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Volvo Group – 2018 2nd Quarter


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Volvo Group Press Release  /  October 20, 2017

  • In Q2 2018 net sales increased by 18% to SEK 103.6 billion (87.9). Adjusted for currency movements and acquired and divested units sales increased by 16%.

  • Adjusted operating income amounted to SEK 11,519 M (8,402), corresponding to an adjusted operating margin of 11.1% (9.6). Adjusted operating income in Q2 2018 excludes a capital gain of SEK 818 M.

  • Reported operating income amounted to SEK 12,337 M (8,402).

  • Currency movements had a positive impact on operating income of SEK 672 M.

  • Diluted earnings per share of SEK 4.53 (2.86).

  • Operating cash flow in the Industrial Operations amounted to SEK 8.3 billion (11.9).

CEO’S Comments

Demand in our main markets was solid in the second quarter of 2018, and both our vehicle and service business continued to grow at a good pace. Our net sales increased by 18% to SEK 104 billion, we improved the adjusted operating income by SEK 3 billion to SEK 11.5 billion and we reached an adjusted operating margin of 11.1% (9.6). This is the first time that the Volvo Group’s sales have exceeded SEK 100 billion in a single quarter and it is also the first time the operating margin is above 10%. With an operating cash flow of SEK 8.3 billion in the Industrial Operations we continue to have a strong financial position.

Our truck business had a good sales development and increased profitability despite a continued stretched situation in parts of the supply chain, primarily in North America. Truck deliveries increased by 14% and net sales by 16% to SEK 65.2 billion. All truck business areas improved their profitability, which contributed to increasing the operating income to SEK 7.2 billion (5.3) with an operating margin of 11.1% (9.4).

Demand in the European truck market continued to be on a good level with high freight activity, which supports our customers’ profitability. In North America demand increased strongly, primarily driven by growth in the highway segment. In total, net order intake for trucks increased by 10% globally. Together with our suppliers we are working hard to meet demand and reduce delivery times to our customers. However, given the strong demand, we expect the supply-chain constraints to remain in the near-term.

Construction Equipment continued the solid development with both increased sales and improved profitability. High demand in most markets in combination with competitive products contributed to the order intake increase of 41%. Net sales rose by 32% to SEK 24.4 billion and the adjusted operating margin improved to 15.1% (13.3). The increased sales volumes and maintained cost level resulted in a substantial profit increase.

Buses’ sales of SEK 6.9 billion were on about the same level as in the preceding year while the operating margin amounted to 3.8% (4.6).

Volvo Penta’s sales continued to increase and the growth is paired with improved profitability. Net sales increased by 15% to SEK 3.6 billion and the operating margin improved to 19.9% (15.5) during the seasonally strong second quarter.

Our customer financing operations in Financial Services increased the new financing volume and continued to have low credit losses as a result of strict credit approvals and good customer profitability. Return on equity increased to 15.0% (14.0).

We continue to invest in new products and technologies to the benefit of our customers. In the second quarter the activity level was high. Among the news was that Mack Trucks will have a fully electric refuse truck in operation in 2019 at one of our major customers in North America, New York City Department of Sanitation.

Renault Trucks presented their second generation of fully electric vehicles with a complete range from 3.5 to 26 tonnes for use in cities.

Volvo Buses launched the biggest renewal of the European product portfolio for long-distance coaches in more than 20 years.
In the US we showcased platooning together with FedEx on a highway in North Carolina. This was the first on-highway demonstration of platooning technology between a major truck manufacturer and a transportation company in the U.S.

Volvo Penta demonstrated an advanced system for self-docking; a solution for one of boating’s most stressful maneuvers, with a planned launch in 2020.

All of these new products will strengthen our future competitiveness.

Our strategy of growing in services is also generating results, and in the quarter the currency-adjusted service sales grew by 8%, with all our business segments improving their performance. We see further potential for growth on the back of investments in increased workshop capacity, growing vehicle populations and higher penetration of service contracts.

The Volvo Group is well-invested with strong assets and our strategy serves both our customers and ourselves well. We continue our efforts to improve efficiency in all parts of the Group and in the entire supply chain, and even though we are moving in the right direction there is still potential for improvement. Finding the balance between investing in new technologies and areas with good potential while at the same time maintaining cost consciousness and flexibility will continue to be in focus during the year.

