Volvo Lifts Dividend After Earnings Rise; Cautions on Normalizing Truck Demand

By Dominic Chopping

STOCKHOLM--Volvo increased its dividend after posting an 82% rise in fourth-quarter earnings, but cautioned that truck demand is normalizing while construction equipment demand is weakening in most markets.

The Swedish truck maker said Friday that truck deliveries rose 4.4% in the quarter but order intake fell 8.8%, amid a continuing normalization of demand that reflects somewhat lower transport volumes and a weaker macroeconomy.

Continued supply disturbances and a six-week strike at Mack Trucks affected productivity and costs in the quarter, it said.

Volvo reported a net profit of 12.05 billion Swedish kronor ($1.15 billion) compared with SEK6.62 billion a year earlier as sales rose 10% on the year to SEK148.12 billion.

Analysts polled by FactSet had seen a net profit of SEK12.65 billion on sales of SEK136.3 billion.

The company reported an adjusted operating margin of 12.4% from 9.1%.

"We successfully mitigated cost inflation with price management, handled disturbances in the supply chain and reduced inventories," Chief Executive Martin Lundstedt said. "With demand normalizing across several of our segments and markets, we are gradually adjusting our production levels."

Volvo lowered its 2024 truck market forecasts for Europe and India, lifted it for Brazil and China, and maintained it for North America.

The company proposed an ordinary dividend of SEK7.50 a share and an extra dividend of SEK10.50 a share, up from SEK14 last year.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

January 26, 2024 02:17 ET (07:17 GMT)

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