Volvo is yet another company telling us that China is slowing down fast26 April, 2012, 14:40. Posted by Zarathustra
How often have you heard in the past few years from global companies that China’s market is weak, but the world ex. China market is doing well?
I am not too sure about the past few years. What I am really sure is that we have heard that 3 times in the past 2 days.
The latest is Volvo, who have just reported earnings for the first quarter. The bottom-line beats expectation, but as someone pointed out to me, the company is forecasting a rather sharp drop in total market for construction equipment. The management guidance now look for a –15 to –25% growth for this segment for 2012. Previous guidance only look for a flat year 2012.
The following chart is from the company’s result presentation. As you can see, they think the world ex. China will be doing fine.
Source: Company presentation
And from the financial report:
Good market development outside China
Measured in units, the total market for construction equipment was flat in December – February compared to the same period last year. In Europe the market increased by 16%, North America was up 35% and South America increased by 3%. Asia excluding China was up 24% while China decreased by 26%. Even though the Chinese market has declined considerably, the total market in China in the period was still bigger than the combined total markets in North America and Europe.
For the full year 2012, Europe is expected to grow by 10–20% (unchanged forecast), North America by 15–25% (unchanged forecast), South America by 0–10% (unchanged forecast). Asia excluding China is expected to grow by 0–10% (previous forecast: 10–20%) while China is expected to decline by 15–25% (previous forecast: 0%).
The good news is that the China bus market is still doing well, and sales of marine engines “remained stable”.