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Volvo group reports a very Difficult third quarter

Wednesday, 24 October 2012
Volvo Corporation submitted a grim report on Wednesday, which meant the company's shares had to plummet in the stock market in early trading.

The problems was compounded by a note of uncertainty presented by the company as analysts covering the company, interprets Volvo forecasts as that they do not have any idea about future developments.

Where is growth going to come from and what is the company's strategy to turn things around, are some of the questions analysts were asking.

Financial summary

Net sales and operating income
During the third quarter of 2012, Volvo Group’s net sales decreased by 6% to SEK 69,111 M (73,321) and operating income amounted to SEK 2,927 M (5,774). For detailed information on the development, see separate sections below.
Net financial items
Net interest expense in the third quarter was SEK 465 M compared to an expense of SEK 589 M in the previous year. In the second quarter of 2012 net interest expense amounted to SEK 535 M.
During the third quarter, market valuation of derivatives used for hedging interest-rate exposure in the debt portfolio had a negative impact on Other financial income and expenses amounting to SEK 21 M compared to a positive impact of SEK 297 M in the third quarter of 2011.
Income taxes
The tax expense in the third quarter amounted to SEK 947 M (1,548), corresponding to a tax rate of 41% (28), including a negative non-recurring and non-cash impact of SEK 340 M relating to a transfer of intangible assets between Japan and Sweden.
Income for the period and earnings per share
Income for the period amounted to SEK 1,382 M in the third quarter of 2012 compared to SEK 3,895 M in the third quarter of 2011.
Basic and diluted earnings per share in the third quarter amounted to SEK 0.68 (1.89).
Source: Volvo
Details could be obtained here

This comes after the company left a weak report with disappointments across the board. Drop in orders, earnings, sales and profitability were worse than expected. Now the company seem to be ready to make new set of cutbacks.

CEO, Olof Persson, said that 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. Net sales for the Group declined to Skr 69.1 billion (73.3). Operating income amounted to Skr 2.9 billion (5.8) and was adversely impacted by under absorption in the industrial systems in the range of Ske 1 billion and another Skr 1,060 Million of negative non-recurring items. Adjusted for the non-recurring items, operating margin was 5.8% (7.9), writes the CEO on the company's website.

Scancomark.com

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