Volvo Construction Equipment reports ‘record earnings’ in Q2
19 July 2023
Despite facing challenges in the South American and Asian markets, Volvo Construction Equipment saw the global sales of machines and services increase by 12% in Q2, 2023.
This growth is said to have occurred despite a 41% decrease in net order intake worldwide, influenced by a weaker market in China, restrictive order placement in North America, and cautiousness among customers and dealers in Europe.
Additionally, deliveries decreased by 24%, primarily due to lower demand in China and a slowdown in Brazil.
Although Europe, North America, and Africa maintained robust sales, the company highlighted that other markets experienced weakening demand due to overall economic developments and rising interest rates, particularly affecting residential construction activity.
The strong profitability in Q2, 2023, is demonstrated by an increase of 12% to SEK 28,999 M (compared to SEK 25,814 M in Q2, 2022). The higher operating income of SEK 5,353 M (compared to SEK 3,568 M in Q2, 2022) is primarily attributed to positive brand and product mix, and price realization, although partially offset by decreased volumes, lower production efficiency, and higher R&D and selling expenses.
In the second quarter, the company not only established a new dedicated business unit to boost growth in its range of compact solutions but also continued its global rollout of electric compact machines, including launch events in Singapore and Tokyo.
Looking at market developments, major markets outside of China, like North America and Europe, performed well in Q2, with a year-to-date growth of 9% and 4%, respectively. However, China experienced a significant negative correction with a 40% year-to-date drop due to emissions regulation changes at the end of the previous year.
South America, particularly Brazil, also faced low investment levels and weak business confidence among customers, resulting in a year-to-date drop of 24%. Nevertheless, Asia outside China showed positive growth due to advancements in India and the Middle East.
Melker Jernberg, President of Volvo CE, says, “Our ability to push innovation across construction with solutions for today and tomorrow, while performing well with continued financial growth and improved profitability will ensure we lead the way for years to come.
“The economic development may be having an effect on the overall construction equipment market but we are focused on leading a sustainable and profitable transformation for the benefit of our customers, our shareholders and society as a whole.”