Volvo CE takes market share despite slide in demand in Q3

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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.

Market contraction

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
SEK M 2015 2014 2015 2014
Europe 4,247     4,354 13,424 13,191
North America 3,065     2,874 9,464 8,188
South America 477       872 1,731 2,391
Asia 3,444     3,724 13,224 14,499
Other markets 651       758 2,198 2,309
Total 11,884 12,582 40,041 40,578