Volvo Group sees tougher economic times ahead even as it posted record third-quarter truck production and deliveries and 35% higher sales.
Adjusted operating income rose to SEK 11.9 billion ($1.06 billion) compared to SEK 9.4 billion ($840 million) in the year-ago quarter. The adjusted operating margin was 10.3% compared to 11% a year ago.
In the trucking business, Volvo posted a 27% increase in orders to 64,700. Much of that traces to pent-up demand for replacement trucks that aged beyond typical trade-in cycles during the pandemic. Deliveries in Q3 rose to 53,300. Both order intake and production set Q3 records.
In North America, deliveries rose 30% while order intake fell 14% to 18,641 trucks. Volvo Trucks’ heavy-duty market share increased to 10.4% through August compared to 8.4% a year ago. Mack Trucks’ share fell to 5.9% from 7.2% in Q3 2021. Mack deliveries of 6,375 trucks amounted to a 19% improvement over 5,349 deliveries in the same period a year earlier.
Caution and flexibility
Demand changes resulting from increased uncertainty about the global economy requires flexibility, CEO and President Martin Lundstedt said in a letter to shareholders. Gothenburg, Sweden-based Volvo makes trucks, buses and construction equipment.
“In order to manage the quality in the orderbooks, and the increasing cost inflation, we continue to be restrictive in slotting orders for production too far into the future,” Lundstedt said.
Volvo gained market share in most regions on the way to SEK 75.1 billion in truck sales, a 41% improvement from a year ago. The net operating margin in trucking was 9.7% compared to 10.9% a year ago.
Lundstedt expressed concern about future quarters, however. He expects continued intermittent production stoppages and higher costs throughout the group.
“The situation in the global supply chain is still unstable, characterized by disruptions, unpredictability and lack of freight capacity,” he said. “Higher input prices, particularly energy costs, are putting our supplier base under financial pressure.”
Pressing an early electric advantage
Volvo pressed its early advantage in electrification.
It began series production of heavy-duty trucks in Europe during the quarter. It already builds the VNR Electric daycab on the same Virginia production line with diesel-powered internal combustion engines in the United States.
“Our ambition is to lead the transition to a decarbonized transport system, and we are accelerating our efforts to build upon our strong position,” Lundstedt said.
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