Volvo Revenues Increase in North America but Decline Internationally
Volvo Construction Equipment posted a 6 percent decrease in net sales, with SEK 11.88 billion (about U.S. $1.39 billion), compared to SEK 12.58 billion a year ago. Volvo said major headwinds creating lower demand, especially in China and South America, affected revenue, although operating margins remained largely stable at 4.8 percent, compared to 5.1 percent in the third quarter of 2014.
However, revenue in North America increased year over year from SEK 2,874 million (about U.S. $337.5) in Q314 to SEK 3,065 million (about U.S. $359.9 million).
Earnings were assisted by favorable currency movements and gross margin improvements, as a result of better product mix and lower operating expenses.
During the current year, Volvo said, the European market is down 7 percent, mainly driven by a sharp drop in Russia and a slowdown in France. Excluding Russia, the European market is up by 3 percent. Growth is also present in North America, at 4 percent, but the rate of growth is showing signs of slowing. The decrease in South America (-36 percent) continues to be caused largely by Brazil (-45 percent), which is being affected by slow economic development and low overall business confidence.
The Chinese market has declined 50 percent in the year to date, Volvo said.
“Despite volumes being down by 25 percent during the period, our targeted sales activities and ongoing efficiency program helped to deliver positive operating income and market share gains in the segments for larger machines,” said Martin Weissburg, president of Volvo Construction Equipment.
For the first nine months of the year, Volvo posted revenue of SEK 40.04 billion, compared to 40.58 a year ago, a 1.3-percent drop. However, European revenue rose 1.8 percent, and North America revenue jumped 15.8 percent in the first nine months of the year. Asia revenues dropped 8.8 percent during the nine-month period.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.