Swedish truck manufacturer AB Volvo has released its third-quarter financial results, revealing a substantial decline in adjusted earnings and forecasting flat demand for heavy trucks in key markets for the coming year. This news comes as the industry grapples with normalising market conditions following the unprecedented sales surge of 2023.
AB Volvo, known for its diverse portfolio of brands including Mack Trucks and Renault, reported an adjusted operating profit of 14.1 billion Swedish crowns (USD 1.34 billion) for the third quarter. This figure represents a marked decrease from the 19.3 billion crowns recorded in the same period last year and falls short of the 15.6 billion crowns projected by analysts in an LSEG poll. The announcement led to a 0.9% drop in Volvo shares by 0727 GMT on Friday.
The company’s CEO, Martin Lundstedt, addressed the current market situation in a statement, noting, “There is some uncertainty about the macroeconomic development in the near term, and this is reflected in our forecasts with relatively flat markets overall for next year.” This cautious outlook underscores the challenges facing the trucking industry as it navigates the post-pandemic economic landscape.
Looking ahead to 2025, AB Volvo predicts that the European and North American heavy truck markets will remain largely unchanged from this year’s expected full-year sales. The company forecasts approximately 290,000 vehicles for the European market and 300,000 for North America. This projection of stagnant demand comes as a stark contrast to the robust growth experienced in recent years.
The slowdown in demand is evident in the company’s third-quarter order intake for heavy-duty trucks, which saw a 7% decrease compared to the same period last year. This decline reflects the broader trend of normalising markets following the historically high sales recorded in 2023 when customers returned en masse after pandemic-related disruptions.
AB Volvo’s report is particularly significant as it marks the first quarterly report this year from the company that has not exceeded market expectations. As the first of the European truck makers to release third-quarter results, Volvo’s performance and outlook are likely to be closely scrutinised by industry analysts and competitors alike. Traton and Daimler, two other major players in the European truck manufacturing sector, are scheduled to report their results in late October and early November, respectively.
The company has taken proactive measures to address the changing market dynamics. Lundstedt highlighted that cuts in production rates at Volvo’s European plants during the first half of the year have brought output in line with demand in the region. Meanwhile, in North America, additional resources have been maintained to support the production of a new truck range.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, commented on the results, stating, “Volvo’s not quite firing on all cylinders, as global freight and construction activity normalised from the heights of last year.” This observation encapsulates the broader challenges facing not just AB Volvo but the entire trucking industry as it adjusts to post-pandemic realities.
The implications of AB Volvo’s financial results and market forecast extend beyond the company itself. As a bellwether for the trucking industry, these figures provide valuable insights into the state of global trade and economic activity. The projected flat demand for heavy trucks in major markets suggests a period of consolidation and potential economic uncertainty ahead.