Regional bump in sales as operating income rises on strong global performance
Led by strong demand in Asia, Volvo Construction Equipment (Volvo CE) saw a 30% rise in net sales year-on-year in the first quarter of 2018, leading to jumps of 33% in results and a whopping 79% in operating income for the period.
Melker Jernberg, Volvo CE’s new president, told the global press at Intermat in Paris last week that net sales jumped to $2.43 billion in the quarter compared to $1.86bn in the corresponding period last year. Adjusted for currency movements, Q1 2018 results were up 33% year-on-year while the 79% rise in operating income saw it grow from $187.6 million in 2017 to $335.6m this year.
In Q1 this year, order intake at Volvo CE increased by 37% to 23,938 machines, while deliveries were up to 22,102 machines, a rise of 35% year-on-year.
Apart from Asia, which recorded the strongest growth, North America also contributed to the rise in numbers, Jernberg said, adding: “It was a good quarter, but we can continue to improve.”
While the North America market was up 21% for Volvo CE, driven mainly by demand for excavators, Germany, Italy and parts of Eastern Europe led the growth in Europe, which was up 10%. Meanwhile, South America continued to recover from low levels, rising 27%.
The main growth area for the company was Asia, which was up 21% compared to last year, excluding China, with continued rise in the Indian and Indonesian markets. Turkey also was among the growth areas while the Middle East, too, registered a small rise for the company. In China, a 13% rise in demand was fueled by strong demand for large excavators and wheel loaders during the quarter.
“In general, market demand is strong, and Volvo CE has continued to improve sales and profitability,” said Jernberg. “We are leveraging the benefits of these increased volumes well, while at the same time keeping a tight control of costs.
“We expect Europe to grow by up to 10%. There are lots of challenges, but we have solutions. This is the beginning of a new era, and the feeling of change is high.”
Volvo CE sees connectivity and changes to the fuels as agendas that will dominate in the future. “We are putting a lot of money and resources into advanced engineering,” said Jernberg, citing the company’s 100% electric excavator prototype as an example.