Volvo CE’s Q3 2024 margins remain strong through weakening market
New products and services, plus growth in China and South America, have buoyed margins despite drop in net sales
Volvo CE has achieved good margins in Q3 2024, despite a much slower market than 2023, as it continues its roll-out of new products and services.
Lower volumes in Europe and North America for the third quarter — when compared to the very high levels of last year — have caused a drop in overall net sales for Volvo CE. However, it has maintained overall good margins despite this slower demand, and has experienced growth in the Chinese and South American markets.
"We are living in turbulent times and, like other companies, are feeling the effects of a market slowdown," says Melker Jernberg, head of Volvo CE. "But we are maintaining our leading position with a strong portfolio, the continued roll-out of new products and services and our steadfast commitment to the industry transformation."
In Q3 2024, net sales decreased by 23 percent to SEK 18,809 M, compared to the high earnings of SEK 24,296 M for the same quarter last year. When adjusted for currency movements, net sales decreased by 20 percent, of which net sales of machines fell by 24 percent, while service sales increased by two percent, reflecting the market's growing interest in digital solutions.
However, the company reports that net order intake has risen slightly, caused largely by a 59 percent increase in South America and a 44 percent increase in Europe, strengthened by a more modest rise in all other regions except North America. Global deliveries were down from last year due to the continued lower market demand and reduction of inventories at dealerships in Europe and North America, partly offset by increased deliveries for the SDLG brand in China.
Leading industry transformation
Volvo CE continued the market launch of new and upgraded models of its most important products and services in key markets in Asia and North America. This included an updated range of the new generation excavator portfolio, as well as the highly anticipated L120 Electric wheel loader.
"The ambitions we have set out towards building the world we want to live in remain unchanged and we take pride in working together to balance the priorities of today with our confident vision for tomorrow," says Jernberg.
The quarter also saw the opening of a new wheel loader facility in Arvika, Sweden, designed to support the production of electric wheel loaders at the plant. This is one of a number of global investments made by Volvo CE to drive industry transformation across production facilities and markets worldwide.
Global market development
Compared to 2023, the total machine market contracted in Q3, largely due to a 25 percent drop from the historically high levels of last year in Europe. The decrease was driven by a combination of low business confidence and a saturated end market. As a consequence of normalizing replenishment of dealer fleets and somewhat lower end customer demand, North America also came down nine percent from very high levels in 2023.
The Asian market, excluding China, was slightly down overall by just two percent, despite market growth in India, Indonesia, and the Middle East, while markets such as Türkiye experienced declines partly driven by revised government infrastructure investments.
In contrast, the Chinese market grew five percent on the back of governmental policies to stimulate the real estate market, while good demand in Brazil, Peru, and Chile saw a similar five percent increase in market development for South America.
