Volvo Q3 Profit Falls 28.5% on Market Downturn, Mack Issues
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Volvo Group profit fell 28.5% in the third quarter of 2024 as a downturn in demand for trucks in both Europe and North America crimped revenue and margin.
Volvo also announced the acquisition of a cab supplier for its Mack Trucks brand, a move made to address supply chain delays.
The Swedish company reported a Q3 profit of $956.6 million, or 47 cents per diluted share, compared with $1.34 billion, or 66 cents, in the year-ago period. Volvo reports all earnings in Swedish kronor, and all conversions were correct as of Oct. 18. Gothenburg-based Volvo posted revenue of $11.1 billion in Q3, down 12% from $12.6 billion in the year-ago period.
“In Q3 2024, demand continued to normalize in most of the Volvo Group’s markets. We see that transport and construction activity has decreased in many regions around the world compared to the very high levels last year,” CEO Martin Lundstedt said in a statement.
“Demand continued to normalize into more of replacement-driven markets, across most of the group’s major segments, and regions, during quarter three,” he added during the company’s quarterly analyst earnings call.
During #Q3 2024, the adjusted operating income amounted to SEK 14.1 billion with a margin of 12.0%#VolvoGroupReport #quarterlyreport #Q3 #stocks #stockmarket #fintwit pic.twitter.com/ZhwYJPCaQg — Volvo Group (@VolvoGroup) October 18, 2024
The company’s operating margin in Q3 was 12%, compared with 13.8% in the year-ago period and 14.5% in the second quarter of 2024. Volvo’s truck unit posted an operating margin of 11.7% in the most recent quarter, compared with14.9% in the same period 12 months earlier, and 14.1% in Q2.
The company’s North American truck unit contributed $2.19 billion of Volvo’s Q3 revenue, down 15% compared with $2.59 billion in the prior-year period.
Order intake for Q3 in North America decreased 50% to 8,614 trucks from 17,355, due to long order lead times for Mack’s vocational products and because of Volvo Trucks’ order book for 2025 not opening until October, the parent company said. For Volvo Trucks North America, truck orders fell 39% year over year to 3,405 from 5,580. Mack’s Q3 North American orders slid 56% to 5,197 from 11,760 a year earlier. Through the first nine months of 2024, overall order intake in North America fell 32% to 27,990 vehicles from 41,222 trucks in the year-ago period.
North American deliveries decreased by 20% to 12,026 vehicles in Q3 from 15,041 trucks as a result of what the company called supply chain “disturbances.” Volvo truck deliveries in North America for Q3 fell 12% year over year to 6,744 from 7,640 units, while Mack deliveries fell 28% to 5,261 from 7,338 in the same period a year earlier.
“In North America, we adjusted production for the Volvo brand to reduce inventories for on-road vehicles while at the same time started series production of the all-new Volvo VNL range. A fantastic milestone,” Lundstedt said in a video released alongside the earnings report. He noted in the video that to effectively manage the introduction as planned, Volvo maintained resource levels at the factory despite lower output.
The company also took a major step to address supply chain issues at Mack.
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Lundstedt said Volvo in October completed the purchase of Commercial Vehicle Group’s Kings Mountain, N.C., plant, which had been slow in supplying bodies-in-white for Mack. With the deal, Volvo is taking over this operation.
“Mack has been hampered by supply disturbances of cabs, which resulted in significantly lower volumes than expected,” he said. “Order books for Mack are elevated. So it is a very high priority to serve our customers on this topic. Now, this production is brought in-house. I was personally involved — together with a fantastic team during the summer — to conclude this. We took it over at the end of [Q3]. By adding resources, and leadership, output will gradually improve here.”
Lundstedt added that while this issue has hampered Mack for a while, he’s optimistic things will improve for the brand.
“This has been a tricky situation for quite some time,” he said. “A tricky situation in terms of really getting our arms around it.” He added, “This is super important for Mack. We have more customers [and] more volumes out there than we — for quite some time now — have been able to execute for Mack. Mack has such a strong position and is deserving more when it comes to the market sales.”
Volvo Group paid around $40 million for the Kings Mountain plant, adding 230 employees as a result, a spokeswoman said.
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