Volvo Cars achieves record SEK 8.2 billion profit
KUALA LUMPUR, 19 July 2024 - Volvo Cars has hit a historic milestone, reporting an operating profit (EBIT), excluding joint ventures and associates, of SEK 8.2 billion for the second quarter of 2024. This marks the highest-ever profit in a single quarter, reflecting a 28% increase compared to the same period in 2023.
The company’s core EBIT margin soared to a record 8.1%, up from 6.3% last year. This remarkable profitability boost was fueled by stringent pricing strategies, meticulous cost management, and a sustained growth trajectory in sales.
Electrified Sales Surge
Volvo's global retail sales witnessed a significant 15% year-on-year increase, totaling 205,400 cars. This surge was predominantly driven by the company’s electrified vehicles—plug-in hybrids and electric cars—which saw a remarkable 43% sales growth compared to the previous year.
Almost half (48%) of Volvo's global sales in Q2 2024 were attributed to electrified vehicles, with 26% being fully electric cars. The EX30 small SUV emerged as one of Europe’s top three best-selling EVs, while the XC60 plug-in hybrid maintained its position as the best-selling PHEV in Europe.
Robust Financial Performance
Volvo Cars’ gross margins climbed to 22.8%, a notable increase from 19.0% in the previous year. Specifically, gross margins on EVs reached a new peak of 20%, underscoring the profitability of Volvo’s transition towards electrification. The company's revenue for Q2 stood at SEK 101.5 billion, slightly down from SEK 102.2 billion last year, attributed to reduced contract manufacturing income and normalised sales to rental companies.
CEO's Vision
“We delivered a strong second quarter performance in 2024 with record underlying profitability, demonstrating our ability to create value despite a complex geopolitical and economic environment,” said Jim Rowan, CEO of Volvo Cars. He emphasized the company's resilient strategy, diverse product portfolio, and agility in navigating economic headwinds.
A Bright Future
2024 is poised to be a landmark year for Volvo with the rollout of the EM90 MPV and the ramp-up of the EX30. The third quarter will see the debut of the EX90, Volvo's flagship fully electric SUV, produced in South Carolina. These models represent Volvo’s forward march towards a fully electric future.
Looking ahead, Volvo Cars anticipates a 12-15% growth in retail sales for 2024, barring major disruptions. Despite geopolitical uncertainties, the company is set for continued growth, with strong operational fundamentals and a strategic vision geared towards long-term profitability.
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