Volvo CE sales fall -38%

Volvo Construction Equipment had revenues of SEK 8,18 billion (€ 792 million) in the third quarter of the year, a -38% fall on the same period last year. The division reported an operating loss of SEK 787 million (€ 76 million), compared to a profit of SEK 134 million (€ 13 million) a year ago.

The company saw the steepest downturn in sales - -54% - in its largest market, Europe. Here its revenues for the quarter were SEK 3,08 billion (€ 299 million), compared to SEK 5,84 billion (€ 566 million) for the same period last year. The company also saw a -47% drop in sales in North America, a -26% decline in South America, a -19% decline in Asia, and a massive -66% fall in other markets.

According to its own research, Volvos fall in revenues in Europe was in line with the overall market decline of -54%. In North America it may have gained market share, with a market decline of -50%, compared to the company's -47% fall in revenues. However, the reverse seems to be true in Asia, where the market fell -11% in the third quarter, compared to Volvo's -19% revenue drop.

The company said demand for road building equipment suffered the most over the three-month period, with a -53% drop in the global market. This was followed by compact equipment (-43%) and heavy equipment (-39%). Overall, Volvo said the world market for construction equipment was -42% lower in the third quarter of the year than it was a year ago.

Volvo Construction Equipment president & CEO, Olof Persson said, "Tough market conditions continue in the sector, but there are some positive signs indicating that the decline in demand may have bottomed out and that we are now beginning a gradual recovery. But we are not relying on a substantial recovery and will therefore continue to improve efficiency and adjust our costs to current demand. I am confident of improving our market position globally as we are well positioned for the new emission regulations that will soon come into force, with new products and services at the absolute forefront."

Year to date performance

Volvo's construction equipment sales for the first nine months of the year stood at SEK 25,5 billion (€ 2,47 billion), a -43% fall on the figure of SEK 46,1 billion (€ 4,37 billion) achieved in the first three quarters of 2008. It has reported an operating loss for the year to date of SEK 3,44 billion (€ 336 million), compared to profits of SEK 3,06 billion (€ 297 million) for the same period last year.

This has seen the 6.8% operating profit margin achieved in the first three quarters of last year turn to a -13,5% operating loss this year. This is the worst operating margin of any of the Volvo Group's divisions.