Swedish truck manufacturer AB Volvo (VOLVb.ST) has reported a larger-than-anticipated decline in quarterly adjusted earnings and is predicting stagnant demand for the coming year, reflecting a notable shift in market conditions.
Reduced freight and construction activity have constrained vehicle sales, contributing to this downturn.
After a record surge in 2023, driven by a post-pandemic recovery, the truck market is experiencing a normalization phase, leading to decreased demand.
Volvo forecasts that heavy truck sales in Europe and North America will remain relatively unchanged in 2025, estimating a total of 290,000 vehicles in Europe and 300,000 in North America, mirroring this year’s expected sales figures.
In a disappointing turn, Friday’s earnings report marked the first instance this year where Volvo’s results did not exceed expectations, with shares falling 0.9% by 0727 GMT.
The company’s adjusted operating profit for Q3 stood at 14.1 billion crowns ($1.34 billion), down from 19.3 billion crowns a year earlier and below the mean forecast of 15.6 billion crowns from an LSEG poll of analysts.
As the first of the major European truck manufacturers to release third-quarter results, Volvo sets the stage for competitors like Traton (8TRA.DE) and Daimler (DTGGe.DE), who are scheduled to report later this month.
Volvo, known for its brands such as Mack Trucks and Renault, noted a 7% decline in third-quarter order intake for its heavy-duty trucks compared to the previous year.
CEO Martin Lundstedt highlighted the prevailing uncertainty in macroeconomic conditions, stating, “There is some uncertainty about the macroeconomic development in the near term, and this is reflected in our forecasts with relatively flat markets overall for next year.”
Production cuts at Volvo’s European plants during the first half of the year have helped align output with regional demand, while the company has retained additional resources in North America to develop a new truck range.
“Volvo’s not quite firing on all cylinders, as global freight and construction activity normalized from the heights of last year,” Hargreaves Lansdown equity analyst Aarin Chiekrie, told Reuters, reflecting on the company’s current challenges.
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