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Profits at truckmaker Volvo beat expectations

Sweden's Volvo, the world number two for heavy goods vehicles, drove back into profit, announcing third-quarter profits of 2.81 billion kronor ($422 million) on Friday.

Published: 22 October 2010 10:10 CEST
Profits at truckmaker Volvo beat expectations

The better-than-expected results compared with losses of 2.91 billion kronor over the same period last year, reflecting the improved economic situation, said the group.

The group’s sales increased by 32 percent to 64 billion in the third quarter, with orders for its trucks up 58 percent to 50,869 units.

Analysts had expected only net profits of 2.42 billion kronor and sales of 62.4 billion, Dow Jones reported.

The latest results ended a run of five straight quarters of heavy losses, which led to the job cuts of 20,000 in the group as it struggled to cope with the effects of the economic crisis.

Half of the Group’s net sales were generated in markets outside Western Europe and North America: sales in Latin America and Asia helped pull the group back into profit.

The group, which also builds construction equipment and buses, is separate from its former subsidiary Volvo Cars, which was sold earlier this year by Ford to China’s Geely.

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VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Published: 3 February 2021 12:21 CET
Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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