Chinese slide hits Volvo Q2

Volvo Construction Equipment’s revenues for the second quarter of the year were down -9% compared to the same period last year at SEK 14.6 billion (US$ 2.14 billion). The division’s operating was down -43% at SEK 751 million (US$ 110 million).

The company said that it saw mature markets in North America and Europe grow over the April – June period, but that this was not enough to offset a sharp downturn in China. It added that in general demand for large equipment for mining continued to be low, with the up-tick it had seen in some parts of the world coming in the less profitable compact equipment areas.

Volvo said the market was up +11% in the year to May in Europe and +7% in North America. However, it said South America was down -13%, mainly due to a slowdown in Brazil, while China was down -6% and the rest of Asia fell -2% year-on-year.

However, the second quarter has seen a steep decline in China and Volvo says demand for excavators and loaders is now -19% lower than it was last year. It forecasts the Chinese market will fall between -10% and -20% in total this year.

Volvo Construction Equipment president, Martin Weissburg said, “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. 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, with demand in Europe and North America continuing to expand during the quarter. We are further strengthening our position in these markets with new products.”

As a whole, Volvo Group’s revenues for the second quarter were almost unchanged with last year at SEK 72.6 billion (US$ 10.6 billion). Net profits were up +21% at SEK 2.53 billion (US$ 370 million).