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31 January 2019

Volvo CE sales up by 27% in 2018

First publishedon www.AggBusiness.com
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Volvo CE says there has been increased demand for its products from construction, infrastructure and mining in all major markets

Volvo Construction Equipment (CE) posted a 27% sales increase in 2018, driven by a strong finish to the year.

The company says the fourth quarter saw sales up 21% and deliveries increase by 24%, ending what it terms as its "strongest year ever buoyed by good demand from all major regions and all industrial segments".

Volvo CE adds that its performance also helped parent company the Volvo Group achieve record results. Growth in both machine and service businesses, and increased demand from construction, infrastructure and mining in all major markets, helped Volvo CE deliver strong improvements in sales, operating income, and order intake.

In Q4 2018, net sales increased by 21% to SEK20,323m (€1,958m) last year, compared with SEK16,730 (€1,612m) in 2017. Operating income rose by 19% and amounted to SEK2,157m (€207.8m) from SEK1,820m (€175.33m) in 2017, corresponding to an operating margin of 10.6% (10.9% in 2017). Earnings were positively impacted by higher sales, which were partially offset by higher production costs and selling expenses.

For the full year net sales increased by 27%, to SEK84,238m (€8,115m) from SEK66,313m (€6,388m) in 2017.

Volvo CE says demand in Europe improved during Q4, and was up 12% by the end of November, helped by strong growth in Russia, and moderate growth in the UK, France, Italy and Germany. North America was up by 16% over the same period in 2017, helped by greater demand for excavators (compact excavators up 10%, larger excavators up 23%), while South America saw a gain of 20%, up from low levels in Q4 2017 and driven mostly from growth in Brazil. Excluding China, Asian markets were up 11% compared to last year, boosted by an improving India. The Chinese market itself was strongly up, growing by 35% above 2017, which Volvo CE says was driven by greater demand for excavators (compact and general purpose) and wheeled loaders.

During Q4 2018 Volvo CE's net order intake increased by 9%, largely driven by strong demand for SDLG branded machines in China. Order intake in Europe increased by 2% compared to the same period in 2017. In North America order intake declined by 24%, due to lower orders on medium and large machines after strong demand in Q3 and a particularly strong period in the corresponding quarter of 2017, (which saw order intake up by 86%). In Asia, order intake was up by 26%, while in South America it dipped by 5% and by 22% in Africa and Oceania.

Deliveries increased by 24% during the period, which Volvo CE says was again boosted by higher volumes in China on SDLG products, and good growth in all major regions.

“2018 was a record year for Volvo CE, driven by good demand from all major regions in the construction, infrastructure and mining sectors,” said Volvo CE president Melker Jernberg “In the future, we see further potential to increase volume flexibility in the supply chain, to improve quality and to grow our service business. An even stronger service business means that we can provide better support for our customers and also better balance the cyclicality in construction equipment sales.”

Volvo CE says that it continued its drive to develop next-generation solutions during 2018, progressing its position in electrification, automation and connectivity. The company demonstrated electric machine prototypes during 2018 and, in a 10-week trial, the company together with customer Skanska tested the Electric Site concept at a quarry near Gothenburg. It is based on autonomous, electric and connected Volvo machines running in a quarry. Volvo CE claims its results show that the Electric Site can deliver significant reductions in carbon emissions as well as operator costs.

In early 2019 Volvo CE announced that it will stop delivering diesel-powered smaller compact equipment in favor of fully electric machines.

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