- No clear signs of global market recovery in the construction equipment industry
- Uptick in China driven by smaller equipment
- Operating margin affected by product mix and negative currency movements
Most markets slightly down year-to-date
Measured in units, the total market for construction equipment in Europe decreased by 8% during January to August 2013 compared to the same period a year earlier. North America was up 1% while South America was flat. Asia, excluding China was down 2% and China decreased by 4%. In China the market is stabilizing. Compared to the weak third quarter of 2012, the Chinese market was up 10%, mainly driven by smaller equipment.
The outlook for the full year of 2013 remains unchanged compared to the previous forecast. The total market in Europe is expected to decline by 5% to 15% measured in units. North America, South America, Asia excluding China and China are expected to be in the range of minus 5% to plus 5%.
For 2014 the above mentioned markets are expected to be in the range of minus 5% to plus 10%, with the exception of China, which is expected to be at 0% to 10%.
In Europe, the market starts to show signs of stabilization at low levels, which is in alignment with the general economic trend. However, strong market fluctuations in individual countries are to be expected. Volvo CE gained market shares in the quarter due to a dedicated campaign to increase sales of compact equipment.
In North America, the total market year-to-date is on par with the same period in 2012. Demand in 2012 was strengthened by rental fleet renewal activities which have now been concluded leading to lower deliveries for Volvo CE in 2013.
There is no sign of recovery in the mining segment around the world and the market for mining continues to be at low levels in Asia, including China.
Negative product and market mix impacting earnings
In the third quarter of 2013, net sales decreased by 7% to SEK 12,278 M (13,272). Adjusted for currency movements net sales decreased by 5%. Sales were negatively impacted by lower activities in the global mining industry affecting sales of larger and more expensive products.
Operating income decreased to SEK 496 M (602) and operating margin was 4.0% (4.5). Earnings in the third quarter were negatively impacted versus the same quarter last year due to lower sales in general and into the higher margin mining segment in particular. Compared with the third quarter of 2012, operating income was negatively impacted by changes in currency exchange rates in an amount of SEK 229 M. In the third quarter of 2013, a capital gain from a divestment of a dealership network had a positive impact of SEK 92 M.