Key highlights from the Q2''25 conference call (presentation slides)
Most of the call was focused around the US market environment and impact from tariffs. Notably, so far in Q2, Volvo commented on a still limited impact from US tariffs but this will increase throughout the year. Out of the SEK4.8bn gross income YoY contraction, tariffs were said to be the third least important, when compared to negative volumes and brand/market/product mix effects. The company continues to adjust production accordingly in light of a weaker market environment and will try to offset cost inflation with price. Customers in North America remain on a wait-and-see mode, evidenced by order intake -16% YoY, while Europe was characterized by a general stabilization.
In Europe, production moved up through the year, where Volvo is working ''step by step on that stability''. Order recovery was said to be solid, although Volvo shied away from being too optimistic, as medium and heavy-duty orders slowed to +8% YoY during Q2''25 from +DD% over the prior 3 quarters.
Quote of the call: ''The impact from tariffs will increase on the results; Q2 still a limited impact''
BNPP Exane View:
The shares are flat intra-day (-2% rel.), reflecting a widely expected weak set of results and some caution on the overall Truck market environment. It will be interesting to understand how H2 will evolve as a growing order book in Europe will be delivered in a seasonally weak H2 while broadly offset by a continued depressed market in North America alongside a declining South American market. Cost inflation will see a material step up therefore cost actions namely adjusting production levels will be key to protect profitability. Still, we fear about further FY Cons. downgrades as H2 requires Truck adj. EBIT to be +18% HoH or +2% YoY, and adj. EBIT margin to improve to 11.7% after 10.3% in H1.
BNPP Exane Research:
. VOLVO ''B'': Q2''25 results: weak across the board
. VOLVO ''B'': Q2''25 pre-close feedback
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