Announcing its fourth quarter and full year results, Volvo Construction Equipment (Volvo CE) reported a sharp increase in sales and profitability in 2010, amid improving conditions for the industry. The company also increased unit sales by 70% -- selling an all-time-high of 66,000 machines during the year.
For the full year 2010, Volvo CE's sales increased by 51% to SEK 53,810 M, compared to 35,658 M in 2009. Operating income, meanwhile, leapt to SEK 6,180 M, up from a loss of 4,005 M in the preceding year. Operating margin also improved considerably, up to 11.5% in 2010 compared to a negative margin of 11.2% in the year before.
These significantly improved full year figures were boosted by a strong set of fourth quarter results. Net sales in the last three months were up 44% and amounted to SEK 14,657 M (SEK 10,159 M in 2009). When adjusted for changes in the exchange rates, net sales rose even further -- by 51%. Operating income also saw a sharp improvement during the quarter at SEK 1,758 M, up from a loss of SEK 564 M in the same period of 2009. These improved results were accompanied by an operating margin of 12%, which was the highest ever for a fourth quarter. Volvo CE's order bookings remain strong; with a total value of the order book on December 31st some 45% higher than on the same date in 2009.
Commenting on the results, Volvo CE's chief executive Mr. Olof Persson said: "We ended 2010 strongly. The gradual improvement in Europe continues and North America is now definitely recovering, at the same time as the emerging economies continue their strong growth. In addition to higher sales, the strong situation we now find ourselves in is also due to internal cost reduction activities, enhanced cost absorption in the manufacturing system and increased productivity."
BRIC leads a strengthening field
The fourth quarter of 2010 saw the total world market for construction equipment within Volvo CE's product range increase by 31%, compared to the same period in 2009. This was strongly driven by the BRIC countries, which saw an increase of 47%. In Europe the total market was up by 4% and North America was up by 31% during the quarter. Asia increased by 39%, strongly influenced by China and India, where the markets increased by 53% and 24% respectively. Other markets were up by 40%, helped by a rapidly recovering Russian economy, which saw a 269% improvement.
For the full year 2010, the total world market increased by 44% -- and conditions in 2011 are expected to remain positive. Europe is expected to grow by 5-15%, North America by between 20-30%, Brazil, India and China by 5-15% and demand in Russia is expected to double during the year. Other markets are expected to grow by between 5-15% in 2011.