The continued deceleration in global demand was partially offset in Volvo CE’s third quarter 2015 results, with operating margins stable and market share gains, despite a 6% fall in net sales during the period.
In the face of significant market headwinds that continues to see lower demand – especially in China and South America – Volvo CE’s third quarter 2015 financial results saw stable operating margin and market share growth in larger machines, despite a fall in overall sales.
Net sales in the third quarter decreased by 6%, amounting to SEK 11,884 M (SEK 12,582 M in Q3 2014). Operating income, excluding restructuring charges, decreased to SEK 576 M, from 648 M in the same period during 2014. Despite the lower demand, operating margin remained largely stable, at 4.8%, compared to 5.1% in same period last year. Earnings were assisted by favorable currency movements and gross margin improvements, as a result of better product mix and lower operating expenses.
During the year-to-date the European market is down 7%, mainly driven by a sharp drop in Russia and a slowdown in France. Excluding Russia, the European market is up by 3%. Growth is also present in North America, at 4%, but the rate of growth is showing signs of slowing. The decrease in South America (-36%) continues to be caused largely by Brazil (-45%), which is being affected by slow economic development and low overall business confidence. The Chinese market, meanwhile, has continued to decline sharply – falling 50% in the year-to-date.
“Despite volumes being down by 25% during the period, our targeted sales activities and ongoing efficiency program helped to deliver positive operating income and market share gains in the segments for larger machines,” commented Martin Weissburg, president of Volvo Construction Equipment.
Table 1. Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona (SEK).
|Net sales by market area||Third quarter||First nine months|