The results of recent acquisitions and cost efficiency initiatives were positive in Volvo Construction Equipment’s first financial quarter of 2008, with both sales and income leaping by 38% when compared to the same period in 2007.
Net sales in the first quarter amounted to SEK 15,140 M (SEK 11,002 M in Q1 2007). Operating income increased to SEK 1,301 M from SEK 946 M in the same period in 2007. Operating income was negatively affected by exchange rates and ongoing integration costs resulting from acquisitions in road machinery and Chinese wheel loader manufacturer Shandong Lingong Construction Machinery Co. However, the reduction in production bottlenecks and ongoing cost efficiencies have had a positive impact on profitability. These helped operating margin to be maintained at 2007 levels, at 8.6%.
One particular highlight of the first quarter of 2008 was the unveiling of Volvo CE’s first hybrid wheel loader. Demonstrated at the industry’s ConExpo/ConAGG exhibition in Las Vegas in March, the L220F Hybrid loader boasts a 10% fuel saving and a range of environmental benefits. When deliveries begin in late 2009, it is expected to be the construction equipment industry’s first commercially available hybrid wheel loader. The L220F Hybrid loader received an enthusiastic reception from both customers and media alike for its enhanced performance, fuel efficiency and environmental benefits.
World markets
The first quarter of 2008 saw the total world market for construction equipment within Volvo CE’s product range remain at historically high levels – but there are marked regional variations. In North America the market is expected to decline by 25-30% during 2008 while the European market is expected to remain at 2007 levels. The rest of the world is expected to compensate for the US downturn, with a growth of 20% forecast.
Order bookings remain strong, with an 18% bigger order backlog (in value) than on the same date a year earlier – excluding the acquired Lingong and road machinery business lines.
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