Martin Lundstedt
President and CEO

Volvo Group 2nd Quarter Report - Volvo-Q2-2018--PDF-(PDF, 1.1 MB)

 

 

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The Numbers

In Q2 2018, sales (deliveries) from Volvo Group’s truck operations amounted to 59,571 units, up 14 percent from 52,058 units in Q2 2017.

 

Q2 2018 Volvo brand truck sales (overall) rose to 33,933 units globally, up 19 percent from 28,510 units in Q2 2017.

Q2 2018 Volvo brand truck sales in North America rose to 8,204 units, up 45 percent from 5,665 units in Q2 2017.

Q2 2018 Volvo brand truck sales in Europe rose to 16,018 units, up 2 percent from 15,745 units in Q2 2017.

Q2 2018 Volvo brand truck sales in Africa/Oceania (includes Australia, New Zealand) rose to 1,648 units, up 23 percent from 1,345 units in Q2 2017.

 

Q2 2018 Mack brand truck sales (overall) rose to 6,300 units globally, up 14 percent from 5,507 units in Q2 2017.

Q2 2018 Mack brand truck sales in North America rose to 5,840 units, up 16 percent from 5,023 units in Q2 2017.

Q2 2018 Mack brand truck sales in South America declined to 182 units, down 18 percent from 221 units in Q2 2017.

Q2 2018 Mack brand truck sales in Africa/Oceania (includes Australia, New Zealand) rose to 278 units, up 6 percent from 263 units in Q2 2017.

 

Q2 2018 Renault Truck brand sales (overall) rose to 14,212 units globally, up 8 percent from 13,110 units in Q2 2017.

Q2 2018 Renault Truck brand sales in Europe rose to 12,897 units, up 8 percent from 11,941 units in Q2 2017.

(Q2 2018 Renault Truck brand medium/heavy truck sales in Europe rose to 8,258 units, up 6 percent from 7,808 units in Q2 2017. Q2 2018 Renault Truck brand light truck sales in Europe rose to 4,639 units, up 12 percent from 4,133 units in Q2 2017.)

Q2 2018 Renault Truck brand truck sales in South America rose to 129 units, up 126 percent from 57 units in Q2 2017.

Q2 2018 Renault Truck brand truck sales in Asia rose to 496 units, up 8 percent from 458 units in Q2 2017.

Q2 2018 Renault Truck brand truck sales in Africa/Oceania (includes Australia, New Zealand) rose to 647 units, up 4 percent from 624 units in Q2 2017.

 

Q2 2018 UD (Nissan Diesel) brand sales (overall) rose to 5,126 units, up 4 percent from 4,931 units in Q2 2017.

Q2 2018 UD (Nissan Diesel) brand sales in Asia rose slightly to 4,037 units from 4,021 units in Q2 2017.

 

Total Global Deliveries by Brand

                                  Q2 2018          Q2 2017          % Change       

Volvo                           33,933             28,510               19 

Renault Trucks            14,212              13,110                8

UD (Nissan Diesel)      5,126                4,931                 4

Mack                             6,300               5,507                 14

Total Deliveries          59,571             52,058                14

 

Total Global Deliveries by Truck Size

                                                      Q2 2018          Q2 2017          % Change       

Heavy Duty (>16 metric tons)        50,961            44,075                  16

Medium Duty (7-16 metric tons)     3,846               3,762                    2

Light Duty (<7 metric tons)             4,764               4,221                  13

Total Deliveries                              59,571             52,058                 14

 

Total Global Deliveries by Region

                                                Q2 2018          Q2 2017          % Change       

Europe                                     28,915             27,686                 4

            Heavy & medium       24,276             23,553                  3

            Light duty                    4,639               4,133                 12

North America                         14,114           10,720                  32

South America                         3,857               2,692                  43

Asia                                          9,077               7,823                  16

Africa & Oceania*                   3,608               3,137                  15 

Total Deliveries                      59,571             52,058                 14 

* includes Australia, New Zealand

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