Steady international strength buoys Volvo CE to strong third quarter
Volvo Construction Equipment has reported strong profits in the third quarter of 2022, with solid performance in most international markets that has helped offset a reduce in orders through the period.
Continued development in the commodity and infrastructure segments has driven Volvo CE to a 23 percent increase in net sales through the third quarter of 2022 compared to the same period in 2021. This is a greater increase than the company saw in the second quarter of 2022. It comes despite the company facing an overall decline in net order intake by 32 percent, and deliveries by 7 percent, both smaller than the second quarter, indicating stable growth, the company states.
After adjustments for currency movements, net sales showed an increase of 9 percent, of which net sales of machines were up by 10 percent and service sales by 3 percent, reflecting a continued focus on service solutions for customers, Volvo stated. Adjusted operating income amounted to SEK 3,773 million, up from SEK 2,635 million in 2021, with positive impacts from price realization and mix effects, partially offset by increased material and freight costs.
The North and South American markets have been strong, Volvo reports, and most Asian countries outside of China have been showing solid progress. Government stimulus programs and high commodity prices have been helping in that regard.
However, in the world's largest construction equipment market, challenges around pricing pressure and weak demand have caused a slowdown. China has experienced lower economic activity combined with continuing COVID-19 restrictions and lockdowns.
Europe has seen strong construction activity but Volvo has seen a mild slowdown there, with uncertainty surrounding economic development keeping buyers cautious. Overall global deliveries were down in the quarter, but were higher in Europe than the previous year when excluding Russia.
Sustainability has stayed high on Volvo's priority list, and the continued global rollout of electric machines has proven positive.
"In this quarter we took still more steps on our transformation journey, ensuring that our electric machines and charging solutions are built to fit the needs of our customers in any application and region of the world," said Melker Jernberg, president of Volvo CE. "Together with our customers, we can lead the transition to a decarbonized construction industry, while still continuing our efforts to build upon our strong financial position."
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