Weak Chinese demand offsets market growth for Volvo

Market growth in North America and Europe failed to offset a sharp downturn in demand in China, affecting Volvo Construction Equipment’s (Volvo CE) 2Q14 results. The company saw a reduction in the period, with sales down 9%.

North America experienced a 25% improvement, while Europe saw an 11% increase, compared to the corresponding period in 2013.

Highlights

• Net sales in 2Q decreased by 9%, amounting to SEK14 624 million (SEK16 019 million in 2Q13).
• Adjusted for currency movements, net sales decreased by 10%.
• Operating income also decreased, to SEK751 million, from SEK1324 million in the same period during 2013.
• Operating margin, at 5.1%, was down compared to the 8.3% achieved in same period last year.
• Earnings were impacted by reduced sales, low capacity utilisation in the industrial system and a negative market mix.

Comments

Commenting on the results, Volvo CE 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 positions in these markets with our new products.”

Adapted from press release by Katie Woodward

Read the article online at: https://www.worldcement.com/europe-cis/22072014/volvo-2q14-sales-drop-9-percent-due-to-weak-chinese-demand-150/