Volvo Group – Report on the third quarter 2012

During the third quarter, sales for the Volvo Group were impacted by the weakening in demand that has become increasingly evident around the globe. To respond to declining demand and increasing inventories, we decided to adjust our production rates down in several parts of the company.

• In the third quarter, net sales decreased by 6% to SEK 69.1 billion (73.3). Adjusted for currency movements and acquired and divested units, sales decreased by 4%.

• The third quarter operating income amounted to SEK 2,927 M (5,774), including a non-recurring negative impact amounting to SEK 1,060 M, whereof SEK 560 M relating to a restructuring in UD Trucks and SEK 500 M to an adjustment of warranty reserves. Compared to the third quarter 2011, changes in exchange rates had a positive impact of SEK 594 M.

• Operating margin in the third quarter was 4.2% (7.9). Adjusted for the non-recurring items, the operating margin was 5.8%.

• In the third quarter, basic and diluted earnings per share was SEK 0.68 (1.89)

• In the third quarter, operating cash flow in the Industrial Operations was negative in an amount of SEK 7.2 billion driven by a lower level of payables (positive SEK 2.2 billion).

• Costs associated with the reorganization of the Volvo Group’s dealer network and sales and marketing organizations in EMEA are currently estimated to be in the magnitude of SEK 900 M starting in the fourth quarter of 2012 and going forward.

• New range of Volvo FH trucks launched.

“In the short term, we have a tough quarter ahead of us to manage the consequences of the slow demand in the third quarter. However, with the production adjustments we are currently implementing, we believe we will have the right level of capacity going into 2013. At the same time we continue to have a high speed in the execution of the activities that are part of our new strategic objectives aimed at improving the overall profitability of the Volvo Group,” says Olof Persson, President and CEO.

Find the full report under interim reports 

October 24, 2012

Contacts Investor Relations:
Christer Johansson, +46 31 66 13 34
Patrik Stenberg, +46 31 66 13 36
Anders Christensson, +46 31 66 11 91
John Hartwell, +1 201 252 8844