With help from the brand’s new XC90 SUV, Volvo managed to turn to profit in the first quarter, but is still far behind its premium rivals.
The Swedish premium brand is definitely on the right track, as its full-year operating earnings trebled last year to 777 million dollars compared to 2014, reporting for the first time more than half a million cars sold in the company’s history as well. The upward trend seems to keep going, as Volvo announced this week its earnings for the first quarter of the year rose to 3.1 billion Swedish crowns (384 million dollars), compared with a 11 million crowns loss (1.36 million dollars) a year ago. The net revenue also received a 24 percent boost to 41.7 billion crowns (5.08 billion dollars). The revenue and profit increase was mainly driven by volume and sales mix, specifically the margin increasing effects of the 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,” Hakan Samuelsson, president and chief executive, said. “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.” By comparison, Volvo posted an operating margin of 7.5 percent in the quarter, while BMW’s operating margin was 9.4 percent for the period, with 2.46 billion euros in earnings before interest and taxes. Based on the volume increase, albeit influenced by launch costs for the new models reaching markets during the year, Volvo expects its full year net revenue and operating income to increase at the end of 2016.