Volvo Group sees modest Q3 recovery

Sweden’s Volvo Group (OTC: VLVLY) reported lower sales and income in the third quarter. But the gap compared to year-ago results narrowed with rebounding truck orders responding to strong freight demand.

Third-quarter net sales fell 16% to SEK 76.9 billion ($8.71 billion) compared to SEK 98.7 billion ($11.18 billion). Adjusted operating income was SEK 7,217 million ($816.73 million) compared to SEK 10,885 million ($1.23 billion) in the year-ago quarter. The adjusted operating margin was 9.4% compared with 11%.

Weak second-quarter orders due to pandemic-forced plant shutdowns impacted third-quarter deliveries across all of Volvo Group’s businesses — trucking, construction, buses and engine manufacturing.

“The uncertainty about the future economic development and demand for our products is considerable as an increase in the spread of COVID-19 can lead to new restrictions on societies and businesses,” Volvo Group President and CEO Martin Lundstedt said.

Orders for Volvo and Mack-branded trucks in North America rose 151% to 12,441 trucks with demand led by regional- and long-haul trucks responding to increased pandemic-driven freight demand for consumer goods.

However, deliveries fell 57% to 6,121 trucks with Volvo down 26% and Mack off 59%. Still, Volvo Trucks’ heavy-duty truck market share through September increased to 9.5% compared with 9.3% a year ago. Mack Trucks’ market share increased to 7.0% from 6.8%.

Mack recalled 230 laid-off workers in August at its Pennsylvania manufacturing plant as orders grew 36% to 4,840 from 3,549 a year ago. Volvo Trucks bookings rose 84% to 36,473 from 19,823.

“Toward the end of the quarter transport activity was back on roughly the same level as a year ago in most markets,” Lundstedt said. “After the easing of COVID-19 restrictions, freight activity has increased and customers are returning to previously planned replacement cycles.”

As of Sept. 30, Volvo had 96,229 employees, including temporary employees and consultants. That was 9,340 fewer employees than a year ago. Blue-collar employment decreased by 3,933. Volvo shed 5,407 white-collar jobs, including 450 in North America.