In Q2 of 2020 Volvo Buses reports a decrease in vehicle sales by 67% and service sales by 38%, compared to Q2 in 2019. Also the order intake decreased by 55% driven by a collapse in demand for coaches during Q2. The overall global bus market was severely affected by Covid-19. The decline in demand has affected all parts of the business, but with more limited impact on the transit bus market. Over the first six months of 2020 Volvo reports a total in orders for 3,732 vehicles compared to 4,574 vehicles in the first six month in 2019.
The Swedish bus builder reports an adjusted operating income of SEK -532 M (+403 – Q2-2019) or 51.6 million euros, with a margin of -16.6% (+4.5% - Q2-2019). Swedish crown: 0.097 euro.
Compared to Q2-2019, net order intake decreased by 55% to 979 units. Volvo says demand was low in all regions, with the coach business accounting for the major part of the decline.
Volvo Buses delivered 873 units in Q2, a decrease of 68%. The company explains this as a consequence of lockdowns disrupting both supply chains and demand, in particular for coaches. In Q2 in Europe net sales amounted to SEK 1,342 M (over the first half year of 2020 SEK 2,354 M), a decline of 43%. The worst market for Volvo was North America with net sales of SEK 867 M compared to SEK 4,440 in Q2-2019 – 80% less. Also South America showed a decline of 77% (SEK 218 M Q2-2020 – 948 M Q2-2019). Asia had 34% less with SEK 427 M (Q2-2019 SEK 644 M) and Africa and Oceania -29% (Q2-2019 SEK 345 M). Overall in Q2, net sales decreased by 64% to SEK 3,199 M (8,885 – Q2-2020), whereof vehicle sales decreased by 67% and service sales by 38%.
The adjusted operating margin of Volvo Buses amounted to -16.6% (+4.5 - Q2-2019). Earnings were negatively impacted by lower vehicle and service volumes and lower capacity utilization in the industrial system, following low demand and production closures due to Covid-19 as Volvo states in its report.
Strong cost reduction efforts and various governmental short-term layoff programs contributed to mitigate some of the shortfall of Volvo Group in volumes and production. “The second quarter of 2020 was characterized by the Covid-19 pandemic and its negative effects on society and economic development. Our net sales decreased by 39% to SEK 73.2 billion (7.1 billion euros). After having been standing still in April, production was gradually restarted in May and is currently running well. All of these activities contributed to the Volvo Group achieving an adjusted operating income of SEK 3.3 billion (15.1 Q2-2019) with a margin of 4.5% (12.5 Q2-2019),” says Martin Lundstedt, President and CEO.
Full report: https://www.volvogroup.com/en-en/investors.html