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Volvo maintains profitability despite lower sales

Volvo Construction Equipment (Volvo CE) saw a 29% drop in the value of its sales in the first quarter of this year compared with the same period last year.

However, profitability was up on the last quarter of 2012, and the company has increased production to meet current demand.

The company said it had been “negatively impacted by weak demand across most of its markets” during the first quarter of 2013, with the effect particularly pronounced in the mining sector, which has seen a sharp reversal of fortunes compared to the same period last year.

Measured in units, Volvo CE’s sales in Europe were down 18%, North America decreased by 7% and South America by 20%. Asia (excluding China) was also down by 7%, while China itself slumped by 42%. Despite the sharp slowing of the Chinese market, Volvo CE has maintained its market leadership position in the country, staking claim to 14.8% of the wheel loader and excavator market.

The firm predicts “modest” prospects for the rest of 2013, with Europe expected to decline by between 5% and 15%, while North America, South America and China are predicted to hover around the -5% to +5% mark. Asia (excluding China) is forecast to grow by up to 10%.

“We have been through a challenging couple of quarters but have now got our inventory pipeline in balance and stabilised the business at a lower sales volume,” commented Volvo CE president Pat Olney. “We still need to keep a tight rein on costs, as well as improve our geographical and product mix. But I take confidence in the fact that we have improved our margins compared to the last quarter of 2012, despite similar sales revenues.”

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