Volvo shares rise on strong FY25 outlook
Investing.com -- Shares of Volvo (ST:VOLVb ) (OTC:VLVLY ) rose on Friday following the company's positive financial outlook for fiscal year 2025.
At 6:05 am (1005 GMT), Volvo was trading 1.2% higher at SEK 268.10.
The automaker’s optimistic projections for North American truck sales stood in contrast to a broader market expectation of weakening European volumes.
Volvo has confirmed its truck market outlook for FY25, projecting volumes of 290,000 units in Europe and 300,000 units in North America.
For 2024, Volvo has also revised its European truck market outlook upwards to 300,000 units, an increase of 10,000, while maintaining its forecast for North America at 290,000 units.
This reflects an anticipated 3% year-on-year decline in Europe and a 3% increase in North America.
“Volvo has a history of guiding conservatively which we think this could provide investors with comfort in the market outlook,” said analysts at Morgan Stanley in a note.
However, Volvo's adjusted industrial EBIT for the third quarter fell about 9% short of market consensus. The underperformance was largely driven by a 14% shortfall in its trucks division and a 10% miss in construction equipment.
This was due to weaker-than-expected sales volumes and ongoing operational challenges, particularly in the North American market. The decline in sales volumes in North America, alongside supply chain disruptions at Mack Trucks, contributed significantly to the lower margins.
Volvo’s total revenue for the quarter was SEK 111.6 billion, which is approximately 5% below consensus estimates. In addition, the trucks division saw a sharp decline in unit sales, dropping by 16.3% year-on-year.
Although the average selling price for trucks rose, indicating strong pricing power, the drop in volume weighed heavily on revenue and profit margins.
According to analysts at Stifel, the margin decline in North America is primarily due to weaker volumes and company-specific issues, but the improved pricing environment is a positive indicator for the broader sector.
Source: Investing.com
