VOLVO Construction Equipment has posted record earnings for Q2 2023.
The manufacturer revealed that sales of machines and services rose across all markets except South America and Asia – resulting in a 12% global increase for the period.
This is despite net order intake decreasing by 41% in global markets, reflecting a weaker market in China, ‘restrictive’ order slotting in North America and ‘cautiousness’ among customers and dealers in Europe. Deliveries also decreased by 24%, driven by lower demand in China and a slowdown in Brazil.
While sales remain ‘robust’ in Europe, North America and Africa, Volvo explained there are signs of demand weakening in other markets due to the overall economic development and rising interest rates.
Profitability for Q2 was demonstrated by a record earnings increase of 12% to SEK 28,999 M (SEK 25,814 M in Q2, 2022). Adjusted for currency movements, net sales increased by 7%, of which sales of machines were up by 7% and service sales by 4%.
Compared with the same period last year, Volvo added that a higher operating income of SEK 5,353 M (SEK 3,568 M in Q2, 2022) is largely due to ‘positive brand and product mix’ and price realisation, partially offset by decreased volumes and lower production efficiency as well as higher R&D and selling expenses.
Melker Jernberg, president of Volvo CE, said, “Our ability to push innovation across construction with solutions for today and tomorrow, while performing well with continued financial growth and improved profitability will ensure we lead the way for years to come. The economic development may be having an effect on the overall construction equipment market but we are focused on leading a sustainable and profitable transformation for the benefit of our customers, our shareholders and society as a whole.”
Volvo said it is expected that cost inflation and ‘increased disturbances’ in the supply chain will see the industry continue to navigate a challenging economic outlook in the coming months.