First publishedon www.AggBusiness.com
Martin Lundstedt, president & CEO of Volvo Group
Reduced market demand saw Volvo Construction Equipment’s sales dip 4% and order intake fall 9% in Q3 2019, compared to the same period of 2018.
The Swedish industry giant posted net sales of SEK 17, 921 million (€1.656bn) between 1 July and 30 September (SEK 18,598mn/€1.719bn in 2018). The Volvo Group business division’s operating income for the quarter was SEK 2,180mn (SEK 2,587mn/€239.1mn in Q3 2018), corresponding to an operating margin of 12.2% (13.9% in Q3).
While overall Volvo CE order intake decreased by 9% in Q3 2019, Volvo-branded products order intake was down 23%, said to reflect softer demand in most markets as well as efforts to reduce pipeline inventory. Order intake for SDLG products increased by 7%.
In Europe, Volvo CE order intake declined by 23% with lower intake in key markets such as the UK, Germany, France and Russia. In North America orders declined by 34% as, Volvo CE states, dealers are holding back on rental fleet expansion and renewal, while at the same time reducing inventories.
In Asia (excluding China) order intake decreased by 24%, while order intake in China increased by 6% driven by SDLG branded wheeled loaders and excavators.
Deliveries decreased by 2% in Q3, driven by a decline of 10% for Volvo, partly offset by an increase of 7% for SDLG.
Martin Lundstedt, Volvo Group president and CEO, said: “After a few years of high market levels, demand for construction equipment is slowing down. In Q3, order intake for construction equipment declined by 9% compared with a year ago. Although many markets are coming off their previous high levels, we expect that low interest rates and the need in many countries to invest in infrastructure will continue to support demand over time.”
Lundstedt said that the Construction Equipment division had lowered its production volumes, and will continue to do so, to adapt to the lower demand and reduce pipeline stock.