A strong fourth quarter helped Volvo Construction Equipment to its most successful year ever, with record sales, earnings and number of machines sold.

In 2006, Volvo CE reached many milestones. Sales increased by 17 percent, while operating income jumped by 41 percent. Operating margin strengthened significantly, rising to 9.6 percent, up from 7.9 percent in 2005. Finally, the company reached an all time high of machines sold in a 12 month period ¨C more than 37,000 in 2006; representing an 11 percent increase on the previous year.

These record figures were helped by a strong set of fourth quarter results. Net sales in the fourth quarter were up 4 percent. When adjusted for currency movements net sales increased further, to 12 percent. Operating income increased by 35 percent in the same period in 2005. This boosted the operating margin in the quarter to 9.2 percent, up from 7.1 percent in the fourth quarter last year.

The fourth quarter of 2006 saw the total world market for construction equipment within Volvo CE¡¯s product range increase by 5 percent compared to the same period in 2005. The US market was down by 20 percent; the cooling housing market driving the reduced demand for compact equipment, which was particularly affected (down 28 percent). Europe increased by 7 percent and Asia increased by 15 percent, helped by a strong Chinese market. Other international markets also increased strongly in the fourth quarter, rising 30 percent in the period. For the full year 2006, the total world market for heavy and compact equipment rose by 9 percent.

The outlook for 2007 is expected to be mixed. The European market is expected to continue to grow in the range of 0-5 percent, while Asia is projected to increase by 10 percent; again driven by China. Other markets are expected to grow by 10-15 percent. The combined growth in these regions is expected to offset a reduction in North America, which is expected to decline by between 5 and 10 percent, again a consequence of reduced housing related activities. Volvo CE¡¯s order bookings remain strong, with a total value of the order book on December 31st 60% higher than on the same date a year earlier.