Volvo CE sees slide in Chinese sales but growth in developed markets

Volvo Construction Equipment has seen sales in China fall, while its performance in the developed markets of North America and Europe has improved. The company has seen sales drop 9% for its second quarter results as improvements in North America and Europe fail to compensate for weak demand from China. The 25% improvement in North America and 11% improvement in Europe, compared to the same period in the year before, has been a cause for optimism. Net sales in the second quarter fell 9% to US$2.144 billion
July 18, 2014 Read time: 3 mins

7659 Volvo Construction Equipment has seen sales in China fall, while its performance in the developed markets of North America and Europe has improved. The company has seen sales drop 9% for its second quarter results as improvements in North America and Europe fail to compensate for weak demand from China.

The 25% improvement in North America and 11% improvement in Europe, compared to the same period in the year before, has been a cause for optimism. Net sales in the second quarter fell 9% to US$2.144 billion compared with $2.39 billion (SEK 14.624 billion compared with SEK 16.019 billion) in the second quarter of 2013. Taking into account currency movements, net sales decreased by 10%. Operating income also decreased, to $110.1 million from $194.132 million (SEK 751 million from SEK 1.324 billion) in the same period during 2013. Operating margin, at 5.1%, was down compared to the 8.3% achieved in same period last year. Earnings were impacted by the reduced sales. There was a drop in the sales of larger machines along with an increase in sales of the less profitable compact units.

“The second quarter was characterised by a considerable decline in China – the world’s largest market for construction equipment – which meant we had to adapt our operations to a lower level,” said Martin Weissburg, president of Volvo Construction Equipment. “The decline was rapid and accelerated during the quarter but we reacted quickly to ensure that production and inventory levels are soon balanced with demand.

“The situation is brighter in our more mature markets,” continued Weissburg, “with demand in Europe and North America continuing to expand during the quarter. We are further strengthening our positions in these markets with our new products.”

The acquisition of the 1222 Terex Trucks hauler business was completed during the period. The deal includes the main production facility in Motherwell, Scotland and two product ranges that offer both rigid and articulated haulers. It also includes the distribution of haulers in the US, as well as a 25.2% holding in Inner Mongolia North Hauler Joint Stock Co. (NHL), which manufactures and sells rigid haulers under the Terex brand in China.

The quarter also saw Volvo CE inaugurate a new test and development center – the company’s 12th – in Hapcheon, Korea. The facility includes an all-weather test dome, reliability and noise test field, workshops, various complete machine performance test areas and a customer clinic. Engineers at the 253,515m2 site will focus on excavator product development, advanced engineering and product maintenance.

The period closed with the inauguration of the new Customer Center at Volvo CE’s North American headquarters in Shippensburg, Pennsylvania. Part of a multi-year, $100 million investment in North America, the facility combines sales and operator training with customer and company dealer visits, as well as large-scale events.

For more information on companies in this article

Related Content

  • Making a base
    July 20, 2012
    Soil stabilisation offers a cost effective solution for road construction in the right conditions Ensuring the soil underneath the aggregate base of a road has been stabilised with cement, lime or fly-ash can provide a greater working life and a reduced risk of problems that can arise as the road ages, such as subsidence. The technology works particularly well in ground with high clay content and where there are local shortages of stone for use in aggregates. Reducing the need for aggregates where they are
    Read More
  • Dubai machine sale for Euro Auctions
    May 11, 2018
    A major auction of construction machines has been carried out successfully in Dubai by the specialist firm Euro Auctions The firm says that it has consolidated its Middle East position with its second Dubai sale. According to Euro Auctions, the firm saw increases in buyers and vendors at the one-day plant and machinery sale. The company held its first Dubai auction in September and has now carried out a successful follow-up event that attracted more buyers and vendors. The firm saw an increase in the
    Read More
  • Revenue crash hits giant European contractor STRABAG SE
    November 30, 2012
    One of Europe’s biggest construction groups, STRABAG SE, is facing tough trading conditions with “earnings significantly down,” according to its latest quarter three report. Chief executive Hans Peter Haselsteiner told World Highways that the central and east European specialist is fighting its way through a continuing downturn. “Conditions in the construction sector are becoming more difficult than we have been accustomed to in recent years,” he said. And this has been the case since “our half-year results
    Read More
  • World growth in geosynthtics set to rise
    February 17, 2012
    With geosynthetics sales set to grow rapidly in the next three years, manufacturers are preparing for the demand. Patrick Smith reports. Global demand for geosynthetics is projected to increase 5.3% annually to 4.7 billion m² in 2013 with countries such as China, India and Russia expected to post the strongest gains through the forecast period. All are building large-scale infrastructure developments and face evolving environmental protection regulations and strict building construction codes.
    Read More

Highlighted Content