Despite the continued decline in China, Volvo Construction Equipment sustained its solid growth in Q4 with high infrastructure investment particularly across Europe, North America and South America, and increased revenue from services.
In Q4, 2021, net sales increased by 5% to SEK 21,812 M (20,810 M). Adjusted for currency movements net sales increased by 2%, of which net sales of machines were flat and service sales increased by 14%. Primarily impacted by the decline in the Chinese market, global order intake decreased by 24% and deliveries decreased by 18% for the final quarter.
For the full year 2021, net sales amounted to SEK 92,031 M – rising from SEK 81,453 M from last year and demonstrating that the global market is continuing to spring back from the initial hit caused by the disruptions of 2020. Adjusted for operating income, it increased to SEK 12,228 M (10,071), corresponding to an adjusted operating margin of 13.3% (12.4%).
The current drop in China is due to a saturated market for excavators following last year’s high sales levels and the overall slowdown in construction and infrastructure investments across the region.
The European market showed a continuation of solid growth (27%) with a high level of infrastructure investments and a recovery in the rental segment. North America’s growth (23%) was supported by investments in commercial real estate and strong housing construction, while South America’s increase of 65% was largely driven by a high demand for commodities. The world’s biggest construction equipment market of China, however, reported a drop of 1% while all other regions in Asia, particularly in Korea and Southeast Asia, continued its rising market development of 19%.
A sustainable outlook
The final months of 2021 saw the first shipment of the 20-ton EC230 Electric excavator for the Asian market from the factory in South Korea – setting yet another milestone for Volvo CE’s electric future. Sales of the company’s compact electric machines, the ECR25 Electric excavator and the L25 Electric wheel loader, continued across key markets with Volvo CE delivering 321 of these machines in the last year. The reveal of a new concept autonomous electric wheel loader, Volvo LX03, also showcased the company’s direction towards decarbonisation.
“The industry continues to be confronted by the effects of the ongoing Covid-19 pandemic in combination with additional challenges such as transport disruptions, global component shortages and an overwhelmed supply chain,” says Melker Jernberg, president of Volvo CE. “Yet thanks to the dedicated work of my colleagues, partners and suppliers, we have continued to deliver good profitability and took several important steps forward in our efforts to lead the transition to a carbon-neutral construction industry. The greater flexibility, digitalisation and innovation across our products and services – not forgetting the stringent targets we have set ourselves in building a better world – have contributed towards a solid performance for 2021.”