Volvo CE reports drop in first quarter sales
Equipment giant says depressed demand due to Covid-19 led to year-on-year fall of 17% in sales while operating income and order intake also dipped
Volvo CE has reported a 17% fall in net sales for the first quarter of this year, while also recording slides in operating income and order intake.
The Swedish equipment giant said that net sales in the first three months of the year stood at $2.1bn, whereas the figure was $2.55bn for the first quarter of 2019.
Operating income dipped to $271.2m in the quarter compared to $369.3m for the same period last year. According to Volvo, earnings were impacted by lower machine volumes and an unfavourable machine mix. Operating margins stood at 13.3%, slightly down from the 15.1% reported in the first quarter of 2019. Order intake also decreased by 7% in Q1 this year and deliveries were down by 13%, to 20,170 units, compared to 23,139 machines for the first three months of 2019.
The company said the results reflect the “rapid deterioration of global demand caused by measures in society to contain the spread of the Coronavirus”, which had a “negative impact on Volvo Construction Equipment’s first quarter 2020 financial results, with sales, profitability, deliveries and orders all showing reversals during the period”.
Broken down by region, the major markets of Europe and North America were both down in the first quarter, falling 20% and 25% respectively in the quarter, said Volvo.
In Asia (not including China) demand was down by 4% compared to the same period last year, the company said, adding that the impact of Covid-19 was more pronounced in China, which fell 44% during the period, due to market disruption. Volvo did see a rebound in China in March, with demand up 2% compared to the same month in 2019, thanks to government stimulus measures aimed at boosting infrastructure development. Overall, sales declined by 10% for Asia as a whole in the quarter.
Volvo’s Africa & Oceania region saw an 18% dip in sales while the only region to report positive results was South America, which saw sales rise by 2%.
Melker Jernberg, president, Volvo CE, said: “The measures to stop the spread of the Covid-19 pandemic began affecting our operations in China in February, and had a severe impact in mid-March, when our global supply chain was disrupted and production halted in most parts of our operations.
“It is clear that we are now entering a tough period, with both production stops and low demand having a negative impact on our profitability. That said, we take confidence in the fact that our customers are active in businesses that are important to society, and that our products and services are vital in building sustainable infrastructure for the future.”
