Volvo CE Shatters Company Financial Records in 2006

With a strong fourth quarter, Volvo Construction Equipment reached all-time highs in several categories for 2006, according to results announced Friday.

Total sales increased 17 percent to SEK 40.6 billion (U.S. $5.76 billion), while operating income jumped 41 percent to SEK 3.9 billion (U.S. $552 million). Operating margin strengthened significantly, rising to 9.6 percent, up from 7.9 percent in 2005. And Volvo reached an all-time high in machines sold in a 12-month period, selling more than 37,000 in 2006, an 11 percent year-over-year increase.

Net sales in Q4 were up 4 percent from the same period last year, at about U.S. $1.52 billion. When adjusted for currency movements, net sales increased further to 12 percent. Operating income increased 35 percent year over year, and the operating margin for the quarter was 9.2 percent, up from 7.1 percent in Q405.

According to Volvo, in the fourth quarter the total world market for construction equipment within Volvo CE’s product range increased 5 percent in 2006 compared to 2005. The U.S. market dropped 20 percent with the cooling housing market driving reduced demand for compact equipment. Europe’s markets increased 7 percent for Volvo equipment, and Asia increased 15 percent, fueled by a strong Chinese market. For the full year, the total world market for heavy and compact equipment rose 9 percent, the company said.

Volvo sees a mixed outlook for 2007. The European market is expected to continue to grow in the 0 to 5 percent range, while Asia is projected to increase by 10 percent, again driven by China. Other markets are expected to grow by 10 to 15 percent, offsetting a reduction in the North American market, expected to decline by 5 to 10 percent, again because of a reduced housing market.

Volvo CE’s order bookings remain strong, with a total value of the order book on December 31 at 60 percent higher than the same date a year earlier.

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