Volvo Construction Equipment (Volvo CE) has announced that, after a long period of strong demand, sales slowed by 4% in the third quarter of 2019.
Net sales in the third quarter decreased by 4% to SEK17.9 billion (US$1.8 billion). Operating income was also slightly down, at SEK 2.2 billion (US$225 million), compared to SEK2.6 billion (US$266 million) in the corresponding period in 2018. This equated to an operating margin of 12.2%.
Profitability was said to be hampered by brand, market and product mix, as well as higher R&D costs and selling expenses.
Net order intake in the third quarter decreased by 9% compared with the same quarter in 2018. Deliveries decreased by 2% to 16,460 machines.
Up to the end of August, the European market was up 4%, driven by stable growth in Russia, Germany and Italy. North America saw an increase of 7% over last year, thanks to demand for large excavators, haulers and wheeled loaders.
South America was up by 10%, driven by growth in Brazil. In Asia (excluding China) the total market was down 11% from last year, spread across all markets. The Chinese market was 7% above last year, thanks in part to increased sales of compact excavators.
“After several years of high market levels, demand for construction equipment is slowing down,” commented Melker Jernber, President of Volvo CE. “Although many markets are coming off their previous high levels, we expect the underlying need for infrastructure development in many markets to support the industry in the longer term.”
Volvo CE also announced that it has signed a contract for the first commercial pilot of its autonomous battery-electric load carrier. The trials will be conducted with customer Harsco Environmental in Sweden, and represent the next stage in the process of industrialising the technology.