AB Volvo profit misses forecast and expects flat truck sales next year

Reuters

AB Volvo profit misses forecast and expects flat truck sales next year

Oct 18, 2024 at 5:28 am GMT

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Volvo Q3 adj op profit 14.1 bln SEK vs forecast 15.6 bln

Order intake and sales dip

Anticipates flat 2025 heavy truck markets in Europe, N. America

Recasts, adds detail throughout, share price

By Marie Mannes

STOCKHOLM, Oct 18 (Reuters) -Swedish truck maker AB Volvo VOLVb.ST forecast stagnant demand next year and posted a bigger-than-expected slide in quarterly adjusted earnings on Friday, after reduced freight and construction activity limited vehicle sales.

Truck makers have experienced a slowdown in demand as markets have normalised following historically high sales in 2023 when customers returned following the pandemic.

Volvo predicted that for 2025, European and North American heavy truck markets would total 290,000 and 300,000 vehicles, respectively, roughly unchanged from this year's expected full-year sales.

Friday's set of numbers was the company's first quarterly report this year that did not beat expectations. Volvo shares fell 0.9% by 0727 GMT.

Adjusted operating profit for the third quarter was 14.1 billion crowns ($1.34 billion) against a year-earlier 19.3 billion and a mean forecast in an LSEG poll of analysts of 15.6 billion.

Volvo Group is the first of the European truck makers to report third-quarter results, with Traton 8TRA.DE reporting late October and Daimler DTGGe.DE early November.

Volvo, which makes vehicles under brands such as Mack Trucks and Renault as well as its own name, said third-quarter order intake for its heavy-duty trucks fell 7% versus a year ago.

"There is some uncertainty about the macroeconomic development in the near term and this is reflected in our forecasts with relatively flat markets overall for next year," CEO Martin Lundstedt said in a statement.

Cuts in production rates at Volvo's European plants in the first half of the year meant output was in balance with demand in the region, Lundstedt said, while additional resources had been maintained in North America to produce a new truck range there.

"Volvo's not quite firing on all cylinders, as global freight and construction activity normalised from the heights of last year," Hargreaves Lansdown equity analyst Aarin Chiekrie said in a note.

($1 = 10.5328 Swedish crowns)

Reporting by Marie Mannes; additional reporting by Niklas Pollard; editing by Anna Ringstrom, Janane Venkatraman and Barbara Lewis

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