Click it and Unblock the Notifications
Volvo Cars Achieves Record Core Operating Profit Of SEK 8.2 Billion In Q2 2024
Volvo Cars has reported an operating profit of SEK 8.2 billion for Q2 2024, excluding joint ventures and associates. This marks a 28 per cent increase compared to the same period in 2023, making it the highest-ever quarterly profit for the company. The core EBIT margin also reached a record high of 8.1 per cent, up from 6.3 per cent last year.
The company's revenue for Q2 2024 was SEK 101.5 billion, slightly down from SEK 102.2 billion in Q2 2023. This minor decline was attributed to reduced income from contract manufacturing and normalised sales to rental companies. However, core revenues from operations remained stable during this period.
Global retail sales rose by 15 per cent year-on-year to 205,400 cars in Q2 2024, driven by strong demand for electrified vehicles. Sales of plug-in hybrids and electric cars grew by 43 per cent compared to the same period last year. Electrified vehicles accounted for 48 per cent of Volvo Cars' global sales volume, with fully electric cars making up 26 per cent.
The EX30 small SUV emerged as one of the top three best-selling EVs in Europe, while the XC60 plug-in hybrid continued to lead PHEV sales in Europe. The popularity of these models contributed to an increase in gross margins to 22.8 per cent from last year's 19.0 per cent, with EV gross margins reaching a new high of 20 per cent.
Volvo Cars is committed to its journey towards full electrification, as evidenced by the rollout of new models like the EX30 and EM90 MPV. Production of the flagship fully electric SUV, the EX90, began in South Carolina during Q2 2024, with customer deliveries expected in Q3 2024. These models represent a balanced portfolio that bridges the gap to an all-electric future.
The company acknowledges that not all consumers can transition to fully electric vehicles due to infrastructure limitations or early withdrawal of government incentives. Therefore, Volvo Cars continues to offer a mix of fully electric, plug-in hybrid, and mild hybrid models to cater to diverse market needs.
Geopolitical Challenges and Future Plans
Volvo Cars operates in a complex geopolitical environment that affects trade and supply chain resilience. Potential EU tariffs on EVs from China could impact the EX30 model. To mitigate this risk, Volvo plans to start producing the EX30 at its Ghent plant in Belgium by mid-2025 as part of its 'Build where we sell' strategy.
The company expects macroeconomic and geopolitical uncertainties to persist but remains optimistic about future growth. For 2024, Volvo Cars anticipates retail sales growth between 12-15 per cent if no major disruptions occur. It aims for neutral cash flow for both 2024 and 2025, with strong cash flows expected from 2026 onwards as investments decrease and long-term benefits materialise.
CEO's Remarks
"We delivered a strong second quarter performance in 2024 with record underlying profitability," said Jim Rowan, CEO of Volvo Cars. "Our core operational momentum remains on a firm footing thanks to our balanced strategy and product portfolio." He added that their brand values around safety and sustainability continue to resonate strongly with customers.
"During the year we increased our market share in Europe to the highest level ever and grew our share in the US as well," Rowan noted. "I am pleased that we did so with pricing discipline."
Volvo Cars will reveal more details about its technological roadmap and upcoming models during its Capital Markets Day in September. The company continues to invest across its product range, focusing on new models and improvements to existing ones.
The company remains committed to growing responsibly while safeguarding value through its newly launched cars and expects an increased share of fully electric cars compared to last year.
Continue with Google