Volvo Cars posts first quarter operating profit of SEK3.1 billion

Premium carmaker Volvo Cars has announced a robust start to 2016 with operating profit for the first three months of the year increasing strongly to SEK 3.1 billion (Rs 2,511 crore) and the operating profit margin reaching 7.5 percent, as sales improved in Europe, Asia and the US.

The Swedish company reported that global retail sales between January and March rose 11.9 percent to 120,591 units, compared to 107,721 in 2015, while net revenue increased to SEK41.7 billion (Rs 33,777 crore), up 24 percent compared to 2015’s SEK33.6 billion (Rs 27,216 crore).

The revenue and profit increase was driven primarily by volume and sales mix, specifically the margin enhancing effects of the all-new XC90 SUV, sales of which hit 20,800 units in the first three months of the year.

“The new XC90 proves that customers like what they see from the transformed Volvo Cars – one in five new Volvo cars sold in the first quarter was an XC90,” said Håkan Samuelsson, president and chief executive. “We also unveiled the new S90 sedan and V90 estate in the first quarter and we expect these cars to have a similar positive impact on sales.”

In Western Europe, the company continued its strong performance and reported retail sales of 49,305 units (2015: 43,522), an increase of 13.3 percent, during the first quarter. Germany, UK, Spain and France were the main drivers behind the positive development.

In China, retail sales in the first quarter saw an increase of 13.4 percent, reaching 19,636 (2015: 17,311) units. The XC60 was the best-selling model with retail sales of 8,794 (2015: 8,029).

In Sweden, previous strong sales trends continued, selling 16,047 (14,093) units and recording an increase of 13.9 percent.

In the US, Volvo Cars’ turnaround continued to gather pace. Sales rose 19.2 percent compared to the same period last year to 16,361 (2015: 13,723).

“We anticipate the full-year retail sales to increase. The XC90 will, with a whole year of production, be a main driver. During the latter part of the year the start of production of the S90 and the V90 will also contribute to the increased sales. Based on the volume increase, albeit influenced by launch costs for the new models reaching markets during the year, we anticipate our full year net revenue and operating income to increase year over year,” said Håkan Samuelsson.