Volvo Group Overcomes Falling Truck Sales 

(Bloomberg) --

Volvo Group reported better than expected profit in the fourth quarter and raised its dividend, in a sign of confidence that the truckmaker will be able to withstand a drop in demand.

• Volvo’s fourth-quarter adjusted operating income fell 13% from a year ago, to 9.22 billion Swedish kronor ($960 million). That was higher than the 8.58 billion that analysts surveyed by Bloomberg had expected on average.

Key Insights

• Volvo has improved profitability significantly in recent years, helped by a strong market. As customers in North America and Europe are now buying fewer trucks, the company’s ability to defend margins is put to the test.
• Under Chief Executive Officer Martin Lundstedt, Volvo has sought to reduce costs and increase service sales, which are less sensitive to demand swings.
• In the fourth quarter, Volvo’s deliveries of trucks declined by 9% and net order intake fell by 10% compared with the year-ago period. “We focused on adapting our operations to lower volumes and we will continue to take action to align our cost level with demand,” Lundstedt said in a statement.
• Volvo’s board proposed to pay dividends of 13 kronor a share, of which 7.50 kronor will be an extra dividend. Analysts surveyed by Bloomberg on average expected total dividends of 10.18 kronor a share.

Market Reaction

• Volvo shares have gained 21% in the past 52 weeks, outperforming the wider OMX Stockholm large cap index, which is up 19%. Of 27 analysts surveyed by Bloomberg, 15 recommend buying the stock.

Get More

• Read the statement
• See more details

To contact the reporter on this story: Niclas Rolander in Stockholm at nrolander@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Veronica Ek

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