Volvo Construction Equipment (CE) has announced an improvement in sales and operating income in the fourth quarter of 2020 while reporting a decline in net sales for the full year owing to the Covid-19 pandemic.
The construction equipment giant said in a statement that despite a steep drop in demand in the first half of the year due to the pandemic, it recovered well, delivering improvements by Q4 2020. Net sales in the last quarter of last year increased by 6% to SEK20,810m. Adjusted for currency movements net sales were up by 15%. Operating income amounted to SEK2,321m, corresponding to an operating margin of 11.2%. Earnings were positively impacted by higher machine and service sales.
For the full year net sales decreased by 8%, to SEK81,453m. Adjusted operating income decreased to SEK10,071m, corresponding to an operating margin of 12.4%.
“After a steep drop at the start of the pandemic in the spring, demand started to recover in the second half of the year. Up to November both the European and North American markets were down 14%, while South America rose 12%, largely a result of an improving Brazilian market. Government stimulus measures fuelled a sharp recovery in China, which was up 28%, although Asia as a whole was down by 6%,” said Volvo.
During the fourth quarter of 2020 Volvo CE saw net order intake increase by 31%, driven by improving activity in most markets and dealer restocking. Order intake in Europe increased by 20% but fell by 18% in North America compared to the record order intake in 2019. In South America, order intake was up 182%, up from low levels in most markets. In Asia order intake was up 39%, boosted by government stimulus in China and improvements in other markets.
Deliveries increased by 21% during the fourth quarter 2020, again boosted by higher volumes in China, as well as other Asian markets and Brazil.
Melker Jernberg, president, Volvo CE, said: “In 2020 the global pandemic presented us with challenges that are unprecedented in modern times. But together with business partners and suppliers we were able to support customers through all stages of the crisis. Construction activity is now back on a par with pre-pandemic levels, and this is giving confidence to customers, which is visible in our strong order intake.”
Volvo CE added that In the fourth quarter, it began deliveries of its electric compact wheel loaders and compact excavators, beginning the company’s electrification journey.