Volvo, the renowned automotive manufacturer, is set to release its third-quarter earnings report on Wednesday. Here are the key details to keep an eye on:
Net Income Forecast According to analysts polled by FactSet, Volvo is expected to report a net profit of 12.05 billion Swedish kronor ($1.1 billion) for the quarter. This would mark an increase from the previous year’s figure of SEK8.63 billion.
Sales Outlook The FactSet poll also indicates that sales are projected to rise to SEK127.05 billion, up from SEK114.92 billion in the same quarter last year.
Key Points of Interest
Truck Performance Volvo has made significant progress in improving margins while effectively managing cost inflation and disruptions in the supply chain. Investors will be looking for indications that this trend continues. The company has also stated that it is gradually transitioning into a more normalized demand situation, boasting record-strong profitability and exceptional operational performance.
Impact of Strike Last week, nearly 4,000 members of the United Auto Workers initiated a strike at Volvo’s Mack Trucks unit after rejecting a proposed five-year contract. Although strikes have taken place before, it is notable that they have had minimal effect on stock performance. As a result, market watchers will monitor order recovery and deliveries in North America closely.
Strains in the Supply Chain Volvo highlighted challenges in its supply chain and industrial system in its 2Q report. Factors such as labor shortages, material and component scarcities, and transportation service disruptions have placed strain on operations.
Declining Orders According to Kepler Cheuvreux analyst Mats Liss, third-quarter truck orders are expected to decline by approximately 24% compared to the previous year. This dip correlates with weaker demand for trucks and construction equipment.
Future Guidance Volvo has already shared its projections for the heavy-duty truck markets across Europe, North America, Brazil, India, and China. Notably, Citi anticipates Volvo to predict a 15% decrease in European truck volumes for 2024, a 12% decline in North America, a 5% increase in South America, and a 10% increase in China.
