Volvo Reports ‘Solid’ Year-End Total as Demand in Q4 Declines

February 6, 2013

Volvo Construction Equipment announced its fourth quarter and full-year results and reported that net sales for 2012 remained at the same level as the previous year, despite a drop in global demand in the last three months. The company sold 78,941 machines in 2012, its second highest year-end total.

Volvo CE also extended its share in the Chinese wheel loader and excavator segment to 15 percent. 

These reasonable full year figures mask a significant slowdown in demand in the fourth quarter results of 2012. A softer world market, in particular mining, saw net sales in the last three months down by almost a quarter. When adjusted for changes in the exchange rates, net sales fell by 22 percent. Operating income was also down  in the same period in the previous year. However, despite the dramatic fall in sales operating margin remained positive, at 2.9 percent, thanks to rapid and significant cuts in production and a consequent reduction in inventories.

“Taken as a whole 2012 was a reasonable year,” commented Pat Olney, president of Volvo CE. “We sold over 78,000 machines, recorded the company’s second highest ever revenues and our proactive downturn management helped protect cash flow and profitability. We recognized the turn in the industry early, and the work undertaken to reduce pipeline inventories was successful. Stock levels have been reduced by around 30 percent since late spring and are now in balance with current demand.”    

The prospects for 2013 are expected to remain subdued, with unit sales in Europe predicted to decline by 5-15 percent, while Asia (excluding China) is forecast to decline by between 0-10 percent. Meanwhile, China, North America and South America and Other Markets are all forecast to operate in the range of minus 5 percent to plus 5 percent.

Volvo Net Sales, in millions of Swedish Krona (SEK)

  Q4 2012 Q4 2011 YTD 2012 YTD 2011
Europe 3,861 4,881 16,518 17,765
North America 1,973 2,214 12,027 7,829
South America 761 1,047 3,788 4,163
Asia 5,143 7,088 27,033 29,999
Other Markets 833 1,125 4,192 3,745
Total 12,572 16,354 63,558 63,500