Volvo CE raises 2011 sales forecast

Volvo Construction Equipment has raised its 2011 sales forecasts for Europe, North America and China after reporting a +41% increase in net first quarter sales to SEK 15.8 billion (US$ 2.6 billion).

Operating income was up +70% to SEK 1.7 billion (US$ 281 million), and Volvo CE's operating margin stood at 10.8% - the highest first quarter margin that the business has ever produced.

Describing the three-month period as "the best first quarter ever for Volvo CE", the company said it had grown its market share in China during the period to become the largest producer of excavators and wheeled loaders in the country.

Measured in units, Volvo CE said the total world market for construction equipment increased by +51% during the first quarter of 2011 compared to the same period last year.

In Europe the market increased by +57%, while North America was up +59% and South America increased by +38%. The total Asian market was up +54%, including a +70% increase in China.

And the company said it expected strong market conditions to continue for the rest of the year, forecasting global growth in construction equipment sales of +20% to +30% in 2011.

For the European market, Volvo CE raised its 2011 growth forecast from between +5% and+15% to between +10 and +20%. In North America, the forecast was increased to between +25% and +35% (previous forecast +20% to +30%), while the company's market growth forecast for South America and Asia remained the same at between +5% and +15% and between +10% and +20% respectively.

However the Chinese market on its own is expected to grow between +20% and +30% (compared to previous the forecast of +5% to +15%).

Volvo group president and CEO Leif Johansson said, "For Volvo CE, the favourable trend continues in both the Chinese and Brazilian markets, while the recovery in North America and Europe is becoming increasingly clear.

"Volvo CE is also in an intense product renewal phase, which will contribute to further strengthening competitiveness," Mr Johansson said, adding that the business has launched more than 50 new models in recent months.

Mr Johansson, who retires in September this year, will be replaced by former CEO of Volvo CE, Olof Persson. Mr Persson takes the reigns as executive vice president and deputy CEO on 1 May, while his position at Volvo CE will be taken by Patrick Olney.