Volvo Car reports wide second-quarter earnings miss

Truck division surprises with stronger-than-expected orders

Volvo Car’s second-quarter adjusted operating profit fell well short of analyst expectations on Wednesday, prompting multiple investment banks to project downward forecast revisions. The Swedish automaker’s results contrasted with better-than-expected performance at its truck division and mixed signals across the broader auto and transport sector, according to research notes reported by The Wall Street Journal.

SB1 Markets analyst Edvin Jabeskog reported that Volvo Car’s net sales came in 5.8% below consensus, while adjusted EBIT fell 36% below expectations. The adjusted EBIT margin of 1.1% compared to an expected 1.6%, according to the analyst. Jabeskog attributed the weakness to soft performance in China, inventory sales and discounts. SB1 Markets reiterates its buy rating on the stock with a 23 kronor target price. Shares fell 9.3% to 19.19 kronor.

Bernstein analysts reported similar findings, noting Volvo Car’s revenue of 77.7 billion Swedish kronor missed consensus by 6%. The gross margin of 16.8% came in 0.9 percentage points below expectations, while the adjusted EBIT excluding items affecting comparability represented a 25% miss. Free cash outflow of 5.2 billion kronor fell considerably short of the consensus expectation for an inflow of 1.9 billion kronor, according to the analysts. Bernstein attributed the weakness to lower wholesale volumes, softer sales mix, pricing pressure, currency effects and a one-off sale that boosted the prior-year comparison. Shares fell 6.7%.

SEB offered a somewhat more constructive outlook, noting that Volvo Car had already flagged that the second quarter would be hit by cost inflation, discounting and the tough China market. “The recovery is expected and the main positive factor is that the second quarter looks set to be confirmed as the quarter when it bottoms out,” SEB analysts wrote. The bank rates Volvo Car at hold with a 20 kronor target price and noted the company signaled free cash flow for the full year would be zero. Shares fell 7.3%.

Jabeskog at SB1 Markets wrote that Autoliv’s second-quarter results were broadly in line with expectations and that the initial 5% share price decline looked excessive. Net sales amounted to $2.83 billion compared to consensus of $2.76 billion, while adjusted EBIT of $270 million exceeded the expected $268 million, according to the analyst. Organic growth of 1% exceeded the 0.3% decrease in global vehicle production, driven by strong development in Asia. The company reiterated guidance and said share buybacks would continue. SB1 Markets reiterates its buy rating with a 1,390 Swedish kronor target price. Shares fell 4.4% to 1,152 kronor.

At Volvo AB, the truck division surprised analysts with stronger-than-expected order intake. RBC Capital Markets analyst Nick Housden wrote that the Swedish truck maker beat consensus expectations for sales and adjusted EBIT by 1% and 2%, respectively, with both trucks and construction equipment divisions benefiting from cyclical recovery. Shares traded 2.3% higher at 349.10 kronor.

Citi analysts highlighted a widening valuation gap between Ryanair and its European airline peers, noting the Dublin-listed carrier’s shares had trailed the sector by approximately 15 percentage points this year despite a lack of earnings outlook downgrades from the company. Ryanair’s fares appear set to stabilize, while airlines such as Lufthansa could face weaker pricing and pressure on earnings later this year, according to the analysts. Shares traded 1.3% lower at 26.3 euros.

UOB Kay Hian analyst Roy Chen wrote that Singapore Airlines could roughly break even in fiscal first quarter, citing higher fuel costs and the drag from Air India as factors weighing on the bottom line. However, Chen noted in-line June operational data with passenger loads driven by travel demand. Cargo loads rose on artificial-intelligence and data-center-related movements, as well as on front-loading of e-commerce shipments into Europe before an EU customs duty on small parcels took effect. The analyst added that profitability could rebound in the second quarter despite renewed U.S.-Iran hostilities pushing fuel prices higher, thanks to effective cost pass-through and fuel hedging. UOB KH retains a hold rating and raised its target price to S$6.76 from S$6.66. Shares ended at S$7.65.

Uber Technologies’ proposed acquisition of Germany’s Delivery Hero would bring more economies of scale while expanding the ride-hailing giant’s global footprint, according to Accuvest Global Advisors’ Eric Clark. “The cross-platform growth opportunities are what gets us excited,” Clark said. Users of both Uber’s mobility and delivery services typically generate three times more bookings, making it cheaper for Uber to expand from existing users than to attract new ones, he added. Delivery Hero shares traded broadly flat.

Macquarie analyst Eugene Hsiao characterized XPeng’s plans to launch a humanoid robot globally next year as a longer-term strategic initiative unlikely to meaningfully contribute to near-term earnings. The Chinese electric-vehicle maker aims to build monthly production capacity to over 1,000 units by end-2026, according to The Wall Street Journal. “At this stage, execution and narrative is most important as it reinforces XPeng’s physical AI positioning to investors,” Hsiao wrote. XPeng shares fell 9.1% at 51.40 Hong Kong dollars, following a 7.6% gain the previous day.