Swedish heavy truck manufacturer, Volvo Group, on Wednesday reported a 30 per cent decline in net profit for the first quarter of the year, attributing the downturn to a nine per cent fall in vehicle sales and heightened global uncertainty over trade tariffs.
In a statement released alongside its quarterly earnings, Volvo Group said, “Recent tariffs and other trade restrictions imposed or considered to be imposed by the United States and other countries have significantly increased uncertainty about trade conditions in markets where the Group is present, as well as in relation to global and regional supply chains.”
It added, “The situation is fast-changing and complex to assess, and no predictions can be made on future developments, potential impacts on the Group or whether trade restrictions may impact the Group more severely than main competitors.”
Despite manufacturing all vehicles destined for the United States domestically, Volvo Group warned that the tariffs could still impact the production process due to their potential effect on imported components used in assembly.
As a result of these uncertainties, the company has revised its full-year forecast for heavy-duty truck sales in the United States, cutting its projection by 25,000 units to 275,000. However, Volvo maintained its market outlook for Europe and China, indicating more stable expectations in those regions.
For the first quarter, Volvo Group recorded a net profit of 9.98 billion kronor ($1.03 billion), down from 14.1 billion kronor during the same period last year. The results were broadly in line with analyst expectations compiled by Bloomberg.
Operating profit also declined sharply by 27 per cent, falling to 13.2 billion kronor from 18.1 billion kronor a year earlier. This drop in earnings was accompanied by a contraction in the operating margin, which fell from 13.8 per cent to 10.9 per cent.
Meanwhile, net sales fell by seven per cent after adjusting for currency movements, totalling 121.8 billion kronor for the quarter. Truck deliveries were also down by 12 per cent compared to the previous year, reflecting the broader weakness in sales.
Volvo Group further noted that the lingering uncertainty surrounding trade tariffs and US emissions regulations had contributed to a shift in customer behaviour, stating that these developments had led US clients “to adopt a wait and see approach.”
Despite the dip in deliveries, the company reported a silver lining: an increase in new orders. Order intake for trucks rose by 13 per cent in the first quarter, reaching a total of 55,227 units.
