The results were supported by a fourth quarter that saw sales up 21% and deliveries increase by 24%. Volvo Construction Equipment ended its strongest year ever buoyed by
There was good demand from all major regions and all industrial segments, said the company, helping in the delivery of strong improvements in sales, operating income and order intake.
Growth in both the machine and service businesses was accompanied by increased demand from construction, infrastructure and mining in all major markets.
Demand in Europe improved during the fourth quarter, and was up 12% by the end of November, helped by strong growth in Russia, and moderate growth in the UK, France, Italy and Germany. North America was up by 16% over the same period in 2017, helped by greater demand for excavators, South America saw a gain of 20%, up from low levels in Q4 2017 and driven mostly from growth in Brazil. Excluding China, Asian markets were up 11% compared to last year, boosted by improvements in India. The Chinese market itself was strongly up, growing by 35% above 2017, driven by greater demand for excavators and wheeled loaders.
In the fourth quarter of 2018, net sales increased by 21% to SEK20.3m. Operating income rose by 19% and amounted to SEK2.16bn, corresponding to an operating margin of 10.6%.
For the full year, net sales increased by 27%, to SEK84.2bn. Adjusted operating income increased to SEK11.3bn, corresponding to an operating margin of 13.4%, compared to 11.9% the previous year.
“2018 was a record year for Volvo CE, driven by good demand from all major regions in the construction, infrastructure and mining sectors,” said Volvo Construction Equipment Melker Jernberg. “In the future, we see further potential to increase volume flexibility in the supply chain, to improve quality and to grow our service business. An even stronger service business means that we can provide better support for our customers and also better balance the cyclicality in construction equipment sales.”
During the year Volvo CE continued its drive to develop next-generation solutions, progressing its position in electrification, automation and connectivity. The company demonstrated electric machine prototypes during 2018 and, in a 10-week trial, the company and customer Skanska tested the Electric Site concept (link opens in new tab).
It is based on autonomous, electric and connected Volvo machines running in a quarry. Results showed that Electric Site can deliver significant reductions in carbon emissions as well as operator costs.
In early 2019 Volvo CE announced that it will stop delivering diesel-powered smaller compact equipment in favour of fully electric machines.