Volvo Cars in Q2 2022, solid results in an uncertain world
- Sales drop 27 percent to 143,006 vehicles [Quartal 2 2021 195.000 Fahrzeuge]
- Sales decreased by 2 percent to SEK 71.3 billion (EUR 6.81 billion)
- Operating profit (EBIT) of SEK 10.8 billion (EUR 1.03 billion) [4,8 Milliarden SEK]
- EBIT rate of 15.1 percent [6,6 Prozent]
- EBIT margin excluding joint ventures and related companies of 6.5 percent [7,9 Prozent]
- Adjusted earnings per share SEK 3.00 (EUR 0.29) [0,99 SEK]
- The Power Back offer accounts for 31 percent of all sales in the second quarter – of which 7.3 percent is fully electric.
Cologne, July 20, 2022
Swedish luxury car maker #Volvo #Cars announced its financial results for the second quarter of fiscal year 2022 on Wednesday, July 20, 2022. From April to June, the company reported solid earnings despite uncertainty ongoing global trade, rising commodity prices and supply constraints due to the recent #epidemic shutdown in #China.
The interim report for the second quarter shows sales of 143,006 vehicles worldwide, which corresponds to a 27 percent decrease compared to the same period last year. Revenue was SEK 71.3 billion (EUR 6.81 billion), down just 2 percent year-on-year, reflecting a strong price and product mix.
Lower volumes in the quarter also impacted EBIT from the core Volvo Cars business, which remained broadly stable. EBIT of the core business was SEK 4.6 billion (EUR 439.19 million) or 6.5 percent. Taking into account joint ventures and partners, EBIT was SEK 10.8 billion (EUR 1.03 billion), or 15.1 percent. Earnings were positively impacted by the accounting impact of Polestar’s listing on New York’s Nasdaq last month. Volvo Cars is the majority shareholder of the electric brand.
“Looking back at Volvo Cars’ performance in a turbulent second quarter, we are pleased with the solid results,” said Jim Rowan, President and CEO of Volvo Cars. » The demand for our products is still stable. We remain focused and aware that immediate business challenges will not weaken our determination to achieve our medium to long term strategic goals. If anything, it will only increase our momentum.”
Rapid increase in production
Volvo Cars’ second quarter sales were impacted by ongoing supply shortages and the impact of the Covid-related shutdown in China. The latter factor not only affected the company’s delivery in China, but also affected production in China and Europe, especially that of the Electric Recharge models. The results are yet to be seen in the third quarter. For 2022 as a whole, the goal remains unchanged: a double-digit share of fully electric vehicles or more than double compared to 2021.
Volvo Cars is also seeing a significant improvement in its supply chain: production picked up again in June. If this correction continues, the company expects a gradual increase in production in the coming months.
Therefore, Volvo Cars expects higher business levels in 2022 than in 2021. However, due to the delay between production and dealer deliveries, this improvement is not expected to translate into an increase in sales in the current calendar year. For the full year 2022, the company expects sales to stagnate or decline slightly compared to 2021.
High demand for recharge and registration
In Q2, Volvo Recharge models continued to be very popular with customers, although production was affected by ongoing supply shortages due to the lockdown in China. From April to June, the recharge share of total sales was 31 percent and thus above the previous year’s figure of 24 percent. Without delivery restrictions, the results could be higher.
The number of subscribers at the end of the second quarter increased by 122 percent compared to the same period last year. This growth was driven by a combination of strong customer demand and expanded supply as online shipping was launched for small and medium-sized businesses in the UK and Sweden. In the second quarter, online sales already accounted for 9.5 percent of all sales in established markets, compared to 4.6 percent in the same period last year.
Reducing CO2 according to the plan
The company’s plans to reduce #CO2 remain on track. In the first half of the year, total CO2 emissions were ten percent below the values for the same period in 2018. Volvo Cars is therefore well on its way to achieving its goal of reducing CO2 emissions per vehicle by 40 percent by 2025.
“As with many other companies, short-term business challenges remain. But we are confident and focused on achieving our strategic goals and objectives,” said Jim Rowan.
* The exchange rate according to the current half-yearly figures is 1 euro equal to 10.4736 Swedish kronor