Volvo turns loss into profit

By Chris Sleight04 February 2011

Out-going Volvo president & CEO, Olof Persson.

Out-going Volvo president & CEO, Olof Persson.

Volvo Construction equipment achieved an operating profit of SEK 6.18 billion (US$ 955 million) last year, reversing the loss of SEK 4.01 billion (US$ 619 million) seen in 2009. Revenues were up +51% to SEK 53.8 billion (US$ 8.32 billion), compared to SEK 5.51 billion (US$ 36.7 billion) in 2009.

The company pointed to strong growth in Brazil, Russia, India and China (the BRIC countries) and other developing markets as the reason for the improvement. Indeed, the company's largest market last year was Asia, with sales totalling SEK 24.4 billion (US$ 3.76 billion) - an increase of +88%. Growth for the year in South America stood at +60%, taking sales to SEK 4.13 billion (US$ 638 million), while other developing markets were up +76% to SEK 2.92 billion (US$ 452 million).

Volvo also saw sales increases in Europe and North America, although they were more subdued. European construction equipment sales were up +24% to SEK 16.1 billion (US$ 2.49 million), while North America was up +14% to SEK 6.27 billion (US$ 968 million).

Looking ahead, Volvo says it sees demand for construction equipment continuing to improve around the world, although growth rates will be more subdued. "Market conditions for 2011 are expected to continue to be positive. Europe is expected to grow by +5% to +15%, North America by +20% to +30%, Brazil, India and China by +5% to +15% whilst the market in Russia is expected to double in 2011. Other markets are expected to grow by +5% to +15%," it said in a statement.

Last year was also a good one for the Volvo Group as a whole. Total revenues increased +29% to SEK 265 billion (US$ 10.9 billion), and the company achieved an operating profit of SEK 18 billion (US$ 2.78 billion), compared to 2009's loss of SEK 17 billion (US$ 2.63 billion). The construction equipment division was the most profitable, with an operating margin of 11.5% - a complete turnaround from the -11.2% negative margin seen in 2009

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