# Truck maker Volvo posts record Q1 as sales, margins beat forecasts
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-12
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: AB Volvo Achieves Record First-Quarter Profit Despite
Meta Description: AB Volvo's first-quarter profit soared 45% to 18.4 billion Swedish crowns, beating expectations. Shares up 9.6%. Supply chain improvements boosted results.
URL: https://financedigest.com/truck-maker-volvo-posts-record-q1-as-sales-margins-beat-forecastshtml

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By Terje Solsvik

OSLO (Reuters) – AB Volvo reported record first-quarter profit, a preliminary filing showed, as the truck maker boosted its revenue and margins despite supply bottlenecks and cost inflation, sending its shares up 9.6% in early trade on Wednesday.

Its adjusted operating profit rose 45% to 18.4 billion Swedish crowns ($1.76 billion) for the January-March quarter, well above the 12.9 billion expected by analysts polled by Refinitiv Eikon.

The Swedish company had said as recently as January it expected “disturbances, stoppages and extra costs” to persist, with soaring inflation and the [energy crisis](https://www.financedigest.com/europes-spend-on-energy-crisis-nears-800-billion-euros.html "Europe’s spend on energy crisis nears 800 billion euros") adding to the pain.

Volvo did not elaborate on what had spurred its turnaround and did not provide a [profit outlook](https://www.financedigest.com/ford-posts-lower-profit-issues-downbeat-outlook-shares-drop.html "Ford posts lower profit, issues downbeat outlook; shares drop") in its preliminary earnings which were released late on Tuesday. It declined to comment further.

We believe this quarter was influenced by price increases and (a) much better [supply chain](https://www.financedigest.com/g7-finance-leaders-pledge-financial-stability-supply-chain-diversity.html "G7 finance leaders pledge financial stability, supply chain diversity") situation leading to less stop and go on the production line allowing the firm to deliver very strong results,” analysts at JPMorgan said in a research note.

Volvo shares were up 8.0% at 210 crowns as of 0725 GMT versus a 0.8% [rise](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up") in Stockholm’s benchmark share index.

Volvo and rivals such as Germany’s Daimler Truck and Traton have struggled with semiconductor shortages and broader [supply chain issues](https://www.financedigest.com/uks-j-d-wetherspoon-returns-to-profit-as-supply-issues-ease.html "UK’s J D Wetherspoon returns to profit as supply issues ease") and strained freight capacity stemming from the COVID-19 pandemic and the war in Ukraine.

Volvo’s results could signal a broad [improvement for the industry](https://www.financedigest.com/plan-to-improve-german-rail-transport-may-worsen-congestion-industry-warns.html "Plan to improve German rail transport may worsen congestion, industry warns"), with a particularly positive “read across” to Daimler Truck, Traton and Italy’s Iveco as well as for their suppliers, JPMorgan said.

Shares in Daimler Truck and Traton were up 3.5% while Iveco was 2.3% higher.

Jyske Bank in a research note said that while the earnings were strong, the brokerage still worried that Volvo’s order intake could [fall and that the truck maker’s customers could see](https://www.financedigest.com/uk-employers-see-slight-fall-in-pay-awards-over-2023-xperthr.html "UK employers see slight fall in pay awards over 2023 – XpertHR") stagnant activity amid global economic weakness.

Volvo’s preliminary net [sales for the quarter rose to 131.4 billion crowns](https://www.financedigest.com/crown-agents-bank-owner-explores-sale-of-british-payments-group-sources.html "Crown Agents Bank owner explores sale of British payments group –sources") from 105.3 billion and topped the 118.6 billion expected by analysts.

Its adjusted [operating margin](https://www.financedigest.com/ubisoft-vows-to-get-back-to-operating-margin-above-20-in-medium-term.html "Ubisoft vows to get back to operating margin above 20% in medium term") rose to 14.0% from 12.0% and earnings at the group’s two major divisions, truck making and construction equipment, both showed progress.

Net sales in the truck segment rose to 89.6 billion crowns from 69.6 billion, [beating a forecast](https://www.financedigest.com/uk-unemployment-edges-up-but-pay-growth-beats-forecasts.html "UK unemployment edges up but pay growth beats forecasts") of 79.7 billion.

The division’s operating [profit jumped to 12.7 billion from 8.7 billion while analysts expected](https://www.financedigest.com/portuguese-airline-tap-swings-to-profit-earlier-than-expected.html "Portuguese airline TAP swings to profit earlier than expected") a decline to 8.4 billion.

Daimler Truck last month said its outlook had improved and that its profit would grow this year, but the company’s share [price still fell amid concerns that inflation would weigh on its margins](https://www.financedigest.com/explainer-oil-price-surge-changes-ecb-narrative-only-at-the-margins.html "Explainer-Oil price surge changes ECB narrative only at the margins").

($1 = 10.4303 [Swedish crowns)](https://www.financedigest.com/dollar-edges-down-from-six-week-peak-swedish-crown-jumps.html "Dollar edges down from six-week peak, Swedish crown jumps")

(Reporting by Terje Solsvik; editing by Sonali Paul and Jason Neely)


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