Volvo shares were down 1.7 per cent this morning despite announcing rising income and its core trucks division recording its most profitable year on record.
The Swedish truck maker said on Wednesday it would pay a dividend of five Swedish krona (42p) per share after what it called “a good finish to a strong year”.
Volvo’s operating income in 2018 was 34.5bn krona, up 16 per cent on 29.7bn krona the previous year. Meanwhile it generated 390.8bn krona in sales, up 17.5 per cent on last year’s 332.7bn.
The rise was partly driven by strong fourth-quarter earnings, which rose 49 per cent year-on-year to 10.6bn krona from 7.1bn last year. This was adjusted for the 7bn krona it set aside early this year to provide for potential costs coming from an emissions issue, which saw the firm admit some of its trucks may be giving off more poisonous nitrogen oxide gases than are legal.
Cash flow for the full-year was slightly down on last year, at 26.6bn krona for 2018 from 28.4bn last year.
Why it matters
Volvo Group – a separate company from Swedish car maker Volvo – said it expected European demand to be on “historically good levels” in future and economic growth in the US to support the regional truck market. It also said it would begin selling electric trucks in Europe this year, as well as moving forward with electric prototypes in its construction equipment division.
But shares have dropped in the company in recent months after it announced the emissions problem in September, which came from a component in some Volvo trucks which controls emissions degrading faster than the firm previously thought.
What Volvo said
President of Volvo Martin Lundstedt said the company’s solid cash position “enables us to take on the future from a position of strength”.
“Going forward, we see further potential to increase volume flexibility in the overall supply chain, to improve quality and to grow our service business,” he added.