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  • 18 Oct 19

Q3 19 was not as smooth as expected

Orders for new trucks fell sharply in the last quarter and a slight fall was also experienced in Construction Equipment. Although truck deliveries fell as well, the divisional operating margin was slightly up. However, Construction Equipment has started to experience a slight profit margin fall.

Companies: Volvo
  • 15 Sep 19

US truck sales and Caterpillar's mining equipment sales still strong

Trucks and Construction Equipment contribute a total of 85% to Volvo’s consolidated sales and almost 90% to its EBIT. US heavy truck sales were up by 11% in the last month and Caterpillar’s worldwide machines sales increased by 4% in all of the last three months.

Companies: Volvo
  • 18 Jul 19

Q2 19 was another superb quarter

Volvo’s revenue and earnings are generated with trucks (63% and 64% in H1 19, respectively) and construction equipment (22% and 28%). These highly cyclical businesses have continued doing very well in Q2, but trucks have started to see falling order inflow as have buses.

Companies: Volvo
  • 24 Apr 19

A formidable Q1 19

Much stronger than expected volume growth in the Americas combined with Swedish kronor weakness have translated into much stronger than anticipated revenue and profit growth.

Companies: Volvo
  • 30 Jan 19

Earnings and dividend higher than we had anticipated

Although Volvo suffered a charge of SEK7bn from the early degradation of an emission control component, it has delivered what we had anticipated. The reasons for the excellent profit number were SEK weakness plus much higher capacity utilisation. However, a further margin increase is unlikely in 2019 as order inflow growth has clearly moderated as of late.

Companies: Volvo
  • 04 Jan 19

SEK7bn provision for emission problem

Volvo has long tried to suggest that it is producing ‘green‘ trucks but management has discovered that one emission control component is degrading faster than expected. This translates into higher emissions and it forces Volvo to make the above provision which represents more than 25% of our projected 2018 Truck division’s EBIT. The company’s press release suggests that this provision only covers initial costs such as the testing of vehicles, statistical analysis and the dialogue with the relevant authorities. Subsequent recall costs associated with the implementation of corrective measures are expected to burden divisional earnings at a later stage.

Companies: Volvo
  • 19 Dec 18

SEK1.5bn profit from disposal of majority stake in WirelessCar

Volvo is selling a 75.1% stake in its fully-owned subsidiary WirelessCar to VW. The disposal price is SEK1.1bn, which translates into the above profit, i.e. the company currently shows negative equity. The transaction is expected to be finalised in H1 19. The subsidiary provides connected vehicle services and solutions to global producers of passenger cars as well as commercial vehicles. By keeping a minority stake, Volvo will continue to have access to the know-how and it will continue to focus on connected solutions for its trucks. WirelessCar had 3m connected vehicles around the globe in 2018 and turnover is projected to reach SEK0.5bn this year.

Companies: Volvo
  • 19 Oct 18

Volume, revenue and profit growth accelerated in Q3

Volvo’s Q3 revenue increased by 20% to SEK92bn which brought the ytd number to SEK285bn (+17%). The respective EBIT growth rates were +38% (to SEK10.2bn) and +31% (to SEK30bn). We had expected a 9M revenue number of SEK280bn and EBIT of SEK28.6bn.

Companies: Volvo
  • 16 Oct 18

Volvo potentially incurs its own Dieselgate

Volvo says that it has detected the premature degradation of one emissions control component. This leads to NOx emissions that exceed legal limits over time. The trucks involved were delivered overwhelmingly to clients in Europe and North America. According to the company’s release, it is impossible to assess the possible financial impact at this time, but the costs could be material.

Companies: Volvo
  • 19 Jul 18

Q2 has been formidable

Volvo’s Q2 revenue surpassed the SEK100bn level for the first time ever and EBIT of clearly more than SEK11bn was above the SEK10bn level for the first time as well. Strong demand combined with cost reductions in the past have translated into these superb numbers.

Companies: Volvo
  • 24 Apr 18

Q1 18 has been superb

Q1 order inflow has been very convincing indeed which provides comfort for the next quarters. This, plus better than expected numbers for the first quarter, allows us to raise our projections.

Companies: Volvo
  • 26 Feb 18

Geely’s acquisition of Daimler stake changes Volvo’s Supervisory Board

Volvo is clearly unsatisfied with Geely’s latest announcement. It had acquired a stake in Volvo just a few weeks ago and has now decided to buy a stake in Daimler, Volvo’s fierciest competitor for trucks around the world. It remains to be seen whether the nomination committee will allow a new Geely representative to join its Supervisory Board.

