10/29/2007 Volvo Construction Equipment’s sales rise 32% in the third quarter of 2007

A strong product portfolio is helping the company continue its rapid growth, despite a slowdown in the North American market.

Volvo Construction Equipment (Volvo CE) delivered another strong performance in the third quarter of 2007, with net sales rising in the period by 32% to SEK 12,963 M – up from SEK 9,807 M in the same period of 2006. Order bookings are also substantially up, with the value of the order book at September 30 being 76% higher than on the same date in 2006 (excluding Lingong and the newly acquired road machinery business line).

Operating income fell slightly in the quarter – by 4% to SEK 839 M (872), a result of increased production costs, exchange rates and reduced production of excavators due to an industrial dispute in Korea.

World market development

The total world market for construction equipment within Volvo CE’s product range increased by 8% during the quarter compared to the same period in 2006. This increase in unit sales was lead by heavy machinery, which rose by 12% in the period, compared to compact equipment’s 5% during the third quarter.

The European market increased by 8%, while Asia grew by 11%, boosted particularly by China, which was up 28%. Other international markets were up by 29%. The North American slowdown continues, albeit at historically high levels, declining 7% during the quarter – largely as a result of lower housing construction activity.

Despite the slowdown in North America – which is expected to decline by 10% in 2007 – the overall picture is expected to continue positive for the rest of the year. The European market is expected to grow by 10% in 2007, while Asia is set to grow 15% and Other International Markets are expected to see growth of approximately 20%.

A highlight of the third quarter was the launch of five pipelayers from 20 to 150 metric tonne lift capacity. With these innovative machines Volvo CE is particularly targeting customers in the on-shore oil and gas industry. The patented adaptation of excavator based machines combined with modern lifting technology is already being regarded as a major technical advance over the traditional tracked tractors with side booms, which have been used largely unchanged since the 1930s.

Table 1. Volvo CE, net sales by market area, in millions of Swedish Krona (SEK M).