Volvo CE holds margins in Q3 as SDLG exit resets China strategy and tariffs bite

Volvo Construction Equipment posted steady profitability in Q3 2025 while exiting SDLG and pushing its largest product launch to date. Reported net sales reached $1.99 billion. Adjusted operating income was $286 million for a 14.4%margin. On a currency basis, sales rose 8 percent. Excluding SDLG, sales increased 14 percent, with machines up 17 percent and […] Volvo CE holds margins in Q3 as SDLG exit resets China strategy and tariffs bite published on The HeavyQuip Magazine.

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Oct 17, 2025 - 12:15
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Volvo CE holds margins in Q3 as SDLG exit resets China strategy and tariffs bite

Volvo Construction Equipment posted steady profitability in Q3 2025 while exiting SDLG and pushing its largest product launch to date. Reported net sales reached $1.99 billion. Adjusted operating income was $286 million for a 14.4%margin. On a currency basis, sales rose 8 percent. Excluding SDLG, sales increased 14 percent, with machines up 17 percent and services up 6 percent.

By the numbers

  • Net sales: $1.99 billion
  • Adjusted operating income: $286 million
  • Adjusted operating margin: 14.4 percent
  • Excluding SDLG: sales +14 percent, machines +17 percent, services +6 percent

SDLG divestment and China focus

Headline order intake decreased 2 percent and deliveries fell 4 percent due to the SDLG exit. Adjusted for SDLG, orders rose 22 percent and deliveries rose 14 percent. Europe saw dealer restocking. North American distributors resized fleets and stock for 2026. Volvo CE completed the SDLG divestment on September 1, 2025 for about $841 million. The sale sharpens the Volvo brand focus in targeted segments. Volvo keeps an industrial base in China through assembly and technology centers. The Group recorded a disposal gain that was excluded from adjusted results.

Volvo CE recently launched a wide range of electric solutions, including its first electric wheeled excavator and charging solutions.

Tariffs and supply chain friction affected the quarter. Management flagged an estimated $53 million net tariff headwind in Q3, with more than half impacting Construction Equipment, and guided to about $105 million in Q4. North American buying pulled forward on expected tariff effects.

The Ownership Strategy

Volvo CE is part of AB Volvo’s dual class structure. Industrivärden is the largest owner by votes. Geely remains a significant shareholder after stake adjustments. The mix combines Swedish long term capital with a Chinese strategic investor while Volvo reduces direct exposure to China’s low end segment after the SDLG sale.

Electrification push

Volvo CE expanded its electric range. The EC230 Electric is available to order in North America. The L120 Electric is in customer pilots, with orders planned to open late 2025 for early 2026 deliveries. Battery pack production supporting mid size electrics is live in Changwon, South Korea. The Group expects a delay of a couple of years to high volume output at the planned Swedish battery plant, signaling capital discipline.

Q3 sales by region – USD

Volvo CE net sales by market area in Q3 2025
Region Sales (USD)
Europe $678 million
North America $501 million
Asia $552 million
South America $111 million
Africa and Oceania $148 million
Total $1.99 billion

What to watch next

  • Tariff pass through and mix versus the guided Q4 headwind.
  • China demand skewed to smaller equipment after policy support, and how Volvo covers that space post SDLG.
  • Order momentum for EC230 and L120 Electric versus depot charging rollouts.

Sources: Volvo Group Q3 2025 report and Volvo CE Q3 2025 press materials

Note: All SEK figures were converted to USD using a Q3 2025 average of 9.5107 SEK per USD. Values are rounded to the nearest million.

 

Volvo CE holds margins in Q3 as SDLG exit resets China strategy and tariffs bite published on The HeavyQuip Magazine.

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