Shares of Volvo Group were losing around 3 percent in the morning trading in Sweden after the commercial vehicle manufacturer reported Wednesday lower orders in its second quarter amid weakening demand, even as profit and net sales increased from last year.
Further, the company raised its forecast for annual industry-wide heavy truck sales in Europe and North America. The company now expects sale of 330,000 units in each market, up by 10,000 units from previous estimate.
Martin Lundstedt, President and CEO, said, “In Q2 2023, the Volvo Group continued to perform well, with continued growth and improved profitability. … Thanks to a strong commercial focus, we have been successful in improving margins while managing cost inflation and increased disturbances in the supply chain…. We are gradually entering into a more normalized demand situation with record strong profitability and high operational performance.”
In a separate development, Volvo Group signed a non-binding letter of intent with Westport Fuel Systems Inc. (WPRT, WPRT.TO) to establish a joint venture to accelerate the commercialization and global adoption of Westport’s HPD fuel system technology for long-haul and off-road applications.
Volvo will acquire a 45 percent interest in the joint venture for around $28 million or around 300 million Swedish kronor, plus up to an additional $45 million depending on the performance of the joint venture. The JV is expected to launch in the first half of 2024.
For the second quarter, Volvo’s income grew to 10.82 billion kronor from prior year’s 10.52 billion kronor. Earnings per share amounted to 5.30 kronor, higher than 5.14 kronor a year ago.
Operating income increased to 14.46 billion kronor from 13.75 billion kronor last year. The latest results included a negative effect of 1.27 billion kronor from a previously announced restructuring provision in Nova Bus and costs of 6 billion kronor relating to claims arising from the European Commission’s 2016 antitrust settlement decision.
Adjusted operating income amounted to 21.73 billion kronor, up from 13.75 billion kronor last year. Adjusted operating margin was 15.4 percent, compared to prior year’s 11.6 percent.
Net sales increased 18 percent to 140.8 billion kronor from 118.9 billion kronor last year. Adjusted for currency movements, the increase was 11 percent.
Net sales in truck business grew 19 percent to 93.7 billion kronor, with strong sales in almost all regions. In the quarter, order intake for new trucks declined 10 percent from last year to 48,300 vehicles, while deliveries increased 5 percent to 63,800 trucks, despite continued supply disturbances.
Order intake in Europe decreased 7 percent and in North America fell 11 percent. In South America, order intake decreased 32 percent, while Order intake in Asia increased 7 percent.
Order intake for fully electric trucks decreased 38 percent, while deliveries surged 251 percent.
Construction Equipment’s net sales increased by 12 percent. Order intake decreased 41 percent hurt by lower demand in Europe and China. Deliveries also declined from last year.
Net sales in the Bus segment rose 34 percent. Volvo Penta’s net sales rose 18 percent on a softening market.
In Sweden, Volvo AB shares were trading at 215.35 kronor, down 3.7 percent.
For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com.
Source: Read Full Article