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Earnings Crash at Volvo Automobiles on Rising Materials Prices and Inflation in Third Quarter


Swedish automaker Volvo Automobiles on Thursday stated rising uncooked materials prices and inflation drove down earnings within the third quarter. The group posted a web revenue of 665 million kronor ($61 million) within the July-September interval, a drop of 71 p.c in comparison with 2.3 billion kronor throughout the identical quarter a 12 months in the past.

The determine was far under analysts’ forecasts of between 2.15 and a pair of.19 billion kronor, based on Bloomberg and Factset. The corporate’s share value was down by round seven p.c in noon buying and selling on the Stockholm inventory alternate.

Chief govt Jim Rowan stated the corporate was hit laborious by rising uncooked materials costs, file inflation, larger rates of interest, and the conflict in Ukraine. “The macroeconomic uncertainties around the globe weighed on our third quarter efficiency”, he stated in an announcement.

Income in the meantime rolled in barely larger than analysts’ expectations, rising by 30 p.c to 79.3 billion kronor, boosted by “sturdy” demand for the corporate’s SUVs. Analysts had predicted third-quarter gross sales of between 78.1 and 78.7 billion kronor.

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Analysts had predicted third-quarter gross sales of between 78.1 and 78.7 billion kronor.

Retail gross sales declined nonetheless in some markets, together with its primary markets Europe and the USA, the place the variety of autos offered fell by 14 and 32 p.c respectively.

The carmaker insisted nonetheless that its order guide remained stable. Volvo Automobiles, which goals to have an all-electric fleet by 2030, additionally reported a “sharp pick-up” for its fully-electric autos on the finish of the quarter, particularly in September. It stated gross sales of fully-electric vehicles soared by 87 p.c within the third quarter, accounting for seven p.c of its complete gross sales throughout the interval.

The corporate, a subsidiary of Chinese language group Geely, stated manufacturing output continued to enhance within the third quarter, however “unexpected elements” comparable to energy outages and Covid-19-related lockdowns in China “slowed down the tempo of normalisation”.

It anticipated manufacturing, wholesale and retail progress within the second half of the 12 months. “For the total 12 months 2022, we anticipate barely decrease wholesale volumes than 2021, assuming no additional main provide chain disturbances. Wholesale and retail volumes shall be on related ranges”, it stated.

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