of SDLG branded products in export markets and in the stabilizing Chinese excavator market were counterbalanced by lower Volvo branded machine sales in the Americas and the Middle East.
“Despite continued low demand operating margin improved slightly in the third quarter to 5.2 percent,” said Martin Weissburg, president of Volvo Construction Equipment. “Further positives were that orders increased slightly across all regions, from low levels in the BRIC regions. We see no immediate increase of demand and continue the internal work to focus on Volvo CE’s strongholds.”
For the first nine months of 2016, Volvo CE’s net sales were SEM 37,620 million compared to SEK 40,041 million for the first nine months in 2015, a 6-percent drop.
During the quarter, Volvo CE displayed a range of innovations such as a hybrid wheel loader with the potential to improve fuel efficiency by up to 50 percent, as well as autonomous wheel loader and hauler prototypes.
