According to Bloomberg's report, Volvo Trucks has announced its intention to gradually reduce truck production to align with the normalization of demand, following a historic surge in OEM orders due to years of supply chain disruptions.
As per the financial report released on January 26th, Volvo Trucks surpassed expectations in the fourth quarter of 2023, demonstrating excellent cost control and effective management of supply chain disruptions. The adjusted operating profit for the fourth quarter reached SEK 18.4 billion (approximately USD 1.76 billion), surpassing analysts' predictions of SEK 17.5 billion.
Furthermore, the company reported a full-year revenue of SEK 552.8 billion for 2023, marking a year-on-year growth of 16.7%. The adjusted operating profit for the year reached SEK 77.6 billion, reflecting a substantial increase of 53.8%. The adjusted operating profit margin stood at 14.0%, compared to 10.7% in 2022.
Volvo Trucks stated, "The suppressed demand conditions in 2022 and 2023 have largely been absorbed by the industry, particularly with delivery times in Europe returning to normal levels."
The company noted that demand in various segments and markets is returning to more average levels. In the fourth quarter of the previous year, its net truck order volume decreased by 9% to just over 49,000 units, with a 24% decline in Europe.
Additionally, Volvo CEO Martin Lundstedt revealed to the Swedish news agency TT that the company is reducing production at its Tuve plant in Sweden, with other facilities also expected to be affected. The company has revised its market forecast for the registration of heavy trucks in Europe from last year's historic high to 280,000 units, while maintaining the forecast for the North American market.
Following this announcement, Volvo Trucks' stock price dropped 4.6% in early trading in Stockholm. Over the past year, the stock had accumulated a 21% increase.
After experiencing performance boosts from pent-up demand and high prices due to years of supply chain disruptions, Volvo Trucks anticipates the market to return to more normalized demand levels this year. Volvo Trucks, along with its competitor Daimler Trucks, holds a strong influence in both the North American and European markets, both of which face economic recession risks in the coming 12 months.
