Volvo braces for slower truck markets next year after Q3 profit beat

Swedish truck maker AB Volvo on Wednesday posted a bigger-than-expected jump in quarterly profit helped by price hikes, sending its shares up, but predicted the European and North American heavy trucks markets would slow next year.

The Gothenburg-based group, which also makes construction equipment and engines, said order intake for its trucks fell 27% in the third quarter.

However, its third-quarter operating profit excluding costs related to the group’s exit from Russia jumped 61% from a year earlier to 19.1 billion crowns ($1.75 billion).

That beat the 16.4 billion forecast by analysts polled by LSEG.

Its adjusted operating profit margin widened to 14.4% from 10.3% as price hikes made up for higher costs.

“We have successfully mitigated cost inflation with price management and continued to handle disturbances in the supply chain,” CEO Martin Lundstedt said in a statement.

Volvo’s shares were up 3.5% at 0746 GMT.

The company predicted the European and North American heavy truck markets would total 290,000 vehicles each in 2024.

It reiterated a 2023 outlook from July which sees the North America market at 330,000 trucks and raised its forecast for Europe to 340,000 from 330,000.

“We expect our major truck markets to continue to be strong throughout this year as we continue to deliver from our large order books to customers, but (we) forecast lower market levels for next year,” Lundstedt said.

Handelsbanken analyst Hampus Engellau said the market outlook was in line with market expectations.