Volvo Group reported record second-quarter profits with strong sales offset by one-time charges for getting out of the bus business in the U.S. and settling price-fixing allegations in Europe.
The strong results came despite lower truck orders and declining market share. Still, Volvo increased industrywide estimates for heavy truck sales in Europe and North America. It now expects 330,000 in each market, up from 320,000, based on larger fleets continuing to replace older vehicles.
Volvo’s Q2 net sales increased by 19% to 93,748 million Swedish crowns (SEK) or $9.2 billion. Adjusted operating income increased to SEK 14,950 million ($1.5 billion) from SEK 9,551 million in the corresponding quarter a year ago. The profit margin was 15.9% compared to 12.2%.
The adjusted operating income excludes a negative effect of SEK 1,270 million from a previously announced restructuring provision in Nova Bus and an SEK 6,000 million fine relating to claims from the European Commission’s 2016 antitrust settlement decision. Currency movements contributed SEK 817 million to operating income.
Volvo Group Truck deliveries rise
New truck deliveries rose 5% to 63,800 globally while order intake decreased by 10% to 48,300.
“We have continued to be restrictive in slotting orders and also [are seeing] more cautiousness among customers,” Volvo CEO Martin Lundstedt said. “Thanks to a strong commercial focus, we have been successful in improving margins while managing cost inflation and increased disturbances in the supply chain.”
Net truck sales rose 19% to SEK 93.7 billion.
In North America, where Volvo sells trucks under the Volvo and Mack brands, order intake decreased by 11% to 8,708 trucks while deliveries increased by 6% to 15,960 vehicles. Volvo Trucksʼ heavy-duty truck market share through May decreased to 9.2% from 10.5%. Mack Trucksʼ market share increased to 5.9% from 5.8%.
Electric truck share growth at Volvo Group
In the nascent heavy-duty electric truck segment, Volvo reported a share increase to 50.7% from 36.9%. The delivery and order picture mirrored traditional diesel-powered trucks. Deliveries across all brands rose 251% to 759 units from 216 units. Order intake fell 38% to 677 from 1,097.
In May, Volvo Trucks signed a letter of intent to sell 1,000 electric trucks until 2030 to Holcim, one of the worldʼs largest building solution providers. The deal is the largest commercial order to date for Volvo electric trucks. The first 130 trucks will be delivered in 2023 and 2024.
Joint venture with Westport Fuel Systems
Volvo Group and Westport signed a letter of intent to establish a joint venture for high-pressure gas injection fuel systems (HPDI). Westport will contribute with current HPDI assets, activities, including fixed assets, intellectual property and business into the joint venture. Volvo will acquire 45% in the joint venture for approximately SEK 300 million ($28 million).
It may add SEK 500 million ($45 million) depending on the joint venture’s performance. Volvo said the transaction has no significant impact on its earnings or financial position.
“Decarbonization with internal combustion engines running on renewable fuels, especially with HPDI, plays an important part in sustainable solutions,” Lars Stenqvist, Volvo chief technology officer, said in a news release. “HPDI has been on the road in Volvo trucks for over five years and is a proven technology that allows customers to significantly reduce CO2 emissions.”
For Westport, the JV replaces a 10-year agreement with Cummins Inc. that ended in December 2021. Cummins bought Westport’s stake for $20 million in February 2022.
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Click for more FreightWaves articles by Alan Adler.
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