Truck maker Volvo posts record Q1 as sales, margins beat forecasts

In a preliminary filing, AB Volvo announced a record profit for the first quarter, boosting revenue and margins despite supply chain disruptions and rising costs. Volvo’s adjusted operating profit for the January-March period rose by 45% to 18.4 billion Swedish crowns ($1.76 billion)—£5 billion— well above the 12.9 billion expected by Refinitiv Eikon analysts. This performance may reflect the improvement in the supply chain situation, decreasing stoppages and allowing the company to deliver positive results.

Volvo did not provide further detail on what led to its improved performance, nor did it provide a forecast in the preliminary earnings report it issued on Tuesday. Analysts from JPMorgan suggest that price increases and improved supply chain management played roles in this quarter’s success. The results offer broad hope for the industry, including similar positive news for Daimler Truck, Traton, and Iveco, as well as their suppliers. Volvo’s preliminary net sales rose to 131.4 billion Swedish crowns, exceeding the 118.6 billion anticipated by analysts.

Despite the pandemic, the war in Ukraine, and disruptions to the supply chain due to semiconductor shortages, Volvo’s truck and construction equipment divisions both reported progress. The operating margin rose to 14.0% from 12.0%, and net sales in the truck segment increased to 89.6 billion crowns from 69.6 billion, beating a forecast of 79.7 billion.

Daimler Truck reported an improved outlook and profit growth prediction last month but still faced concerns about how inflation may impact its margins.

Volvo’s shares were up 8.0% at 210 crowns as of 0725 GMT, compared to a 0.8% increase in Stockholm’s benchmark share index. The report shows the potential for broad improvement in the industry, indicating good news for Volvo’s competitors and suppliers.