Volvo Cars Q2 results: full speed ahead in transformation with a solid business performance
Volvo Cars today reports a 39 per cent increase in operating profits, excluding joint ventures and associates, to SEK 6.4 bn and a corresponding EBIT margin of 6.3 per cent for the second quarter of 2023. The result came despite a SEK 0.9 bn, non-recurring item related to the redundancy programme announced in May, part of securing a more efficient and sustainable cost base for the future. Without this item, the underlying EBIT margin, excluding joint ventures and associates, was 7.2 per cent in the second quarter. This illustrates that the solid underlying performance momentum from the first three months of the year continued during this past quarter.
While it delivered a higher percentage of fully electric cars during the quarter, the company’s margins on fully electric cars were impacted in this period because the lithium used in these cars was sourced when prices peaked in late 2022.
As the company enters the second half of 2023 this dynamic will change, since it will not only benefit from lower lithium prices, but also realise the effects of increased pricing on MY2024 fully electric cars. Therefore, margins on fully electric cars are expected to improve in the coming quarters.
More broadly speaking, the company sees supply and demand continue to normalise in the wider market, which brings some additional pricing pressure as price levels have also started to normalise in several markets.