Big Q4 Boosts Volvo CE

By Mike Brezonick31 January 2018

Volvo Construction Equipment (Volvo CE) put in a strong performance in the fourth quarter of 2017, helping its parent company the Volvo Group achieve the highest sales and operating income in its history.

In the final quarter of 2017, net sales increased by 28% to 16,733 million Swedish Kronor (SEK), up from 13,110 SEK. When adjusted for currency movements, net sales rose 34%. Operating income was 1816 million SEK, a significant increase from the 494 SEK from the previous year and corresponding to an operating margin of 10.9%, the company said.

For the full year net sales increased by 31% to 66,497 million SEK from 50,731 SEK in 2016. Adjusted operating income increased to 7917 million SEK, which Volvo said corresponds to an operating margin of 11.9%.

“The performance program to strengthen Volvo CE’s competitiveness combined with increased market demand yielded good results in 2017,” said Melker Jernberg, the new president of Volvo CE. “Volvo CE improved profitability and gained market share in several of our stronghold segments of excavators, wheel loaders and haulers.”

Demand in Europe improved during the quarter and was up 16% by the end of November, helped by growth in the UK, France, Italy, Germany and a rapidly improving Russian market. North America was up by 10% over last year, helped by greater demand for excavators, while South America saw a gain of 17%, from low levels and mostly from markets outside of Brazil.

The Middle Eastern market continued to slow, weighed by weak demand from Saudi Arabia. Excluding China, Asian markets were up 11% compared to last year, boosted by an improving mining sector. The Chinese market itself was strongly up, growing by 74% above last year, driven by greater demand for excavators and wheel loaders. The market for large excavators was up 121%, while compact excavators enjoyed an 83% improvement. By the end of November, the market for wheel loaders in China was up by 50%.

During the fourth quarter of 2017 Volvo CE saw net order intake increase by 48%, largely driven by strong demand in China and North America. Deliveries increased by 49% during the period, again boosted by higher volumes in China.

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