Volvo Earnings Beat Estimates as New Trucks Mitigate DropChristoph Rauwald
Volvo AB, the world’s second-largest truckmaker, posted second-quarter earnings and sales that beat analyst estimates as new models helped mitigate the effects of a recession in Europe and currency shifts.
Earnings before interest and taxes of 3.26 billion kronor ($505 million) at Gothenburg, Sweden-based Volvo said exceeded the 3.22 billion-krona average of nine analyst estimates compiled by Bloomberg. Revenue amounted to 72.8 billion kronor, compared with the 71.6 billion-krona average estimate.
Volvo rolled out new versions of its FH model line starting in 2012 in a bid to counter economic contractions across Europe that pushed five-month industrywide deliveries down 13 percent. The manufacturer’s second-quarter worldwide truck orders rose 16 percent, including a 13 percent boost in its home region, Volvo said today in a statement.
“The results were slightly better than I expected, as pricing held up surprisingly well, considering the poor market conditions,” Hans-Peter Wodniok, a Frankfurt-based analyst at Fairesearch GmbH & Co said by phone. Wodniok said he’ll stick to his sell recommendation for Volvo stock, though plans to lift earnings estimates.
Volvo rose as much as 3.5 percent to 96.55 kronor, the biggest intraday gain since April 25, and was trading up 3 percent at 9:42 a.m. in Stockholm. The stock has increased 8.2 percent this year, valuing the manufacturer at 204.4 billion kronor. That compares with a 1.1 percent share decline in 2013 at Soedertaelje, Sweden-based competitor Scania AB and a 27 percent jump for Daimler AG, the luxury-car producer that’s also the world’s largest maker of heavy trucks.
Ebit at Volvo in the quarter dropped 58 percent, reduced by 1.21 billion kronor because of exchange-rate moves, the company said. Revenue fell 12 percent while deliveries declined 4.3 percent to 51,984 vehicles. Orders rose to 56,349 trucks.
Sales-contract “momentum” continued this quarter, and the company has a “healthy” backlog, prompting Volvo to consider increasing its production rate in Europe, Chief Executive Officer Olof Persson said today at a Stockholm press conference.
The Swedish company has an emerging competitor in Volkswagen AG, Europe’s biggest carmaker, which controls Scania and Munich-based MAN SE and is working to have the truck units cooperate more closely. Scania said on July 19 that it will increase production after quarterly orders rose.
Daimler, whose commercial-vehicle brands include Mercedes-Benz and Freightliner, said today that its truck division’s second-quarter deliveries rose 1 percent to 123,763 vehicles. Ebit at the unit fell 17 percent to 434 million euros ($573 million) as sales declined 2 percent to 7.97 billion euros, the Stuttgart, Germany-based manufacturer said.
Volvo’s new models this year will include four trucks in the FH line, while the Renault brand presented a new range of transport and construction vehicles in June, the Swedish company said.
The company, which also owns the Mack nameplate in the U.S., reiterated forecasts that industrywide North American truck deliveries this year will about match the 250,000 vehicles sold in 2012, with the European market probably increasing 4 percent to 230,000 trucks and Brazilian demand totaling 105,000 trucks.