Slower first quarter brings 9 percent drop in net sales for Volvo Construction Equipment
An expected downturn in the construction market has had an effect on the first quarter of 2024 for Volvo Construction Equipment, which reports market demand softening across the globe.
Volvo CE reported 22.877 billion Swedish krona in net sales for the quarter, a drop of 9 percent compared to the same three-month period in 2023. Adjusted for currency movements, net sales of machines have decreased by 9 percent and service sales by 3 percent. Sales were affected by a negative brand and market mix, partly offset by price realization and lower material costs.
Deliveries in the first quarter were on par with 2023, with a lower performance in Europe and North America being offset by the Chinese market. During the same period, net order intake increased by 4 percent, largely driven by China and the SDLG brand, which is rising after low order intake in the previous year's first quarter.
Overall, order intake for the Volvo brand decreased in line with market development in Europe and North America. Orders in South America increased from a low level in 2023, driven by signs of recovery in Brazil.
The tougher climate has not stopped Volvo CE furthering its commitment to sustainable transformation. It introduced its first commercial grid-connected excavator, the EWR240 Electric material handler, to select customers earlier in the year. A forward-thinking partnership with Sweden's largest ski company, SkiStar, will develop a roadmap towards fossil-free ski resorts. Later in the quarter, Volvo CE announced the trial of an electric shuttle delivery solution for transporting its machines from Belley, France, together with Volvo Trucks and logistics firm Capelle Transports.
"Maintaining profitability remains a high priority and we have taken great steps to ensure as strong a performance as possible during these tougher times," said Melker Jernberg Head of Volvo CE. "While the industry feels the effects of this market downturn, we are maintaining our momentum to come out stronger - ensuring that we remain flexible in our systems while continuing to deliver on our transformation ambitions."
The machine market was flat or negative through the first quarter across most regions, Volvo CE reports. In Asia outside China it was on par with the previous year, and South America saw a modest increase. However, Europe, North America, and China all saw decreases. Europe's 22-percent drop was driven largely by customer caution in the face of a weakening climate. North America saw a drop of 6 percent, likely due to a continued deferral of rental fleet replacement, as interest and inflation rates remain high. Market demand in China declined by 22 percent due to low investment levels and an overall slow economic activity. South America's 4-percent rise came from signs of recovery in various industry segments.
