Volvo Reports Mixed Q4 Results

Volvo VNR
Volvo VNR by Volvo Truck Corp.

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Volvo Group reported net income slipped and revenue increased modestly in the fourth quarter, and noted that global demand for trucks remained high amid a steep decline in sales of construction equipment in China and a falloff in its bus business.

The Gothenburg, Sweden-based company also said the supply chain for semiconductors and other components remains unstable, which led to higher costs to manage production. Against this backdrop, the company expects inflationary pressures to continue.

For the period that ended Dec. 31, Volvo — which reports in Swedish kroner — had net income that was the approximate equivalent of $840 million, or 41 cents per diluted share, compared with $980 million, 48 cents, a year earlier. Revenue inched up to $10.8 billion compared with $10.2 billion a year earlier.

Bloomberg News reported the Q4 results were broadly in line with expectations.

The truck maker’s operating margin in Q4 decreased to 10% compared with 12.6% a year earlier.

“Increasing demand for transport is a clear, long-term trend driven by population growth, urbanization and increasing e- commerce,” Volvo CEO Martin Lundstedt said in a release. “It is equally clear that we must meet this demand with transport and infrastructure solutions that are more sustainable than today. We will continue to invest to stay at the forefront of this transformation. In 2021 we increased our R&D investments and we plan to step up our efforts further this year.”

Volvo noted its white collar workforce grew in 2021 by 793 to keep pace with its R&D activity.

“During the year, we accelerated our transformation journey. We set climate targets that are in line with what the latest climate science deems necessary” to keep global warming at a sustainable level, Lundstedt said.

In Q4, order intake of fully electric trucks amounted to 454 compared with 39 a year ago, while deliveries amounted to 144 compared with 34 vehicles a year earlier.

In January, the company announced that production in North America — its second-largest market — of the enhanced Volvo VNR Electric model will begin in Q2. The truck features up to an 85% increase in range to 275 miles, faster charging, and more configurations for heavy-duty transport.

Meanwhile, Q4 order intake in North America decreased by 33% to 16,624 trucks while deliveries increased by 29% to 14,577 vehicles.

Volvo q4 2021 Eng by Transport Topics

Volvo has been restricting orders amid an already large and supply chain-constrained backlog.

Heavy-duty truck market share for Volvo Trucks North America increased .2 percentage point to 9.6% and Mack Trucks’ market share increased .8 percentage point to 7.7%.

North American truck revenue rose 25% to $2.9 billion.

In Europe — its largest market — order intake for heavy- and medium-duty trucks declined by 12% to 27,990 vehicles while deliveries increased by 18% to 26,292 vehicles.

European truck revenue rose 12% to $4.7 billion.

Overall adjusted operating income for its truck business dropped 14% to $730 million compared with $840 million a year earlier.

Total revenue at the truck unit rose 8% to $7 billion compared with $6.5 billion in the 2020 period.

“We are doing our utmost to produce as much as we can to reduce long delivery times to our customers,” Lundstedt said.

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Looking ahead, Volvo forecast North American heavy-duty vehicle retail sales would be 300,000 in 2022 compared with 270,022 in 2021.

Volvo reported revenue from its bus unit fell 19% to $430 million compared with $540 million in the 2020 period.

Construction equipment revenue inched up to $2.3 billion compared with $2.1 billion a year earlier.

For the 12-month period net income was $3.5 billion, $1.70, compared with $2.1 billion, $1, a year earlier.

Revenue rose to $39.2 billion compared with $35.7 billion in 2020.

Volvo’s full-year adjusted operating margin increased to 11.6% compared with 8.1%.