Weak demand in Europe and North America was partially offset by a strong rebound in the Chinese market, the world's largest.
Despite lower demand impacting sales profitability held up well during the period. Volvo CE's 14% adjusted net sales decline amounted to SEK 22.876bn (€2.209bn) (SEK 26.814bn - €2.589bn - in Q2 2019).
Higher sales in China did much to compensate for lower sales in all other markets. Operating income was also impacted, at SEK 3.108bn (€300.12mn) - down from the SEK 4,153bn reported in the same period the year before. This equates to an operating margin of 13.6% (15.5%).
Despite the impact of the pandemic on sales, Q2 2020 saw order intake increase by 11%, driven by strong demand for the company's SDLG branded machines, which were up by 31%. Notwithstanding that most factories in Europe and the Americas were closed for a month during the second quarter, a result of countrywide lockdowns and supply issues, deliveries increased by 8% in Q2.
The year up to the end of May saw both the European and North American markets, measured in units, shrink by 22%, while the Asian market (excluding China) reduce by 21%. The Chinese market has recovered strongly and was up 13% at the end of May. The South American market was also in positive territory, up by 8% at the same point in the year.
"While demand for construction equipment in both Europe and North America was weak during the second quarter we were able to leverage our strong position in China, which rebounded strongly in the period," said Melker Jernberg, head of Volvo Construction Equipment. "This is allowing us to act from a position of relative strength and to drive transformational technologies that are moving our industry to more sustainable solutions. We are continuing to invest in electrification, automation and connectivity."
