Volvo Construction Equipment's Q1 numbers show net sales down 33 percent compared to Q1 2012, a result of faltering global demand, particularly in the mining sector.
During the first three months of 2013, Volvo's net sales declined by 33 percent to SEK 12,136 M (versus SEK 17,999 M in Q1 2012). The company maintained profitability anyway, as operating income was down to SEK 500 M, compared to SEK 2,089 M in the first quarter of 2012, while operating margin was 4. 1 percent, down from 11.6 percent. Earnings were not only impacted by lower sales but also by the product mix, with fewer larger, typically higher margin machines being shipped, thanks in large part to the mining market.
These results come amid an across-the-board decline in the market situation, according to Volvo. Measured in units, Europe was down 18 percent, while North America decreased by 7 percent and South America by 20 percent. Asia (excluding China) was also down by 7 percent, while China itself slumped by 42 percent.
Volvo says the prospects for the rest of 2013 remain modest. Measured in units, Europe is expected to decline by between 5 percent and 15 percent, while North America, South America and China are predicted to hover around the minus 5 percent to plus 5 percent mark. Asia (excluding China) is forecast to grow in the range from zero to 10 percent.
“We have been through a challenging couple of quarters but have now got our inventory pipeline in balance and stabilized the business at a lower sales volume,” says Volvo CE’s president Pat Olney. “We still need to keep a tight rein on costs, as well as improve our geographical and product mix. But I take confidence in the fact that we have improved our margins compared to the last quarter of 2012, despite similar sales revenues.”