Business Standard

Volvo's truck order intake slips, taking shine off bonus payout


By Esha Vaish
STOCKHOLM (Reuters) - Sweden's Volvo said on Wednesday that its fourth-quarter truck order intake fell by 14 percent to 59,535 trucks, a total below analysts' forecasts, but announced a special dividend after strong cash generation.
The truckmaker, which has been buoyed by robust demand in recent years as truck buyers renew fleets starved of investment during the last downturn, also repeated its 2019 demand outlook.
Shares in Volvo, which ignited worries in October with a forecast of slowing market demand outlook in Europe and China, were down 2 percent to 123.90 Swedish crowns at 0834 GMT as investors focused on the order intake figures.
Volvo, which also makes construction equipment and engines, said that total truck order intake decreased by 14 percent, lagging the 65,416 forecast by analysts polled.
"Volvo had good numbers but the order intake may be some what of a troublesome point.... Investor sentiment is now somewhat negative so (shares) might go back a little actually," Pareto Securities analyst Erik Paulsson told Reuters.
Although order intake for its construction equipment grew 9 percent, two analysts said it was weaker than expected.
Volvo shares have also been hit by its October admission that some of its engines run the risk of exceeding emission limits, in a problem unrelated to Volkswagen's Traton and Daimler.
Handelsbanken Capital Markets' Hampus Engellau said trucks and construction equipment margins were also weaker than expected after an "amazing" third quarter raised expectations.
Volvo's truck margins came in at 10.9 percent versus the 11.1 percent reported in the preceding quarter, while its construction equipment margins stood at 10.6 percent compared with 13.9 percent in the third quarter.
Operating income, adjusted for a 7 billion crowns provision relating to the emissions issue, jumped to 10.60 billion from a year-ago 7.12 billion, largely in line with the 10.47 billion forecast by analysts.
Volvo reiterated its markets outlook for China and its other markets, saying it expected European demand at "historically good levels" and North American economic growth to support the regional truck market.
The truckmaker also proposed dividends totalling 10 crowns per share for 2018, a five crown special payout in addition to an ordinary dividend of five crowns.
Analysts polled had expected an ordinary dividend of 4.97 crowns, although the expectations for a special payout were high due to strong cash generation in 2018.
($1 = 9.0531 Swedish crowns)
(Reporting by Esha Vaish and Helena Soderpalm in Stockholm; editing by Niklas Pollard and Alexander Smith)

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First Published: Jan 30 2019 | 2:40 PM IST

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