Volvo posts solid solid Q2 performance

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Continuing its strong rebound from the challenges of last year all markets have enjoyed in uptick in sales from the same period 2020 – all except China which has seen a slight slowdown despite its initial surge of sales in the first three months of the year. With improved construction activity, high customer confidence and increased investment in infrastructure, order intake has also increased by 35%.

Total net sales in the second quarter increased by 13% amounting to SEK 25,839 M (SEK 22,876 M in Q2 2020) – supported by a 17% rise in the sales of services. Adjusted for currency movements, however, net sales increased by 21%. Sales in Asia, including China, the world’s largest construction equipment market, remained the highest but still accounted for a 12% drop, due to a decline in infrastructure investment.

Net sales by market area Second quarter First six months
SEK M 2021 2020 2021 2020
Europe 7,734 5,254 14,997 11,731
North America 4,418 3,527 8,715 7,237
South America 857 422 1,531 981
Asia 11,421 12,928 22,740 21,331
Africa & Oceania 1,408 746 2,597 1,744
Total 25,839 22,876 50,581 43,023

Above: Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona (SEK)

Asia (excluding China) continued to solidify its growth with improvements in all key markets including India, Korea and South East Asia. Adjusted operating income amounted to SEK 3,374 M, up slightly from 3,108 M last year, corresponding to an adjusted operating margin of 13.1% (13.6%).

Thanks to a more confident customer outlook and increased investment across most markets, order intake increased by 35% with a significant increase in orders for Volvo branded products and a more modest yet stable order intake in SDLG branded products, affected as they were by the slowdown in the Chinese market. Demand for large and medium sized machines remained strong and higher than for compact machines. Due in large part to higher sales in Europe and North and South America, the latter of which saw a 120% increase in deliveries from the same period last year, overall deliveries increased by 5% in Q2.

Market development

The year up to May has benefited from high customer activity across industry segments, more than positively impacted by increasing volumes in the European, North American and South American markets. In Europe, the majority of countries continued their recovery to see a 30% increase measured in units from the same period last year, while North America saw a 35% rise thanks to high infrastructure and housing construction activity. The South American market enjoyed the biggest surge (71%) due to an increased demand in commodities. Despite its strong start to the year, China began to decline in Q2 in line with decreasing government investment in infrastructure.

“Thanks to our commitment to innovation and customer success, we have offset a slowdown in China with a solid increase in demand across our other key regions of Europe and North America,” said Melker Jernberg, president of Volvo CE. “While maintaining a steady recovery from the challenges of last year remains our top priority, we have also continued our journey of innovation with a number of exciting launches this quarter, including our entry into the 50 ton excavator segment and the launch of our first dedicated Fuel Cell Test Lab.”

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Saul Wordsworth is deputy editor of the iVT brand - which includes digital and print editions of a quarterly magazine and Off-Highway Annual, as well as ivtinternational.com. He is a keen cyclist and lives in north London.

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