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Annual Report 2008

Significant slowdown in global demand

Volvo CE's launch of new excavators for pipelaying was one of many important product launches.

After a first and second quarter with record sales and income, Volvo Construction Equipment (Volvo CE) saw sales decelerate rapidly during the third and fourth quarters of 2008.

Continued weakness in North America and a sharp decline in Europe were partly offset by growth in other markets, such as Asia and in particular China. This helped the company achieve increased sales and operating income during the first half of the year, although high raw material prices, unfavorable exchange rates and integration costs of acquired businesses put pressure on operating margins.

In the latter half of the year the cyclical slowdown in the construction equipment industry was greatly exacerbated by the global financial crisis. To mitigate the impact of reduced demand, Volvo CE focused on avoiding inventory build up by lowering production capacity, reducing head count and cutting operational costs. Volvo CE also decided to move the motor grader production from Canada to an existing facility in the U.S.

Volvo Construction Equipment
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