Volvo Construction Equipment saw out 2017 in style with a strong fourth quarter due to improved competitiveness and vehicle demand.
Sales for the final months of last year increased by 28% compared with 2016 Q4 figures pushing up sales the whole calendar year to 31% better than the previous 12 months.
Growing demand – especially in Asia – helped the Swedish firm deliver strong improvements in sales, operating income and order intakes.
In Q4 2017, net sales increased by 28% to Skr16,733m (US$2.1bn). When adjusted for currency movements net sales were up even more, to 34% on 2016 results. Operating income amounted to Skr1,816m (US$231m), corresponding to an operating margin of 10.9%. Earnings were positively impacted by higher sales and increased utilization of the industrial system.
For the full year, net sales increased by 31%, to Skr66,497m (US$8.4bn). Adjusted operating income increased to Skr7,917m (US$1bn), corresponding to an operating margin of 11.9%.
Demand in Europe improved during the quarter, and was up 16% by the end of November, helped by growth in the UK, France, Italy and Germany and a rapidly improving Russian market.
North America was up by 10% over the previous year, helped by greater demand for excavators, while South America saw a gain of 17%, from low levels and mostly from markets outside of Brazil. The Middle Eastern market continued to slow, weighed by weak demand from Saudi Arabia.
Excluding China, Asian markets were up 11% compared to 2016, boosted by an improving mining sector. The Chinese market itself was strongly up, growing by 74% above the previous year, driven by greater demand for excavators and wheel loaders. The market for large excavators was up 121%, while compact excavators enjoyed an 83% improvement. By the end of November, the market for wheel loaders in China was up by 50%.
During the fourth quarter of 2017, Volvo CE saw net order intake increase by 48%, largely driven by strong demand in China and North America. Deliveries increased by 49% during the period, again boosted by higher volumes in China.
“The performance program to strengthen Volvo CE’s competitiveness, combined with increased market demand, yielded good results in 2017,” said Melker Jernberg, the new president of Volvo Construction Equipment.
“Volvo CE improved profitability and gained market share in several of our stronghold segments of excavators, wheel loaders and haulers.”
Volvo CE has begun 2018 in confident mood. In January, the company took another step toward further strengthening its customer offer with the announcement that the Volvo brand was entering the rigid hauler market, introducing four new models ranging from 45 tonnes to 100 tonnes.
February 2, 2018