Volvo shares were a top gainer in European trading Friday when the global equipment and engine maker posted stronger-than-expected third quarter profits and issued a bullish outlook for the rest of the year. The company’s shares jumped 7% hitting a record high of SEK 166.80 (US$20.40) during the day and extending its 52 week gains to 72%.
Volvo said earnings for the three months ending in September came in at SEK7.02 billion (US$861 million) on sales of SEK77,225 billion (US$9.48m), a 12% increase from the same period last year. The company's order book swelled over the third quarter and total employment is up to 99,630, including approximately 13,500 temporary workers and consultants.
The Swedish company credited especially strong performance in its construction equipment and truck business during the quarter. Volvo Group President and CEO Martin Lundstedt said, “From an overall perspective, market demand is strong, as evidenced by a 32% increase in truck orders and 45% in construction equipment orders.” European analysts saw the improvement in the construction sector as a solid economic indicator for the region.
Sales in the Volvo Penta business unit were up 8% in the third quarter and 13% for the first nine months of the 2017 financial year to SEK 8,444 billion (US$1.03 million), however the company said its improvement was from market share gains, rather than growth in the marine leisure market which Volvo described as flat.
Total orders and deliveries of engines in the Volvo Penta business unit were both up for the first nine months of the year (+11% to 30,677 units in orders, and +10% to 31,027 units for deliveries). Sales showed double digit gains across all regions for the first nine months, except South America which was up only 2%. The unit’s operating margin for the period was a strong 14.8%.
Volvo Penta also launched its most powerful marine leisure engine to date during the quarter – a 13-liter 1,000hp diesel engine that can propel yachts up to 120 feet.
In separate news from the company, the 45,000-mile nine-month Volvo Ocean Race set off on 22 October from Alicante, Spain with US/Danish entry Vestas in the lead after the first 24 hours. This edition of the race is focusing on a sustainability and clean ocean message which includes a United Nations team, called Clean Seas – Turn the Tide on Plastic, skippered by female British skipper Dee Caffari. Other industry partners and sponsors of the race include Inmarsat, Omega, Musto, and AkzoNobel.