Volvo Cars quarterly operating profit beats expectations despite tariff hit
Sweden-based Volvo Cars is the first European carmaker to release results in what analysts expect to be a challenging earnings season, as subdued demand for electric vehicles and intensifying competition from Chinese manufacturers coincide with trade tensions.
But much of the fall had already been priced in to analyst and investor estimates as the prospect of tariffs and lower sales was largely expected.
Shares were up nearly 8% at 0712 GMT.
"Demand remains soft and volatile, impacted by weakening consumer confidence and the introduction of additional tariffs, which continue to pose challenges for the automotive sector," the carmaker said in its earnings report.
In addition to a 27.5% tariff imposed on European-made Volvo cars entering the U.S., it has also been hit by a 25% tariff on auto parts as well as on steel and aluminium.
Despite the gloomy environment, second-quarter numbers came in better than feared, analysts at Bernstein said in a research note.
"Given how weak stock positioning is here it should be enough for a positive market reaction," they said.
The company, owned by China's Geely Holding, posted an adjusted operating profit of 2.9 billion Swedish crowns ($297.89 million), down from 8.0 billion crowns a year earlier.
Its gross margin, a key metric for assessing the tariff impact, dropped to 13.5% from 18.2% in the first quarter, though, adjusted for one-offs, it stood at 17.7%.
Volvo Cars announced a $1.2 billion impairment charge related to model launch delays and tariffs on Monday, resulting in an operating loss of 10 billion crowns, compared to a profit of 8 billion crowns in the same quarter last year.
Earlier in the year, former CEO Hakan Samuelsson was brought back for two years to help revive a record-low share price. Samuelsson quickly launched a cost-cutting programme, pulled earnings guidance, slashed 3,000 jobs, and slowed down investments.
($1 = 9.7352 Swedish crowns)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
10 minutes ago
- The Independent
Top tips for Gen Z job hunters – and why it's not all doom and gloom
UK unemployment has risen to its highest rate in four years at 4.7 per cent, with job vacancies falling to a decade low of 727,000 between April and June. Young people, especially graduates, are facing the toughest job market since 2018, drawing parallels to the author's experience during the 2008 financial crash. The rise of artificial intelligence is significantly impacting entry-level jobs, with a nearly one-third reduction in such roles since ChatGPT 's launch. Increased labour costs, including higher national insurance contributions and the minimum wage, are also contributing to employers reducing headcounts. Current difficulties are due to economic conditions rather than individual failings.
The Independent
10 minutes ago
- The Independent
This unbeatable wine deal gets you 12 bottles for just £5.99 each
It's always handy to have a few bottles of wine ready to go in the summer for those last-minute garden parties and barbecues when the sunshine hits. If you need to replenish your stash for the next heatwave, we've spotted an excellent wine deal at Laithwaites. As an introductory offer to its wine case delivery, the retailer is offering 12 bottles of its bestselling reds and whites for just £5.99 each with the discount code 25OFF90. We're always on the lookout for the best wine deals, and this is by far the best offer you'll get on a bulk order of wine right now. As well as bargain bottles, you'll even get some freebies thrown in. This includes a bottle of Cabalié cuvée vieilles (worth £14.99) and Ribolla Gialla spumante cuvée biele zôe (worth £10.99), plus two stemless wine glasses (worth £18) to enjoy your drinks in. For more wine bargains this summer, we've spoken to experts and sommeliers for their pick of the best supermarket wines. If sparkling is more your thing, we've also rounded up the best champagne deals of the month to toast your celebrations. With Laithwaites' welcome offer to its wine subscription, you'll get a mixed case of 12 top-selling bottles, which includes the following red and whites. We've also included how much each bottle would cost if you bought it on its own: Two bottles of Vinha do Fava touriga nacional 2023 (£13.99) Two bottles of Camino de Seda 2023 (£12.49) Two bottles of The Black Stump durif shiraz 2022 (£12.99) Two bottles of Mussel Pot Marlborough sauvignon blanc 2024 (£13.99) Two bottles of Rex Mundi blanc 2024 (£12.99) Two bottles of Alessandro Gallici pinot grigio 2024 (£11.99) Don't forget to use the discount code 25OFF90 to get the bottles for just £5.99 each, totalling £71.82 for the full case. Without the discount code, you'll pay £7.99 per bottle, coming to £95.76 for the full case. Without the offer, you'd pay £156.88 if you bought the wines separately, so you're saving more than 50 per cent when you buy them as part of the deal. If you prefer red wine over white, or vice versa, you can also choose a case of all reds or whites that include more of your chosen type. Keep in mind that when you add this offer to your basket, you're signing up to a regular delivery of the Laithwaites bestsellers case. This means that after eight weeks, you'll be charged £119.88 (£9.99 per bottle) for your next case. If you want to continue the subscription, you can adjust the frequency of delivery to every four or 12 weeks. There's also the option to pause your subscription if you're not ready for another delivery, or cancel for free.
