Volvo CE operating income plummets 54% in 2013 despite gains in 4Q

|  February 06, 2014 |

volvo_logo2006_lgDespite encouraging gains in the fourth quarter, Volvo Construction Equipment will be glad to put 2013 behind it.

Full-year sales fell by 16 percent to $8.2 billion (53.4 billion SEK) while operating income plummeted 54 percent to $399 million (2.6 billion SEK).

In its report, Volvo CE attributed the fall in operating income to “tough price competition, weak product mix, low capacity utilization and unfavorable exchange rates.”

The good news is the company’s fourth quarter gives it reason for optimism in 2014. Sales increased by 3 percent in the quarter to $2 billion (13 billion SEK) while operating income improved 16 percent to $42 million (272 billion SEK).

Volvo attributes the fourth quarter gains to higher sales of smaller equipment with deliveries boosted by 9 percent during the period. The company notes however that “demand for larger machines, especially in the mining segment, remains subdued.”

Looking forward to 2014, Volvo CE expects improvements as global markets recover. It expects the China and Europe markets to each improve between 0 and 10 percent while the North America, South America and Asia markets are all expected to finish anywhere between a 5-percent decrease and a 5-percent increase.

 

“For 2014 we expect a slight improvement in market demand, mainly driven by China and Europe,” Martin Weissburg, president of Volvo Construction CE, said in a prepared statement. Weissburg was named president of the company in November and began his role on January 1.

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