Volvo CE reports 10% first quarter revenue increase

Volvo Construction Equipment reported net revenues of SEK13.4 billion (€1.47 billion) for the first three months of 2014, up 10% compared to the same period last year.

First quarter operating income also increased to SEK647 million (€71.1 million), compared to SEK500 million (€54.9 million) in 2013. The operating margin was 4.8%.

The manufacturer said it had seen higher sales of smaller equipment during the period, while demand for large equipment remained relatively low.

Net order intake was up 9% year-on-year to 19,241 machines in the first quarter, fuelled by a 24% increase in Europe to 4,053 units and a 26% increase in North America to 2,095 units.

In South America, order intake was up 14% to 952 machines, while for Asia the figure increased 4% to 11,309 machines. Other markets saw a 21% fall in order intake to 832 machines.

Of the total order intake, Volvo CE said orders for SDLG equipment – its joint venture brand in China – accounted for 7,494 machines, up 6% year-on-year.

Volvo Group president and CEO Olof Persson said the seasonally strong first quarter had a positive impact on volumes, which contributed to improved profitability compared with the weak close of 2013.

“To increase profitability further we are currently implementing a number of activities to reduce costs. We expect a moderate growth in Volvo CE’s mature markets but a relatively weak development in emerging markets.

“The situation is still challenging for some customers and dealers with large exposure to the mining industry, primarily in China. In Europe and North America, Volvo CE is in the process of launching machines which are compliant with the latest emission regulations,” Persson said.

The company also revised its forecasts for the global construction equipment market, and said it now expected unit sales in China to develop in the region of ±5% in 2014, compared to its previous forecast of between 0% and 10% growth.

In Asia excluding China, it said the total market was now expected to end up either stable year-on-year or with a decline of 10%, compared to its previous forecast of ±5%, with the same change in forecast for the market in South America.

In North America, Volvo CE said it now expected the total market for construction equipment to remain either stable year-on-year or show growth of up to 10% for 2014, compared to its previous forecast of ±5%, while its outlook for Europe this year remained unchanged at between 0% and 10% growth.