Volvo Construction Equipment remains upbeat despite 2015 sales dip

7659 Volvo Construction Equipment saw market share and underlying earnings improve in the final quarter of 2015

The company said that improved underlying earnings and more market share of the important larger machine segments were insufficient to offset a declining total market in Volvo Construction Equipment’s final quarter 2015 results. Sales were down 11% in the period.

For full year 2015, sales at the company dipped by 3%.

In the fourth quarter of 2015 Volvo CE reported that net sales decreased by 11% to €1,164 million, down from €1,304 million in the same period 2014.

The company said the figures were due to further large declines in China and Brazil, coupled with headwinds in many markets outside of North America, which also showed signs of cooling.

Operating income almost doubled, at €222.09 million, up from €130.82 million in 2014. Operating income, excluding restructuring charges, during the final period of the year resulted in a loss of €20.23 million, a considerable improvement compared to the loss of €86.57 million in the same period of the previous year.

Operating margin also showed signs of progress, at negative 1.7% for the period – up from a negative 6.6% in Q4 2014. Operating margin was positive for the full year, at 4.1%, up from 2.3% in the same period the year before. These relatively encouraging developments were achieved despite lower sales volumes, low capacity utilization and a credit provision in China of nearly €17 million.

“Despite lower sales, our operating results improved, and were much better than in the same period in 2014,” said Martin Weissburg, president of Volvo Construction Equipment.

“We took market share in larger, more profitable machine segments, completed the exit of backhoes, graders and milling machines and strengthened a new governance structure that allows us to make clear, informed decisions,” he said.

“This shows that the activities of the Volvo, 5316 SDLG and 8081 Terex Trucks teams to drive our transformation as Volvo CE globally are working.”

Volvo Group is based in Göteborg, Sweden, and employs around 100,000 people worldwide. It has production facilities in 19 countries selling into more than 190 markets. Sales in 2014 were €31 billion.