Volvo 2011 Annual Report Download - page 62

Volvo CE’s equipment is distributed to customers
through a global network of independent deal-
ers, and in some instances, Volvo-owned dis-
tributors. The customer offering also includes
services such as financing, leasing and used
equipment sales. Customers are using Volvo CE
products in different applications, including
general construction, road building and mainte-
nance, demolition, waste processing, material
handling and extraction.
Widespread demand
Measured in units sold, the total world market
for heavy, compact and road machinery equip-
ment increased by 18% in 2011, compared to
2010. After a long period of low growth, the
mature markets of Europe saw rises of 31% in
2011, whereas demand in the previously slug-
gish North American market jumped by 37%.
Asia excluding China grew by 28% and Other
Markets by 14%. In China, government efforts to
cool inflation dampened demand, but sales never-
theless increased by 7% in this, the world’s largest
construction equipment market.
Recoveries in mature economies coupled with
continued buoyant demand in emerging markets
and internal cost reductions saw Volvo CE to a
confident 2011 in terms of sales and income.
During 2011 the company sold a record 84,000
machines, compared with 66,000 in 2010.
Net sales increased by 21% to SEK 64,987 M
(53,810). Operating income rose to SEK 6,653 M
(6,180) whereas the operating margin amounted
to 10.2% (11.5). These are solid results given the
significant currency headwinds and the supplier-
related consequences of the earthquake and
tsunami that struck Japan in early March, which
had a negative effect on both sales and income.
Strengthen position in BRIC countries
In 2011 Volvo CE saw strong momentum in all
BRIC markets. Significantly, it became market
leader in China for excavator and wheel loader
sales, with a share of 12%. Despite a softening
of the Chinese market, Volvo CE’s sales there
grew by 29% in 2011. In October the company
broke ground on its major new technology
center in Jinan, China, which, when completed,
will design products for the BRIC markets and
form part of the company’s plan to have a global
footprint of engineering and design resources.
The third quarter saw Volvo CE announce a
SEK 350 M investment in a new excavator plant
in Kaluga, Russia, which will see production start
in early 2013. Distribution in Russia also got a
boost; with new partner Ferronordic committing
USD 100 M to expanding dealer locations in the
vast country.
In India, dealer development was also in focus,
and SEK 140 M is being spent on expanding
Volvo CE’s Bangalore facility to accommodate
excavator production. Elsewhere, the company
saw strong market growth across South Amer-
ica, with its SDLG wheel loader range gaining
the market leadership position among Chinese
brands in the region. A SEK 65 M investment
will see Volvo CE excavators produced at the
Pederneiras, Brazil facility.
Reduce break-even
Further investments were announced that will
see efficiency gains and lower the break-even
point, as well as reducing currency exposure.
Localization of sourcing and production is essen-
tial to this objective, with the most notable exam-
ple being the announcement of a USD 100 M
investment in the company’s Shippensburg, US
facility to allow production of wheel loaders,
excavators and articulated haulers.
Launch Tier 4i/Stage IIIB engines
Volvo has taken the lead in introducing envi-
ronmentally friendly Tier 4 Interim/Stage IIIB-
compliant products in North America and Europe,
with the successful launch of complete new
generations of machines affected by the legisla-
tion. The company’s new V-ACT engine systems
have the hallmarks of lower emissions, better
performance, improved operational economy
and higher quality. As well as advanced engine
monitoring and control, the new Volvo system
uses an advanced exhaust after-treatment sys-
tem that reduces particulate matter by 90%
compared to the previous machine series.
New products
Volvo CE chose the ConExpo exhibition in Las
Vegas in March 2011 to unveil its fundamentally
updated product range, which includes excava-
tors, wheel loaders, articulated haulers, backhoe
loaders – and the Red Dot award winning
L220G wheel loader. In all, over 50 new models
were introduced to dealers and customers in
Europe and North America, with a host of new
products also available in Asia and other
markets.
Volvo CE manufactures equipment for construction
applications and related industries.
Number of employees
14,857
Volvo Construction Equipment (Volvo CE) is among the largest global producers of excavators, haulers,
loaders and a range of smaller equipment such as backhoe loaders. The road machinery range includes
graders, compactors and pavers. Its Chinese built SDLG branded excavators, loaders and compactors are
marketed through separate sales channels.
CONSTRUCTION EQUIPMENT
WIDESPREAD DEMAND UNDERPINS GROWTH
Volvo CE launched more than 50 new models
during the year.
Position on world market
Volvo CE is the world’s largest manufac-
turer of articulated haulers and one of the
world’s largest manufacturers of wheel
loaders, excavators, road development
machines and compact construction equip-
ment.
Brands
Volvo and SDLG (Lingong).
BOARD OF DIRECTORS’ REPORT 2011
58