Volvo Penta

Improved operating income

  • Continued weak demand for marine engines
  • Strengthened product portfolio in both marine and industrial engines
  • Operating margin of 9.3%

Weak demand forces consolidation in boat builder industry
Consolidation in the boat industry continues in the wake of the constant weak global demand for leisure boats. During the summer, ownership changes occurred in leading boat brands while most of the boat industry in general was forced to continue with cut-backs and rationalizations. The general assessment in the industry is that the total demand for marine engines in 2013 will not exceed the levels of the preceding year.

During the quarter, the global market for industrial engines was negatively impacted by reduced demand in the Chinese construction sector. The total market within power generation, Volvo Penta’s largest segment in industrial engines, continues to expand due to increased demand in, for example, Western Europe, Turkey and the Middle East.

Products for the luxury yacht segment
Triple and quadruple installations of the largest power classes of the IPS system make it possible for Volvo Penta to deliver engines to yachts in classes up to 100 feet. Successful IPS installations are currently available in the market in a large number of boat models up to 80-feet, which successively strengthens acceptance of the IPS in larger boat classes. Additional installations will be completed at leading boat builders at year-end, while Volvo Penta will also be implementing more targeted marketing activities, including at the autumn boat trade fairs, to strengthen the positions in the luxury yacht segment.

In terms of industrial engines, promotion of Volvo Penta’s product program for off-road engines, which meets emission legislation for 2014, continued. New delivery agreements were signed with European manufacturers of pumps and special vehicles during the third quarter.

The volume in the total order book at September 30, 2013 was 29% higher than a year earlier.

Increased sales and improved ­profitability
Net sales during the third quarter of 2013 rose 3% to SEK 1,774 M (1,720), compared with the year-earlier period. Adjusted for exchange-rate fluctuations, net sales increased by 5%. Sales were distributed between both business segments as follows: Marine SEK 932 M (912) and Industrial SEK 842 M (808).

The operating income amounted to SEK 165 M, compared with SEK 144 M in the year-earlier period. Earnings were positively impacted by a favorable product mix. Compared with the third quarter of 2012, operating income was negatively impacted by changes in currency exchange rates in an amount of SEK 24 M. The operating margin was 9.3% (8.4).