Volvo CE Reports Stable Earnings in Q3 2023

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EC320 being charged at remote site
Stable sales were seen in the third quarter of 2023 for Volvo CE as the company continues its shift to electric machines.
Volvo Construction Equipment

Volvo Construction Equipment saw stable sales in North America and Europe that showed some signs of softening in the third quarter of 2023.

The North American market grew by 10% in the year to date, supported by continued large infrastructure projects and strong commercial construction that offsets a weaker residential sector. 

Overall, the company’s net sales amounted to SEK 24,296 million in Q3 2023 a modest increase from SEK 24,238 million in the Q3 2022.

When adjusted for currency movements, net sales decreased by 4%, of which net sales of machines decreased by 5% while service sales increased by 4%. 

Adjusted operating income amounted to SEK 3,733 million (SEK 3,773 million in 2022) corresponding to an adjusted operating margin of 15.4%.

“We have performed well this quarter during a challenging economic environment while continuing to drive the long-term transformation towards more efficient and sustainable construction solutions,” said Melker Jernberg, head of Volvo CE. “Maintaining this solid performance is essential to help us also lead the way with our industry’s transformation.”

Compared to the North American market, Europe sales slowed due to a weakening macroeconomic outlook and increasing interest rates, but still maintained a modest 4% growth.

Sharp declines of 25% in South America and 40% in China were reported by Volvo Construction Equipment. 

Reduced investments and low business confidence was cited in the numbers from Brazil. The Chinese market’s decline was primarily related to a reduction of real estate investments.

In other Asian markets, Q3 showed an increase in demand in India, Japan, and the Middle East, offset by a lower market in South Korea and Indonesia, resulting in a steady development rate of 3%.

The slowdowns in Brazil and China reduced global deliveries by 21%, while net order intake also declined by 27%. 

According to Volvo CE, this was largely driven by lower demand in China and cautiousness in Europe. 

North America, however, recorded a 33% increase in deliveries and a 196% increase in orders.

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Market development

This third quarter saw the unveiling of the company’s first electric power unit for larger electric machines like the EC230 Electric excavator. 

The power unit allows for charging of electric machines in remote locations, where access to a stable grid connection is limited. 

Volvo CE also expanded the availability of the EC230 Electric excavator to customers in additional key markets in Europe. 

 In Q3, service solutions continued to show an increased opportunity for profitability, with a rise in sales compared to the same period last year, demonstrating their increased significance and Volvo CE’s continued focus on digitalization.

 Also, in North America, the company opened a new innovation center to provide training for technicians in diesel and electric heavy equipment, machine control technology, connectivity, and productivity services.