Companies: Volvo
  • 31 Jan 18

Q4 17 dollar weakness took its toll, but not on profits

Volvo released the expected superb 2017 numbers and management’s optimistic view for 2018 is also reflected in the dividend which is raised by SEK1 to SEK4.25 whereas we had expected SEK3.75. This higher dividend proposal was also supported by much improved cash generation.

Companies: Volvo
  • 29 Dec 17

Chinese Geely acquires the shares that were held by Cevian

Geely, which does not have any expertise in manufacturing trucks, has acquired a stake of a good 8% from Cevian. Speculations suggest that this might eventually lead to the re-merger of Volvo Trucks and Volvo Cars as Geely had acquired the latter operation from Ford earlier this decade.

Companies: Volvo
  • 20 Oct 17

9M 17 numbers ahead of our expectations

Volvo has delivered superb revenue and profit numbers. Consolidated revenue increased by a good 12% to SEK77bn in the last quarter which brought the 9M number to SEK243bn, an increase of almost 11%. The respective EBIT numbers were +60% to SEK7.42bn and +67% to SEK23.0bn. We had expected 9M numbers of SEK240bn (sales) and SEK20.6bn (EBIT).

Companies: Volvo

Research, Charts & Company Announcements

Research Tree provides access to ongoing research coverage, media content and regulatory news on Volvo. We currently have 43 research reports from 1 professional analysts.

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  • 03 Dec 19

Interim results – trading on track

Interim results show a decent level of organic growth and points to trading being on track to achieve full-year expectations. Trading remains at a record level with improved gross margins and operational drop through. Sector diversity has increased. Cash generation has been creditable, allowing for the early pay-down of Pacer-related loans. No change to forecasts. The shares have performed well on the back of several upgrades over the past year, a combination of acquisitions and contract wins, but still trade at a discount to its peer averages and continue to offer good upside with trading momentum remaining positive.

Companies: Solid State
  • 05 Dec 19

LIBERUM: PayPoint* - Growth drivers becoming more powerful

The H1 20 results were ahead. PBT fell 5% yoy to £24.0m and FD EPS fell 5% to 28.5p due to the non-repeat of the VAT credit in H1 19, although both were 7% ahead of our estimates.

Companies: Paypoint
  • 28 Nov 19

Cenkos: TClarke Plc - Sparking into life

We effectively re-initiate TClarke on a buy rating against a ‘model fair value' of 136p (20% upside). A positive trading update confirms 2019 consensus and the achievement of target 3% margins. The next leg of growth will focus on revenue expansion (and margin sustainability) which potentially drives high-single digit earnings growth beyond 2021. This is scarcely recognised by a 2021e PE of c6x, dividend yield of 4.4% and FCF yield rising through 9%. The stock has clear attractions on valuation and income grounds.

Companies: TClarke
  • 03 Dec 19

Morning Comment

This morning’s interims illustrate, as expected following the trading update of 24 October, a very strong H1 2020E performance with a 43% rise in revenue (+11% organic) driving a 61% increase in adjusted PBT. These results represent 49% and 63% of our FY 2020E revenue and PBT expectations respectively. Key standouts were the Manufacturing division (Power in particular, bolstered by good demand for battery packs), which grew revenue by 22%; and a group forward order book +5% LFL at £37.8m. Whilst the latter underpins our full year expectations, caution over wider macro events and movements in FX lead us to maintain our upgraded full year expectations for the time being. Even so, the shares continue to trade at a material discount to our estimate of fair value of 640p, which is based on a current year PER of 15x against its closest quoted peer discoverIE on 17x.

Companies: Solid State
  • 05 Dec 19

Solid State - Record trading in H120

Solid State delivered an 11% pro forma increase in group revenues and a 60% jump in adjusted profit before tax during H120. While some of this increase was attributable to factors such as favourable forex, which management expects will reverse in H220, the group is showing a sustainable benefit from the acquisition of Pacer in November 2018 and a drive to higher margin added-value activities in the Manufacturing division. Management is confident of meeting consensus expectations for the year, which are broadly unchanged since the September upgrade. The shares continue to trade at a substantial discount to peers for prospective P/E.

Companies: Solid State
  • 03 Dec 19

Cenkos: Marlowe Plc -- Trading ahead of expectations

Marlowe has produced a strong set of results for H1/20A, with improved cross-selling helping drive an acceleration in organic revenue growth to +6.5% YoY. With H2/20E starting well, we upgrade our FY20E and FY21E forecasts to account for this improved growth trajectory, along with the impact of recent acquisitions. Buy.

Companies: Marlowe
  • 21 Oct 19

Quarterly Research Outlook Autumn 2019

Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.

