Volvo CE Increased Sales in 2023 But Expects Weaker 2024

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Volvo CE products displayed at the Excon trade fair in December 2023
Volvo CE has reported improved earnings and stable sales in Europe and North America for Q4 2023, but softer demand is beginning to affect the global market.
Volvo CE

Editor’s Note: The Forbes Advisor conversion tool was used for this article to convert Swedish Krona, or SEK, to U.S. dollar amounts.

For the full year 2023, Volvo Construction Equipment increased annual net sales from 2022, despite a drop in sales for the last quarter, impacted by a weaker global market. 

Higher interest rates and an economic slowdown caused total order intake to decrease 26%, with China and Europe as the main negatives. 

While global equipment sales are slowing, service sales for Volvo CE have been softening in Europe, North America, Africa, and Oceania and declining in Asia and South America.

According to Volvo CE's year-end report, in Q4 2023 global net sales dropped by 4% to $2.6 billion (26,578 M SEK) compared to $2.7 billion (27,596 M SEK) in the same quarter in 2022. A positive mix and increased prices almost offset deliveries that decreased by 27%, primarily driven by the ongoing decline in the Chinese market.

Net sales of machines decreased by 6% while service sales increased by 6%. For the full year 2023, net sales rose to $10 billion (104,981 M SEK). 

Despite an increase in orders in North and South America – largely due to the low order intake from Q4 2022 that was driven by unpredictable supply chains – overall global net order intake has remained low, declining by 26%. This has been primarily caused by lower demand in China and cautiousness among customers and dealers in Europe.

Volvo CE stated that deliveries also decreased by 27% in Q4 due to the general weakening demand in China and Europe, as well as the slowdown in Brazil.

“The progress and milestones we have made in 2023 will prepare us for the challenges of 2024,” said Melker Jernberg, president of Volvo CE. “There is no doubt our industry is coming into the new year faced with a weaker market landscape, but now more than ever we will show our ability to perform for today while transforming for tomorrow.”

Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona (SEK).Volvo Construction Equipment, net sales by market area, in Millions of Swedish Krona (SEK).Volvo CE

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Market development

Q4 saw a flat or negative market for Volvo CE in most regions with North America and Asia outside of China reporting only slight increases. 

The company said the North American market softened in the final part of the year, reporting only a 7% increase, due to a deferral of fleet replacement as interest rates and inflation remain high, while in Europe the market fell by 1% from a high level driven by cautiousness among end customers.

South America dropped by 24% in market development following low investment levels in Brazil, while China saw the largest fall of 40% due largely to slower economic activity.

Other Asian markets remained flat at 4%, thanks to a slowdown in markets such as South Korea and Indonesia and despite an increase in demand in India, Japan, and the Middle East.

Solid foundation

“We have been successful in building a solid foundation with a strong financial position, customer satisfaction and relations, industrial backbone, technology, products and services, and – most importantly – people,” said Martin Lundstedt, Volvo Group president and CEO.

Collectively, the group’s businesses are in serial production of electric vehicles and machines to drive industry transformation. Among the moves included. The acquisition of the business and assets of Proterrato fast-forward the establishment of a battery value chain in North America.

In 2023, Volvo CE also continued its rollout of electric construction solutions and introduced zero-emission machines to new regions including Australia and UAE. 

The company has further taken steps to decarbonize construction by establishing net zero partnerships with customers to help reduce their operational emissions.

In addition, in December, an agreement was reached for the Ammann Group to acquire Volvo CE’s global ABG Paver Business including ABG in Hameln, Germany. The deal is subject to regulatory approval, which is expected in the first half of 2024.