Volvo CE boosted by solid growth outside China in Q3

Despite a dip in sales in China, Volvo Construction Equipment (Volvo CE) continues its improved profitability with a strong performance across all other regions and a rise in services for Q3, 2021.

Thanks to continuing high levels of investment in both infrastructure refurbishment and more sustainable products of the future, Volvo CE has increased its net sales by 11%. After several years of high demand for construction equipment in China, orders in the market there have declined by 26% as reduced government investments has led to lower construction activity. This has been more than offset by a good development in Europe, North America and other parts of the world. Order intake remains stable on a high level.

Net sales in the third quarter increased by 11% to SEK 19,638 M, from SEK 17,619 M in 2020. When adjusted for currency movements they were also up by 11% in the same period, of which net sales of machines increased by 11% and service sales by 13% – reflecting Volvo CE’s increased focus on services. Adjusted operating income amounted to SEK 2,635 M, compared to SEK 1,963 M in the same quarter 2020 and corresponding to an adjusted operating margin of 13.4% (11.1%).
Despite a continued rise in interest for Volvo branded products across all other regions, order intake for Q3 remained flat, though still high. Together with a 9% reduction in deliveries, this is largely driven by the sudden decline in the China market.

Market Development

Across both the European and the North American markets, demand has remained high – the latter thanks to high infrastructure investments and housing construction activity. Asia, excluding China, showed good improvements particularly across South Korea and South East Asia. Continuing uncertainty across market forecasts remains significant due to the inability to predict supply chain capacity and the ongoing Covid-19 pandemic.

Melker Jernberg, President of Volvo CE, says: “Despite industry-wide challenges of supply and delivery constraints, the power of Volvo CE as a truly global leader is clear to see in today’s quarterly results. While sales in China have dipped, the strength of sales in other regions has ensured we have remained at peak performance. This quarter has also demonstrated our leading focus on sustainable power, with several exciting launches and events, ensuring we keep a strong focus on building a brighter future.”
With the launch of three new electric compact machines and the reveal of the world’s first fossil-free steel prototype vehicle this quarter, Volvo CE is now not only the manufacturer with the largest range of commercially available electric machines, but is also taking big strides forward in accelerating more sustainable products, services and processes across the supply chain. In India, the company also launched 16 new machines all of which are engineered to the new CEV 4 emission norms.

Table 1. Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona (SEK).