VOLVO Construction Equipment has revealed that demand in the first quarter of 2021 has increased ‘sharply’ from the same period last year following a ‘strong recovery’ in the second half of last year driven by high activity levels in infrastructure and improved construction activity.
The manufacturer said order intake has risen by 73%, with demand from China described as ‘strong’ due to governmental infrastructure investments. Together with an increase in sales across all global markets and segments, Volvo said China’s investment helped the business ‘reverse the negative impact’ shaped by Covid-19 for the first quarter 2021 financial results.
Deliveries also increased by 53% in Q1, driven by higher sales in all regions with the largest increase again in China.
During the first three months of 2021, Volvo CE recorded a 23% net sales increase to SEK 24,742 M – slightly higher than the same period in 2019 before the pandemic hit. Earnings were ‘positively impacted’ by higher machine volumes and capacity utilisation in the industrial system, cost reductions and increased service earnings, which were partly offset by negative mix effects. This, Volvo explained, was reflected in the operating margin, which at 15.4% was up from 13.3% in the same period the year before.
As well as strong infrastructure investment, low inventory levels at dealers and their need to restock is also said to have contributed to the increase in order intake to 73% for Q1.
Volvo said Europe had a ‘slow’ start to the year, having been impacted by Covid restrictions in markets such as France and Germany, but has since ‘gained momentum’. While its net order intake has increased by 87% thanks to stronger demand in the later half of the quarter, Europe’s total market development has declined by 9%.
In China, Volvo CE’s market development is up 142% in the first two months, when compared to the ‘very low’ volumes caused by Covid-19 in Q1 2020.
Volvo CE president Melker Jernberg said, “It is heartening to see demand increasing in the first quarter of this year, with sales up across all regions and markets. We can take confidence that we have weathered a tough period for our customers, our employees and the wider industry and are beginning to now see higher activity. In many countries, we have seen increased investment in an aging infrastructure, something which we expect to continue for the future. Together with a high level of construction activity in several other sectors, this is driving demand for both new machines and services, reflected in both deliveries and order intake rising sharply for the first quarter.”