Improvements in the key European and North American markets, coupled with a strong focus on its service business, volume flexibility in the industrial system and tight cost control helped Volvo Construction Equipment (Volvo CE) deliver a strong all-around performance in its second quarter 2019 results.
Net sales in the second quarter increased by 9.9 percent, amounting to SEK 26,814 M (about U.S. $2.86 billion) compared to SEK 24,403 M in the second quarter of 2018. Operating income also continued its upwards trajectory, at 4,153 M SEK in the period, up from 3,675 M SEK reported in the same period the year before, equating to an operating margin of 15.5 percent (15.1 last year), and a 13 percent year-over-year increase.
Sales in North America totaled SEK 5,621 million compared to SEK 4,463 million a year ago, a 25.9-percent hike. For the first six months of 2019, North America sales totaled SEK 10,457 million compared to SEK 7,896 million in the first six months of 2018, a 32.4-percent leap.
Order intake increased by 6 percent in the second quarter of 2019, with SDLG branded products increasing by 28 percent. Order intake was particularly strong in China, rising 21 percent, driven by strong demand for SDLG-branded excavators and wheel loaders. Deliveries were up 12 percent in the period, again driven by growth in China and stable demand in Europe and North America.
The second quarter of 2019 brought growth in Europe and North America, with a small decline in Asia (excluding China). In the period up to May, demand for construction equipment in Europe was up 5 percent, compared to the same period the year before, while demand for large excavators, road equipment and articulated haulers pushed the North American market up 7 percent. In South America demand rose 6 percent, while Asia (excluding China) was down 11 percent compared to the previous year. In China, demand rose 8 percent, thanks to growth in the compact excavator segment.
“Volvo CE continued on the path of increased sales and improved profitability in the second quarter,” said Melker Jernberg, president of Volvo CE. “Volume flexibility in the industrial system and tight cost control will continue to be in focus in the second half of the year.”