Volvo Construction Equipment says its earnings rose strongly in Q3 2014 – despite stable market growth in North America being dented by a faster decline in China and a loss of momentum in Europe.
A solid 9% improvement in the North American market was not enough to overcome uncertainty and negative growth elsewhere in
Net sales in the three months of July-September increased to €1.364 billion (SEK 12,582 million) (€1.331 billion - SEK 12,278 million in Q3 2013). However, when adjusted for currency movements, net sales were down by 3% during the period. Offsetting continued solid growth in North America, sales during the quarter were weighted down by reduced momentum in Europe and an accelerated negative growth in China.
Despite largely flat sales in the period, operating income and operating margin both improved, to €70.26 million (SEK 648 million) (€53.78 million - SEK 496 million in Q3 2013) and 5.1% (4%) respectively. Earnings were positively impacted by favourable currency movements, to the value of €13.55 million (SEK 125 million), compared to the third quarter of 2013. Earnings were, however, reined back by lower capacity utilization in the industrial system – and to address this further cost saving initiatives will be introduced to right-size the cost structure.
Volvo CE president Martin Weissburg said: “We expect demand in China to continue down for the rest of the year and into 2015. To react to this market scenario our focus is on adapting production to ensure a balance between demand and supply, and continuing to execute on our efficiency and cost saving program – while at the same time defending prices and gaining market share.”
