The Volvo Group reported a net decrease in overall global sales for the first quarter of 2016.
According to the company, the group’s sales revenue was down $8.8 billion (SEK 71.7 billion). That constituted a drop of nearly 4% over the same period a year ago. Volvo said a large reason for the decline was due to “currency effects.” Unit sales for the group dropped 2% over the same time last year.
The company’s profitability was maintained and its operating income totaled $656 million (SEK 5.3 billion), which the company said left an operating margin of 7.5%.
“Truck markets are following the trend we have seen since last year,” said Martin Lundstedt, president and CEO of Volvo Group, in a statement. ” While truck deliveries declined 5% in total, we succeeded in improving our operating margin in the truck business to 7.8%.
He said demand in North America is slowing after a fast 2015 and weak demand in Brazil is dropping demand acrossSouth America. Both Asia and Europe continue to grow as the European market jumped 23% over the first quarter of 2015.
He said Volvo CE sales dropped “marginally” and the bus division had any deliveries hurt by currency effects. Sales of services and spare parts, excluding financial services, was 23% of net sales in the first quarter. Additionally, the company shaved nearly 6,000 jobs over the year.
“During the quarter we also implemented our new brand based organization for trucks with clear profit responsibility for each brand and business area,” Lundstedt said. “Furthermore a new governance model is implemented with the aim of further increasing customer focus, moving decisions closer to customers and securing clarity about our areas of improvement.”