Daily Mail
11 minutes ago
- Daily Mail
Ryanair boss Michael O'Leary says he's 'happy to incentivise' staff to crack down on oversized luggage
Ryanair is considering increasing a bonus paid to staff for identifying passengers' oversized luggage, its chief executive has announced. The airline currently pays staff around €1.50 (£1.30) for intercepting customers who are bringing bags on to the aircraft. It is reported that the bonus is capped at about €80 (£70) for each staff member per month. Passengers are charged a fee of up to €75 (£65) for bringing luggage that is larger than they paid for while booking their journey. Ryanair currently includes a small carry-on bag - capped at a size of 40x20x25cm and weight of 10kg - with every ticket. Passengers must pay a fee if they want to bring larger luggage, or if they want to bring multiple bags. Ryanair boss Michael O'Leary said on Monday that summer fares would, on average, be the same rate as 2023 - but added that he expects a boost in profitability for the airline by 'controlling costs'. Members of the European Parliament are pushing for airlines to allow passengers to be allowed to bring on free an on-board personal item and small hand luggage. However, Mr O'Leary predicted the proposal will not come into law due to a lack of space. Speaking to the business news on RTE's Morning Ireland, he said: 'We're flying largely full flights, about half the passengers can bring two bags and the other half can only bring one - because that's all that fits in the plane. 'We're already struggling with that amount of baggage. 'That's one of the reasons we are so aggressive about eliminating the scourge of passengers with excess baggage.' Mr O'Leary said more than 99.9 per cent of passengers comply with baggage rules, with 'sizers' located within the airport. He said: 'We are happy to incentivise our (staff) with a share of those excess baggage fees, which we think will decline over the coming year or two.' The chief executive added: 'It is about €1.50 per bag - and we're thinking of increasing it, so we eliminate it.' Meanwhile, Mr O'Leary predicted that US President Donald Trump will 'chicken out' of introducing increased tariffs for Europe on August 1. Ryanair currently includes a small carry-on bag - capped at a size of 40x20x25cm and weight of 10kg - with every ticket Asked if he anticipated tariffs applying to Boeing aircraft being delivered to the airline, he said: 'Trump will probably chicken out again, I suspect the August 1 will get moved to September or October. 'We have taken delivery of five aircraft in the first quarter but no tariffs applied to those aircraft 'There is a risk of tariffs being introduced by the Europeans or the Americans in some tit-for-tat in August, September or October - but Boeing will have to pay those tariffs.' Mr O'Leary said Ryanair would work with Boeing to ensure no tariffs are applied to commercial aircraft, which he said would be bad for the manufacturer's exports to Europe as well as Airbus's sales to the US - as well as the Irish aircraft leasing industry. He added: 'There's increasing optimism, though, in Washington that commercial aircraft will be exempt from any tariffs - if Trump ever gets around to actually imposing tariffs.'
