Written by Cláudio Afonso | info@claudio-afonso.com
The Swedish automaker Volvo announced on Friday its Q1 2022 results unveiling that net sales increased by 12%. “Economic activity continued to be good in Q1 2022 with high transport volumes and good construction activity in most markets. We increased sales and improved profitability”, CEO said. An on-line presentation of the report, followed by a question and answer session will be webcast starting at 9.00 CEST.
- In Q1 2022, net sales increased by 12% to SEK 105.3 billion (94.0). Adjusted for currency movements and the divestment of UD Trucks, the increase was 11%.
- Adjusted operating income amounted to SEK 12,681 M (11,821), corresponding to an adjusted operating margin of 12.0% (12.6).
- Reported operating income amounted to SEK 8,556 M (12,067), including a negative effect from provisioning of assets related to Russia in an amount of SEK 4,125 M.
- Currency movements had a positive impact on operating income of SEK 1,267 M.
- Earnings per share amounted to SEK 3.46 (4.35).
- Operating cash flow in the Industrial Operations amounted to SEK -5,400 M (5,665).
- Return on capital employed in Industrial Operations of 25.3% (17.1).
CEO’s Comments
“Economic activity continued to be good in Q1 2022 with high transport volumes and good construction activity in most markets. We increased sales and improved profitability. Our net sales grew by 12% to SEK 105.3 billion. The high business activity combined with our growing service contract portfolio resulted in continued good service growth, which was up by 19%. Adjusted operating income increased to SEK 12.7 billion (11.8) and we achieved an adjusted operating margin of 12.0% (12.6) despite a challenging supply chain situation. Operating cash flow in the Industrial Operations amounted to SEK -5.4 billion (5.7), in part due to a build-up of inventory related to the unstable supply chain.
Since the war in Ukraine started and sanctions were imposed, all sales, services and production in Russia have been suspended. We have total assets of approximately SEK 9 billion related to Russia, of which SEK 4.1 billion were provisioned for in Q1 with a negative impact on operating income.
The ongoing war is devastating for Ukraine and my thoughts go out to everyone who is suffering. We are doing what we can to support affected colleagues, families and communities. The Group and many individual employees have donated funds to the Red Cross and UNHCR. Furthermore, our colleagues in neighboring countries have teamed up with these organizations so that we can provide concrete local in-kind support that matches their needs. There are many examples of our colleagues going above and beyond to support the victims of this humanitarian catastrophe and we appreciate all their dedicated efforts.
With transport activity across most regions on good levels, demand for trucks is high. We have large order books and delivery times are long, and this has made us restrictive with order slotting, which affected order intake negatively. We are doing everything we can to reduce the long lead times to our customers. The supply chain continued to be strained, which caused disturbances and stoppages in production also i Q1. Despite these issues, truck deliveries increased by 6% to 55,600 vehicles which is a record for a first quarter. Net sales grew by 31% to SEK 69.6 billion. We have had extra costs due to the supply chain disruptions as well as higher costs for material and have worked proactively with price management to mitigate them. We expect that the inflationary pressure will continue. Despite these headwinds, our truck business achieved an adjusted operating margin of 12.5% (12.8).”
More information, including an interview with CEO Martin Lundstedt, is available on https://www.volvogroup.com/en/investors.html
Volvo, through the Volvo Cars Tech Fund, announced on April 19 that has made a strategic investment in StoreDot, the pioneer of extreme fast charging technologies for electric vehicles. StoreDot is on track to begin mass producing its ‘100in5’ cells as early as 2024, achieving 100 miles of charge in just five minutes. The investment gives Volvo Cars the opportunity to collaborate closely with StoreDot on exciting new battery technology, as it aims to become a pure electric car company by 2030.
The automaker announced recently that delivered 58,677 vehicles in March 2022, a 22.1% decline year-over-year. When it comes to rechargeable vehicles, sales of Volvo Cars’ recharge models made up 35.5% of all Volvo cars sold globally during the month. Sales of fully electric cars made up 9.0% of total sales. In the first quarter, Recharge sales made up 33.6% of total sales, while fully electric cars made up 7.9 per cent. Volvo’s CEO was among the invited CEOs to speech at the 8th China EV 100 (held in Beijing from March 25 to 27), being the first public appearance of Mr. Jim Rowan since he took up his new position at Volvo Cars.
Written by Cláudio Afonso | info@claudio-afonso.com