Truck maker Volvo’s 4th quarter operating profit beats forecasts By Reuters

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© Reuters. FILE PHOTO: Volvo trucks are seen for sale in Linden, New Jersey, U.S., May 23, 2022. REUTERS/Andrew Kelly/File Photo

By Marie Mannes

STOCKHOLM (Reuters) -Swedish truck maker AB Volvo (OTC:) reported a bigger-than-expected rise in fourth-quarter adjusted operating profit on Friday and said it had adjusted production levels and raised prices to compensate for cost inflation and normalising demand.

The sector and investors alike brace for a tougher 2024 for the trucking market with Volvo expecting fewer trucks to be registered this year than the year before and analysts flagging a downturn in demand in Europe.

On Friday, Volvo cut its predictions for the total European heavy truck market this year, seeing registrations of 280,000 trucks for the region instead of 290,000. However, it kept its 290,000 prediction for the North American heavy truck market.

It also raised its prediction for the China medium and heavy truck market to 800,000 from 700,000 trucks previously.

“We successfully mitigated cost inflation with price management, handled disturbances in the supply chain and reduced inventories,” Volvo CEO Martin Lundstedt said in a statement, stating he saw demand normalising across several markets and segments.

Other truck makers are also feeling the squeeze, with rival Daimler (OTC:) trucks citing ongoing supply shortages in key regions as a reason it saw group sales grow by only 1% for the full year of 2023.

However, peer Traton said earlier in the week it started 2024 with a good order book.

Operating profit adjusted for divestment costs came to 18.4 billion Swedish crowns ($1.76 billion), above the mean forecast of 17.2 billion Swedish crowns in an LSEG poll of analysts.

Volvo proposed an ordinary 2023 dividend of 7.50 crowns per share, up from 7.0 crowns in 2022. This is in addition to an extra dividend of 10.50 crowns per share, up from 7 crowns a year earlier.

The overall proposed dividend of 18 crowns was above the total payment of 17 crowns expected by analysts.

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