Volvo CE has secured good profitability and a boost to its operating margin in Q1 with continued demand in large infrastructure and construction projects – particularly in North America and Europe – while increasing its own investments into the biggest technological shift in the industry’s history.
Compared to the same period last year, Volvo CE is reporting a strong boost in sales of 17% in Europe and 37% in North America. This is more than compensating for a dip in sales in Asia and South America where investment levels have slowed down. With the exception of China, activity in the construction industry has continued to be good across most markets, driven primarily by ongoing infrastructure investments and by the mining industry, which benefits from continued good commodity prices.
Melker Jernberg, President of Volvo CE, says: “Strong profitability and robust sales like the kind we see this quarter is of course important to us and is a testament to the great products and service solutions we continue to bring to the market. But these results also allow us to maintain our industry lead in the sustainable transformation, increasing our investments into zero emission solutions and demonstrating innovative partnerships in what is no doubt the biggest technological shift ever to happen in our industry.”
For the first quarter this year, Volvo CE increased net sales by 11% to SEK 25,109 M from SEK 22,613 M in Q1, 2022 – with the majority coming from machine sales, while service sales remained flat. Adjusted operating income amounted to SEK 4,587 M (from SEK 2,810 M), corresponding to an adjusted operating margin of 18.3%, way up from 12.4% last year. Operating income was positively impacted by a favorable brand and product mix, minimally offset by lower volumes, increased material costs and R&D expenses.
Despite net order intake declining this quarter – heavily impacted by an anticipated drop in China following the pre-buy effect of the emissions regulations change that came in at the end of last year – it was North America that saw the most significant increase of 107% driven by a favorable market outlook. Deliveries in China and Brazil slowed down, while deliveries in North America and Europe, excluding the stopped sales in Russia, increased.