The Volvo Group surprised the markets with a very strong first-quarter preliminary earnings preview — the opposite of a dour prediction just months ago.
Sales amounted to 131.4 billion Swedish crowns ($12.6 billion) compared to SEK 105.3 billion ($10.1 billion) in the same period of 2022.
Adjusted operating income was SEK 18.4 billion ($1.78 billion) versus SEK 12.7 billion a year earlier. Adjusted operating margin was 14% compared to 12%a year ago.
Reported operating income of SEK 17.1 billion included SEK 1.3 billion in restructuring costs for the buses segment.
Net sales in the truck segment rose to 89.6 billion crowns from 69.6 billion, beating a forecast of 79.7 billion. The division’s operating profit jumped to SEK 12.7 billion from SEK 8.7 billion. Analysts expected a decline to 8.4 billion, according to Reuters.
Better-than-expected results suggest improved supplier performance
The strong preliminary results suggested Volvo benefited from better supplier performance than expected, allowing greater truck production. It also may have benefited from charging higher prices.
Volvo and rivals such as Germany’s Daimler Truck and Traton Group have struggled to keep production going despite semiconductor shortages and broader supply chain issues as well as a hangover of strained freight capacity from the COVID-19 pandemic and the war in Ukraine.
Volvo’s results could signal a broad improvement for the industry, with a particularly positive “read across” to Daimler Truck, Traton and Italy’s Iveco as well as for their suppliers, JPMorgan said in an investors note quoted by Reuters.
Volvo shares closed 7.35% higher on Stockholm’s benchmark share index.
The Gothenburg, Sweden-based company will report final financials for Q1 on April 20.