Volvo Group overcame worries about waning demand and supply chain problems for truckmakers as the Swedish company posted record results more than a week earlier than scheduled.

Shares in the world’s second-largest truckmaker jumped 8 per cent on Wednesday morning as its underlying operating profits rose by almost a half, well above analysts’ expectations.

Volvo warned in January that it expected supply chain disturbances, stoppages and surging inflation to continue. But late on Tuesday it pre-released its first-quarter results, without explanation for the better than expected figures.

Sales rose by a quarter in the first quarter to SKr131bn ($13bn) while underlying operating profits rose 45 per cent to SKr18.4bn, compared with an average forecast of SKr12.9bn from analysts.

Investors had been braced for a sharp slowdown in truck sales this year as the macroeconomic backdrop deteriorated and amid worries that supply chain issues that caused component shortages would persist.

Citi analyst Klas Bergelind said he now expected Volvo to have an operating profit margin almost a percentage point higher than at the trough of the current economic cycle.

“With the latest [US truck] orders down 12 per cent year on year and with dealer checks from our US colleagues suggesting incremental weakness in certain segments, this has seen some investors wanting to turn negative on the truck names,” he added.

Harald Henrikse, analyst at Morgan Stanley, said that Volvo’s “monster” beat was probably more of a one-off than a recurring positive, but that investors would have to wait until the full results that are to be unveiled on April 20 as originally planned.

He said Volvo might have seen a material improvement in component supplies, such as semiconductors, which helped the company to deliver materially more units than previously expected. “This could have a positive follow-on impact for the remaining quarters of 2023,” he added.

Shares in rival European truckmakers such as Traton, Daimler, and Iveco all rose on the news from the Swedish group.

Volvo enjoyed significantly better performance from both its truck and construction equipment divisions. Truck sales increased 29 per cent to SKr90bn in the first quarter, while construction equipment revenues rose 11 per cent to SKr25bn.

The impact on profitability was more marked with underlying operating income jumping 46 per cent in trucks to SKr12.7bn and 64 per cent in construction equipment to SKr4.6bn.


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