Volvo Cars reported an operating profit, excluding JVs and associates, of SEK 3.5 billion and a profit margin of 4.4 per cent, a result that reflects the multiple headwinds facing the global car industry.
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Highlights:
Retail sales decreased by 8% to 138 (150) thousand cars
Revenue up 30% to SEK 79.3 bn
Operating income (EBIT) was SEK 2.1 (3.3) bn
EBIT margin was 2.6 (5.5)%
EBIT margin excl. share of income from joint ventures and associates was 4.4 (7.1)%
Basic earnings per share was SEK 0.11 (0.86)
Electrified ‘Recharge’ line-up accounted for 25.1% of total sales in Q3, of which 7.4% were fully electric
“Macroeconomic uncertainties around the world weighed on our third quarter performance,†said Jim Rowan, president and chief executive. “But with a nimble and agile organisation, strong financial position and ample liquidity, we are confident we will tide over the ongoing challenges.â€
We are on an exciting path to transform our company towards becoming a fully electric car brand by the end of this decade and reach climate neutrality by 2040,†Jim Rowan added. “We remain focused on that strategic direction.â€
While sales volumes fell by 8 per cent during the quarter versus the same period last year, revenues increased by 30 per cent during the period. This illustrates the strength of the Volvo brand and underscores the company’s pricing power and the robust demand for its SUVs, especially the Recharge line-up.
Lower volumes during the quarter also affected the company’s EBIT performance, excluding JVs and associates, which came in at SEK 3.5 billion, with an EBIT margin of 4.4 per cent.
Higher raw material costs, spot buying of semiconductors to fill a production shortfall and logistics costs, contributed to a lower operating profit. The EBIT margin including joint ventures and associates reached 2.6 per cent during the period.
Manufacturing output continued to improve in the third quarter, compared to the previous quarter. However, unforeseen factors such as power outages and COVID-19 related lockdowns in China slowed down the pace of normalisation Volvo Cars was anticipating.
Provided there are no further major supply chain disturbances, the company expects the improved production run rate to continue into the fourth quarter and into 2023.
For the second half of the year, Volvo Cars expects production, wholesale and retail growth compared with the same period last year. For the full year 2022, the company expects slightly lower wholesale volumes than 2021, assuming no further major supply chain disturbances. Wholesale and retail volumes will be on similar levels. ■