VOLVO CARS reported a record revenue for the first six months of 2019 of SEK130.1 billion, up from SEK122.9 billion year-on-year and buoyed by the best first half-year sales performance in the company’s history.
For the first six months, sales amounted to a record 340,286 cars, a year-on-year increase of 7.3%. During the period, Volvo Cars grew consistently faster than the overall market.
The company has gained market share across the US, China and Europe, with the UK and Germany recording growth of 30% and 32%, respectively. The overall passenger car market in the US declined by 2.0% in first half, while China and Europe fell by 9.3% and 3.1%, respectively, during the same period.
Håkan Samuelsson, president and chief executive, emphasized that the company has prioritized growth and market share during the period, capitalizing on the building momentum for the Volvo brand generated by an all-new lineup of award-winning models.
“At a time when most markets in the world see stagnating car sales, we have had strong growth in the first half,” Mr. Samuelsson said. “We continue to take market share in all regions where we operate, but increased pricing pressure and tariffs have decreased our operating profit. The cost measures we took earlier this year will come into effect in the second half of the year.”
In the Philippines, the Volvo market continues to look forward to a positive turn as new models are introduced. The stately Volvo S90 estate, the luxurious Volvo XC90 SUV, and the robust Volvo XC60 SUV continue to bring in interest for the Swedish marque. The local market in Twin Engine Plug-in Hybrid variants can now also enjoy these three models, as well.
Operating profit for the first half of 2019 was of SEK5.5 billion, compared with a SEK7.8 billion operating profit for the same period last year. For the second quarter of the year, operating profit fell to SEK2.6 billion, while revenue rose to SEK67.2 billion.
The first-half operating margin fell to 4.2% from 6.4%, while the operating margin for the second quarter of the year amounted to 3.9%.
Volvo Cars has initiated additional cost measures within the company on top of already planned measures, which combined, aim to lower fixed costs by SEK2 billion. These actions will come into effect in the second half of the year and running into the first half of 2020.
For the remainder of the year, Volvo Cars expects continued growth in sales and revenue, boosted by continued strong demand for the fully renewed product portfolio as well as increased production capacity.
Market conditions are expected to put continued pressure on margins, but the combination of volume growth and cost measures is expected to result in a strengthened profit in the second half of the year compared with the same period last year.