Volvo Group First-Quarter Earnings, Sales Rise

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Transport Topics  /  April 25, 2017

Volvo AB posted first-quarter gains in earnings and profitability, most of which was generated by its construction equipment division, as the larger truck division was fairly static compared with the same time in 2016.

While construction equipment profits surged 374%, in part due to a stronger global mining industry, the truck unit encountered a varied market. The Gothenburg, Sweden-based corporation said Asia is expanding in terms of truck sales, Europe is stable and North America still falling, although net orders for new North American trucks are rising.

Corporate-wide, Volvo earned the equivalent of $539.9 million, or 26.1 cents a share, on global revenue of $8.67 billion. In the 2016 first quarter, the company had net income of $447.9 million, or 21.9 cents, on sales of $8.48 billion.

At the global truck division, including North American brands Volvo and Mack, operating profit rose 31%, as measured in Swedish kronor, to the equivalent of $550.4 million from $442.2 million during the first three months of last year.

Quarterly sales moved to $5.55 billion from $5.68 billion. The strengthening U.S. dollar turned the krona-denominated increase into a dollar decrease.

Worldwide deliveries of new Volvo Group trucks dipped 5% for the quarter to 43,927 vehicles. Pricing improved, though, and the smaller number of vehicles sold turned into a revenue increase of 0.15%, year-over-year.

The big source of quarterly improvement at the truck division came from maintenance, technology and other services, which rose by 11%.

“After the downward correction in the long-haulage segment in 2016, the North American market seems to be bottoming out. We see positive signs of increased order activity,” Volvo CEO Martin Lundstedt said in the company’s April 25 report. He also mentioned the introduction of the company’s new North American regional-haul tractor.
Quarterly deliveries fell most severely in North America, by 34%, to 7,065 from 10,740. The best geographies for the group’s truck deliveries were Asia, up 8% and Africa/Oceania, up 7%.

Among net new-truck orders, four areas had year-over-year growth of 20% or more: Asia, up 31%; South America, up 29%; and Africa/Oceania, up 21%. North American growth was 27%, to 11,334 from 8,982 in the 2016 quarter.

Bloomberg News reported that Volvo has canceled planned North American stop days, which will operate without the planned changes during the second quarter because of the stronger demand. The wire service said Lundstedt told this to stock analysts.

Volvo Trucks North America spokesman Brandon Borgna offered confirmation.

“We had originally planned to take some downtime at our New River Valley [Va.] assembly plant but have canceled those plans as a result of strengthened order support,” he said.

A Mack spokesman was not immediately available for comment.

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Volvo posts improved sales, Volvo & Mack gain marketshare

Jason Cannon, Commercial Carrier Journal (CCJ)  /  April 25. 2017

Volvo Group posted improved sales and profitability for the first quarter Tuesday.

Global volumes of heavy-duty and medium-duty trucks fell 4 percent, led by a North American market that Volvo Group President and CEO Martin Lundstedt says “seems to be bottoming out.”

“We see positive signs of increased order activity,” he adds.

Volvo Group’s net sales increased by 8 percent to $8.7 billion in the first quarter.

Vehicle sales increased by 3 percent, primarily on good demand for products in Europe and Asia.

North American heavy-duty truck industry orders increased during the quarter (from 8,892 to 11,334), and “dealer inventories of new trucks are at healthy levels,” Volvo said through its earnings release.

“However, inventories for used long- haulage trucks remain elevated. This continues to dampen demand for new trucks in this segment despite indications of an improving freight environment. Demand in the refuse and construction segments remains good. Retail sales for the industry are forecasted to be lower 2017 compared to 2016.”

In North America, deliveries were down 34 percent compared to the same quarter last year.

Both Volvo Trucks and Mack gained market shares, with Volvo Trucks reaching 9.4 percent and Mack reaching 8.9 percent. “An order intake increase of 27 percent was driven by both Volvo Trucks and Mack activity within the construction segment and a somewhat improved freight environment combined with low dealer inventories,” the company says.

Earlier this month, Volvo launched its new Volvo VNR regional haul tractor – the company’s first step in the renewal of the Volvo lineup in North America.

“With its modern, ergonomic and more aerodynamic cab, the new vehicle will significantly improve Volvo’s position in the regional haul market,” Lundstedt says. “Product features are focused on delivering the maneuverability, productivity and safety that are so important to customers in this segment.”

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Unstable numbers from Volvo

Göteborgs-Posten  /  April 25, 2017

Economics, it goes awry for AB Volvo. Now the pace is turned up in the factories in Tuve, as well as Vara and Skövde.

"Now we can be happy for a few days - then we have to concentrate on getting even better. Competition is tough”, says CEO Martin Lundstedt.

AB Volvo reported a pre-tax profit of SEK 6.4 billion for the first quarter of the year. A substantial increase compared to the profit of 5.3 billion kronor in the same period last year.
As a result, the truck manufacturer also hit the expectations of the collective analysts - on average, they had a profit of approximately SEK 5 billion, according to Reuters compilation. The stock market was impressed and Volvo's B shares rushed around seven percent on Tuesday morning.
"We have had a strong quarter, both in terms of profit and sales. The report shows many good examples of what we want to achieve in the organization - service sales increase, it is stronger for construction machinery and the truck market is also going strong. There is much to be enjoyed, but there is also much more we can do with the organization, "said Martin Lundstedt, President and CEO of Volvo.

Five-fold profit for Volvo CE

The biggest surprise is Volvo CE. The segment, which manufactures construction machinery, has long been hard pressed, seen as a problem child, and surrounded by stubborn sales sprawling. Sales now increase by 30 percent while it adjusted operating profit almost fivefold - to 1.6 billion from SEK 341 million in the same period last year.
"We are in the midst of implementing a major improvement plan for Volvo CE - it brings results now. For example, internal efficiency and service sales have increased. At the same time, the market situation has improved in both Europe and Asia and also Africa and Oceania, "said Martin Lundstedt.
Truck sales increased by more modest three percent during the period. The trend is the same as in the last year - sales in Europe are increasing while deliveries in North America are shrinking. Now, however, development can be broken. In the last three months, order intake in North America has increased by 27 percent. Martin Lundstedt, however, is cautiously optimistic.

Europe backs

"It is important to remember that we are now comparing with previous weak quarters. Even though order intake is increasing and inventory levels appear more normal for both new and used trucks, deliveries in North America decreased by 34 percent during the quarter. But the market has probably bottomed down now, he says.
However, in the European market, to which the Tuve factory delivers, orders received decreased by one percent in total. Demand for heavy and medium-heavy trucks continues to be strong, while order bookings for light trucks fall by 37 percent. Volvo explains that many European customers "pre-purchased" light trucks in the first quarter of last year before the EU introduced new, stricter emission regulations.
The truck manufacturer, however, retains its previous forecasts for both the European market and North America - while increasing for China. Now it is expected that a total of 765,000 heavy trucks will be sold in China during the year - 110,000 more than Volvo previously believed.

The threat - political concern

Overall, it is now better for all Volvo's operations. The Group sells both more buses and boat engines while increasing profitability for the four different business areas significantly.
The factories are under pressure and production, and the number of employees, has increased in both the Tuve factory and the engine plants in Vara and Skövde. As the GP told us earlier this week, Volvo will also employ 500 new engineers.
What threatens the positive trend? Martin Lundstedt points out the increased political unrest in the world, like a worrying cloud.
"There is a greater measure of insecurity today, including in the relationship between different continents. We are affected by how the economy is developing globally and of possible threats to, for example, free trade. Therefore, we must maintain flexibility in the organization and ensure that we have country organizations that can handle development, he says.