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While the company was happy to see its profitability improve from the fourth quarter, Volvo Construction Equipment’s first-quarter operating income plummeted 76 percent from the same period a year ago.
The company reports that it was hurt by declines in each market and a sharp decline in mining sector demand.
Volvo reported first-quarter operating profits of $76 million (SEK 500 million.) That’s down from the $317.2 million (SEK 2.089 billion) the company made in the first quarter of 2012.
Net sales fell sharply from last year as well. The company reported first-quarter net sales of $1.8 billion (SEK 12.1 billion) a decrease of 32.5 percent from first quarter 2012’s mark of $2.7 billion (SEK 18 billion).
“We have been through a challenging couple of quarters but have now got our inventory pipeline in balance and stabilized the business at a lower sales volume,” said Volvo CE President Pat Olney in a prepared statement. “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.”
The company reported accross-the-board market declines with Europe down 18 percent, North America down 7 percent, South America down 20 percent and Asia (excluding China) down 7 percent. Volvo saw a 42-percent market decline in China.
For the rest of the year, Volvo referred to its prospects as “modest.”
Europe is expected to continue to decline between 5 and 15 percent, while North America, South America and China are could end up anywhere between a continued decline of 5 percent to an improvement of 5 percent. Asia, again excluding China, however, is forecast to grow between from zero to 10 percent.