Volvo CE improved sales in Europe and North America in the first quarter of 2015, but the gains were more than offset by continued weakness in Asia, particularly China, where sales were half what they were in the same period in 2014, Volvo announced. Overall, Volvo CE total sales declined 5 percent to SEK 12,737 million (about U.S. $1.47 billion), compared to SEK 13,371 million in the first quarter of 2014.
Operating income was affected by lower sales volume, a provision for expected credit losses and lower earnings in China, decreasing to SEK 352 million compared to SEK 647 million in the first quarter of 2014.
The restructuring program that was launched in November 2014 is developing according to plan, the company said.
Volvo said the Chinese market has been in decline since March 2014 and this continued in the beginning of 2015 with a decline of more than 50 percent compared to the previous year, mainly caused by lower levels of economic activity, lower machine utilization and construction projects and mining activity remaining soft. In addition to China, there was decline in Japan, Southeast Asia and India.
Asia decreased 21 percent year over year, dropping from SEK 5,921 million to SEK 4,682 million.
Through February of 2015, the European market was down by 12 percent, primarily driven by a sharp drop in the Russian market as well as slowdown in the French market, although the U.K. and Germany are growing. Overall, Europe jumped 10 percent year over year.
The North American market continued to grow, primarily in the compact equipment segment. The market increased 8 percent for Volvo, with SEK 2,576 million compared to SEK 2,375 million in the year-ago quarter.
South America decreased 1 percent, mainly caused by weak economic development and low business confidence in Brazil.
“We are working to adapt to lower volumes and are implementing a series of measures to reduce cost levels,” said Volvo CE president Martin Weissburg. “However our efforts could not fully offset the significant drop in volumes.”
