Volvo Group Sales Increased 11% in 2019

Overall group sales increased in 2019; Volvo Construction Equipment had a 5% sales increase for the year.

Volvo Group
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Volvo Group has announced its fourth quarter and full year financial results for 2019. 

“2019 was another good year for the Volvo Group. We grew net sales by 11% to SEK 432 billion and improved our adjusted operating income to SEK 47.9 billion (40.7), with a margin of 11.1% (10.4). During the year we also continued to increase our financial strength. With an operating cash flow of SEK 38.3 billion, we ended the year with a net cash position of SEK 62.6 billion in the Industrial Operations, excluding pension and lease liabilities. Our increased profitability and strong financial position allow us to invest in our future as well as return cash to our shareholders,” says Martin Lundstedt, President and CEO.

The fourth quarter 2019

  • In Q4 2019, net sales amounted to SEK 105.4 billion (105.8). Adjusted for currency movements, net sales decreased by 5%.
  • Adjusted operating income amounted to SEK 9,223 M (10,597), corresponding to an operating margin of 8.8% (10.0).
  • Reported operating income amounted to SEK 9,379 M (3,597).
  • Currency movements had a positive impact on operating income of SEK 763 M.
  • Diluted earnings per share amounted to SEK 3.27 (1.26).
  • Operating cash flow in the Industrial Operations amounted to SEK 19,856 M (15,471).
  • Volvo Group and Isuzu Motors intend to form strategic alliance.

The full year 2019

  • For the full year 2019 net sales increased by 11% to SEK 432.0 billion (390.8).
  • Adjusted operating income amounted to SEK 47,910 M (40,660) corresponding to an operating margin of 11.1% (10.4).
  • Reported operating income amounted to SEK 49,531 M (34,478).
  • Diluted earnings per share amounted to SEK 17.64 (12.24).
  • Operating cash flow in the Industrial Operations amounted to SEK 38,309 M (26,597).
  • The Board of Directors proposes an ordinary dividend of SEK 5.50 per share (5.00) and an extra dividend of SEK 7.50 per share (5.00).

Volvo Construction Equipment

Volvo Construction Equipment (Volvo CE) gave a strong performance in 2019, delivering another record set of annual financial results and growing market share in the world’s largest construction market, China. For the full year the company saw sales rise 5%, despite a slight sales dip in the fourth quarter. 

In Q4 2019, net sales decreased by 3% to SEK 19,716 M (20,323). Operating income amounted to SEK 1,931 M (2,157), corresponding to an operating margin of 9.8% (10.6). Earnings were positively impacted by currency movements, to the value of SEK 113 M. 

For the full year, net sales increased by 5%, to SEK 88,606 M (84,238). Adjusted operating income increased to SEK 11,910 M (11,306), corresponding to an operating margin of 13.4% (13.4). 

Volvo Ce Financial Results

Market conditions 

Demand in Europe improved during the fourth quarter, and was up 6% by the end of November, helped by continued growth in Germany, Italy, France and Russia. North America was also up by 6% over the same period in 2018, helped by greater demand for larger equipment, while South America saw a gain of 17%, driven mostly from growth in Brazil. Excluding China, Asian markets were down by 11% compared to last year. The Chinese market itself continued to grow, and was up 8%, with increased demand for both excavators and wheel loaders. 

Orders and deliveries 

During the fourth quarter of 2019 Volvo CE saw net order intake increase by 6%, driven by good demand for SDLG branded machines in China and Russia. Order intake in Europe declined by 5%, despite a strong increase in Russia. Thanks to dealers restocking, North America saw order intake jump by 40%. In Asia (excluding China), order intake was down by 17%, while in China it was up by 14%. Volvo CE continues to gain market share in both wheel loaders and excavators in China. 

Deliveries increased by 4% during the fourth quarter 2019, again boosted by higher volumes in China and Russia on SDLG products. 

“2019 was another year of good performance on several levels,” says Melker Jernberg, President of Volvo CE. “We gained market share in the larger equipment category in North America and in Europe saw good developments in sales, operating income and cash flow. Asia has had its challenges, but in China we see encouraging market share growth in large excavators and wheel loaders, which is good to see.” 

In February 2020 Volvo CE will start taking orders for both electric compact wheel loaders and compact excavators. Serial production is planned for Q3 2020. 

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