FX.co ★ Volvo Cars Q1 Profit Down, Core Operating Profit Up; Sees Growth In FY24 Profit, Demand

Volvo Cars AB, a renowned luxury auto manufacturer from Sweden, reported on Wednesday that its net income for the first quarter saw a decline of 10 percent, reducing to 3.6 billion Swedish kronor from the previous year's 4 billion kronor.

The basic earnings per share were at 1.12 kronor, a 7 percent decline from 1.21 kronor in the same period last year. The operating profit also saw a dip of 8 percent compared to the previous year, settling at 4.7 billion kronor. Conversely, Volvo Cars reported an 8 percent increase in the core operating profit, which stood at 6.8 billion kronor, a noticeable incline from 6.3 billion kronor the previous year. Moreover, the EBIT margin for the same period was 7.2 percent, which is an improvement from the 6.6 percent recorded a year earlier.

Total revenue for the interval was noted at 93.9 billion kronor, a 2 percent decline from the 95.7 billion kronor earned in the previous year. Notably, this drop was mainly attributed to a decrease in revenue from contract manufacturing. However, during the first quarter, retail sales recorded an impressive growth of 12 percent on a year-on-year basis, resulting in a total sale of 182,687 cars, marking a record-breaking sales figure for a single month in March.

The company credited its heightened sales to its remarkable performance in Europe and the US, adding that this led to new sales records for the first quarter in 11 markets, including Canada, Turkey, Germany, France, and the Netherlands. The sales share for fully electric cars was at 21 percent, showing a rise from the previous year's 18 percent figure.

Looking at future prospects, Volvo Cars expressed a positive outlook, with a strong focus on maintaining profitable growth in fiscal 2024, expecting it to be another strong year after their record-breaking performance in 2023. The company aims for a higher year-on-year growth rate in retail sales for 2024 than the one accomplished in 2023, provided there are no substantial disruptions. Additionally, the company plans to significantly increase the sales share of fully electric cars compared to 2023.

Volvo Cars is predicting that the demand for their cars will continue to thrive in the coming quarters and expects to maintain its full-year sales growth guidance of at least 15 percent. Furthermore, with an improved cash flow in the coming quarters, the company is optimistic about achieving a cash-neutral standing for the full year.

By 2026, Volvo Cars targets an increased revenue in the range of SEK 550-600 billion and an EBIT margin above 8 percent.