- Improved earnings on the back of higher sales
- Launch of new machines complying with Tier 4 final
- Moderate growth in mature markets expected, weaker development in emerging markets
Market was up in the beginning of the year
In the first two months of 2014 the European market grew by 15%, with growth mainly coming from Western Europe, particularly from the UK, Germany and France. The North American market grew by 7%, despite the harsh winter, mainly from compact equipment, driven by rental and housing. The decrease in South America is mainly caused by Brazil after the majority of the large government deals have been delivered during 2013 as well as low demand for commodities impacting markets across the region. The total Asian market, excluding China, was 4% above 2013 driven by a 38% growth in Japan. On the other hand, India and South East Asia showed a further decline. The Chinese market increased in the first two months of 2014 compared to low levels in 2013. However, in March the market decreased compared to last year and with a further shift towards compact equipment. In all, the segments for wheel loaders and excavators showed a slight growth of 7% in China in the first quarter.
Order intake 9% above last year
In the first quarter of 2014 order intake was 9% higher than in the same quarter 2013. Order intake grew in Europe and North America. In Europe the growth was driven by market uptake and market share improvements through a dedicated program focusing on compact equipment. In North America the growth was driven by market growth and by good order intake on articulated haulers and excavators. In South America order intake was above last year, mainly driven by high intake for compact products, which were at low levels in the first quarter last year. Order intake in Asia was slightly above last year, mainly driven by higher order intake in China as intake in rest of Asia decreased because of low demand in India and Southeast Asia.
Deliveries were up 11%
In the first quarter Volvo CE’s deliveries increased by 11% compared to the same period in 2013. In Europe the growth was mainly driven by market growth and market share increases in France, the UK and Germany. In North America, the growth was mainly driven by improved market demand and low deliveries in the first quarter of 2013. In Asia the increase was mainly due to slight market growth in China during the first quarter. However, the mining sector continued to be soft, resulting in a low mix of large products in the delivery numbers in Asia.
Tier4 final launched
The construction equipment industry’s largest event of the year, CONEXPO 2014 in Las Vegas, saw Volvo CE unveil an overhaul of its core product range. Some of the new machines include the H-Series wheel loaders, E-Series excavators, G-Series articulated haulers and C-Series motor graders, as well as a host of emissions-compliant road machinery introductions. All new machines meet, where necessary, the low-emission requirements of Tier 4 Final/Stage IV legislation, which came into force in North America and the EU in January 2014.
Increased sales and earnings
In the first quarter of 2014, net sales increased by 10% to SEK 13,371 M (12,136). Adjusted for currency movements net sales increased by 11%. The increase in sales is mainly due to higher sales of smaller equipment. Demand for larger equipment is still relatively low.
Operating income increased to SEK 647 M (500) and the operating margin was 4.8% (4.1). Earnings in the first quarter were positively impacted by increasing volumes which was partly offset by negative currency exchange movements. Compared with the first quarter of 2013, changes in currency exchange rates had a negative impact on operating income of SEK 180 M.