Volvo Cars sees good demand this year

Swedish automaker Volvo Cars said yesterday it expects good demand for its vehicles this year after a rise in first-quarter unit sales, though operating earnings missed forecasts due to lower revenues.

Operating income (EBIT) for the first quarter fell to 4.7 billion Swedish crowns (RM2.07 billion) from 5.1 billion a year ago on the back of a decline in sales due to a negative foreign exchange rate and lower contract manufacturing sales, it said.

This was below a consensus referenced by JPMorgan, which had expected operating income of 5.93 billion crowns.

However, its adjusted operating income, which excludes joint ventures, associates and one-offs, rose 8% to 6.8 billion Swedish crowns.

“Overall, a good start to the year where Volvo reported double-digit sales growth and continued to ramp up production of the EX30,” JPMorgan said, referring to unit sales.

“We expect demand for our cars to remain robust in coming quarters in line with our guidance of full-year sales volumes growth of at least 15%,” CEO Jim Rowan said.

He has expressed confidence in the firm’s ability to drive high electric vehicle (EV) margins and continue on a profitable path.

While automakers and suppliers are betting on future demand for EVs, sales growth has slowed, with investment in capacity and technology development outrunning demand, boosting pressure on companies to cut costs.

Volvo’s BEV (battery-electric vehicle) gross margins were 16% in the quarter, a rise from the previous quarter’s figure of 13%, underpinning Rowan’s stance that its margins will continue to rise.