Sweden's Volvo Cars Q3 revenue drops; plans job cuts

Overview

• Sweden-based automaker's Q3 revenue fell sharply yr/yr, company posted operating loss

• Company cited deteriorating conditions in China and US for weaker results

• Volvo Cars to cut about 2,500 jobs globally as part of new cost-saving plan

Outlook

• Volvo Cars expects tough market conditions in China to persist for the next two years

• Company aims to achieve SEK 5 bln in additional cost savings

• Company plans to reveal three new cars in 2027, including two China-specific models

Result Drivers

• CHINA MARKET - Co said hypercompetition and severe pricing pressure in China led to nearly 50% yr/yr revenue decline in the country

• US TARIFFS & INCENTIVES - Co said continued negative effects from tariffs and removal of consumer incentives for electrified cars in US pressured margins

• LEGISLATION & RAW MATERIALS - Negative revaluation of SEK 1.1 bln in CAFE credits due to US legislation changes and negative raw material developments affected Q3 results

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 8 "hold" and 4 "sell" or "strong sell"

• The average consensus recommendation for the auto & truck manufacturers peer group is "buy."

• Wall Street's median 12-month price target for Volvo Car AB is SEK15.10, about 7% above its October 22 closing price of SEK14.12

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 5 three months ago

Reuters Recommended Reads

• Oct 20 - Volkswagen bet on Xpeng to save its China business. It's not going to plan

• Oct 21 - Auto industry bosses expect software, China growth to reshape sector by 2035, survey shows

• Oct 22 - Audi gets new China leadership to face bruising competition

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)