Volvo Quarterly Earnings Surge as North America Deliveries Jump

(Bloomberg) -- Volvo Group’s second-quarter earnings beat analyst expectations, as truck deliveries rose and the company increased its market forecasts for North America and Europe this year.

• The Swedish company has been reaping the rewards of roaring demand for trucks in the last couple of years, and adjusted operating income surged 31% to 15.1 billion kronor ($1.6 billion), beating the 13.4 billion kronor expected by analysts.

Key Insights

• An economic slowdown is causing a downturn in future demand. Volvo’s second-quarter truck-order intake fell 21% from a year earlier. Even so, the company increased its industrywide delivery forecasts by 4.8% for North America and 6.7% for Europe.
• Chief Executive Officer Martin Lundstedt has brought profitability up, surpassing an ambitious margin target of 10% of sales introduced in 2017. His task is now to defend the figure, which was 12.5% in the second quarter, as demand falters.
• Volvo is also facing stiff competition from newly listed Traton SE, which combines Germany’s MAN SE and Lundstedt’s former employer, Scania AB. The Volkswagen AG unit commands a third of the market for heavy-duty trucks in Europe, and aims to expand in new countries to challenge global leaders Daimler AG and Volvo.
• In the second quarter, the group’s truck deliveries jumped 10%, propelled by a 35% surge in North America. the European market share for heavy-duty trucks under the Volvo brand narrowed to 15.4% from 16.7% a year ago. Its Renault-branded trucks gained market share to 8.6% from 8.5% in the 2018 period.

Market Reaction

• Volvo shares fell 1.2% to 143.80 kronor as of 9:10 a.m. in Stockholm. They have jumped almost 30% this year.

Get More

• Summary of second-quarter results

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, Tom Lavell

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