Volvo Construction Equipment sees sales rise through 2023 but expects softer market ahead
A softening in the construction market towards the end of the year did not put a damper on Volvo Construction Equipment's financial results for 2023, which show an increase in annual net sales and improved service sales.
The fourth quarter of 2023 saw Volvo CE's net sales decline by 4 percent to SEK 26,578 million. Net sales of machines decreased by 6 percent, while service sales increased by 6 percent. Adjusted operating income for the period amounted to SEK 3,320 million, corresponding to an adjusted operating margin of 12.5 percent, up from 11.2 percent in the fourth quarter of 2022.
For the full year 2023, net sales rose to SEK 104,981 million, an increase from 100,261 million in 2022. Adjusted operating income was 16,993 million, with an adjusted operating margin of 16.2 percent.
Orders increased in North and South America, largely due to the low order intake from Q4 of 2022 that was driven by unpredictable supply chains. Overall, global net order intake has remained low, primarily caused by lower demand in China plus cautious customers and dealers in Europe. Deliveries slowed by 27 percent in Q4 of 2023 as well, due to weakening demand in China, Europe, and Brazil.
North America and Asia outside of China showed some slight market increases in the fourth quarter. Noth America softened in the final part of the year, reporting a 7 percent increase, due to deferral of fleet replacement as interest rates and inflation remain high. Europe fell by 1 percent from a high level driven by cautiousness among end customers, while South America dropped by 24 percent and China by 40 percent.
"The progress and milestones we have made in 2023 will prepare us for the challenges of 2024. 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," said Melker Jernberg, President of Volvo CE.