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  • 02 Dec 19

Keywords Studios - Confidence in its sustainable model

At the capital markets day (CMD) on 14 November, management offered a comprehensive review of Keywords’ business and its drivers. This was the first event with Jon Hauck formally in place as CFO, who brings useful experience from his background at Rentokil Initial. Keywords appears to be well positioned to continue to perform robustly in FY20 despite the Q420 console transition (which may even be a net benefit to the group), balancing strong growth with a margin recovery back to more normalised levels (c 15%) with M&A, particularly in game development and marketing, very much front of mind. Keywords remains the only public games service provider at a global scale. We have updated our forecasts, but these are largely unchanged as the year end approaches.

Companies: Keywords Studios
  • 02 Dec 19

Cenkos: Velocity Composites Plc - Poised for Growth

Velocity offers a supply chain outsourcing solution to Tier 1 and Original Equipment Manufacturers (OEMs) in the aerospace industry. It supplies composite material kits which reduce waste, product manufacturing times and provides process standardisation and stock management. The Company has undergone a recent restructuring and is now well positioned to capitalise on its large growth market opportunity. We see the Company generating incremental value as larger contracts materialise through a renewed focus on larger, scalable customers and through the Wesco partnership in the USA.

Companies: Velocity Composites
  • 02 Dec 19

Allenby Capital TMT Update - 02.12.19 (BIRD.L, CPX.L, SWG.L)

Blackbird plc* (BIRD.L, 35p/£30.7m) | CAP-XX Ltd* (CPX.L, 3.7p/£12.0m) | Shearwater plc (SWG.L, 242p/£53.5m)

Companies: BIRD CPX SWG

  • 02 Dec 19

Norcros - Strength in diversity

The nature of a portfolio business is that all parts do not necessarily move forward at the same rate. Norcros’s double-digit progress in H120 included some notable company performances enhanced by an acquisition, which together more than offset pockets of softer trading elsewhere. The group is rising to the challenge of some tricky market conditions and this is starting to be reflected in its rating.

Companies: Norcros
  • 03 Dec 19

Full-year results, trading on track for FY 2020 forecasts

Full-year results were in line with expectations, with market conditions showing little change from previous indications. The subsea telecom fibre couplers continue to show robust growth and a strong order book. Demand from the microelectronics sector has stabilised, but remains affected by the slow-down in China and US/Chinese trade issues. A&D remains solid and the Lifesciences business has jumped in scale from the acquisition of ITL. No change to forecasts. The shares have performed well over the past quarter and are now fairly close to our maintained 1250p price target. As such, the shares look up with events, pending definitive news on Chinese trade talks, which could act as a catalyst to performance.

Companies: Gooch & Housego
  • 14 May 19

H1 results held back by Gaming

Zytronic’s H1 results contain no surprises, less than two weeks on from the trading update. Gaming sector weakness outweighed a stronger performance from a number of other sectors and PBT reduced to £1.4m from £2.2m in H1’18. The outlook statement strikes a cautious tone and this has already been reflected in our forecasts (as revised on 2nd May). The shares trade on a marked discount to the smaller cap goods stocks (6.6x cal’19 EV/EBITDA versus peers on 9.2x). Zytronic’s dividend yield is now striking at 8%, which is affordable (net cash £12.1m) and, we believe, sustainable although dependent on the recovery in higher margin activity over coming periods.

Companies: Zytronic
  • 27 Nov 19

First Light

Water Intelligence (WATR) – Corporate – 10-month update reflects continuing good progress

Companies: Water Intelligence
  • 02 Dec 19

Positive update on Hemerdon tungsten mine

Hargreaves has announced positive developments at the Hemerdon tungsten mine, which was operated by Hargreaves’ customer Wolf Minerals until Wolf ceased trading in October 2018. Since then, Hargreaves has been in discussions with the Official Receiver and other interested parties regarding the future of the mine, initially in order to protect Hargreaves’ role in the restoration of the site. Earlier this year, as these discussions continued, Hargreaves acquired various properties and an assignment of the minerals lease via wholly owned subsidiary Drakelands Restoration Ltd (DRL). Today, Hargreaves has announced the sale of DRL to a third party, Tungsten West Limited (TWL) for £2.8m in cash generating an exceptional profit on disposal of £2.4m. TWL intends to recommence tungsten mining in due course and has awarded Hargreaves a 10 year mining services contract. The contract comprises a fixed fee of £1m p.a. in addition to revenue for services provided when mining operations commence. Hargreaves will also continue to carry out maintenance services on site. In our view, this is an excellent outcome, crystallising a £2.4m exceptional profit, whilst reviving the opportunity for future tungsten production at Hemerdon and protecting Hargreaves’ longer term interest in the restoration of the site.

Companies: Hargreaves Services