Volvo Cars profits power up ahead of possible IPO
By Abigail Townsend
Date: Thursday 19 Jul 2018
(Sharecast News) - Volvo Cars said it was on track for another record year after second-quarter profits motored ahead.
The Gothenburg-based manufacturer, which has been owned by Chinese car group Geely since 2010 but is rumoured to be eyeing an IPO, said operating profits for the three months to June 30 were 4.2bn Swedish crowns, a 29% increase. Revenues came in at 66bn crowns, up 25%.
Overall, first-half revenues were ahead 24% at 122.9bn crowns with interim profits up 16% at 7.8bn crowns. Volvo Cars delivered a total of 317,639 new vehicles over the six months, a 14.4% increase.
Chief executive Hakan Samuelsson said the company had sold "more cars than ever before", adding: "The robust first-half performance places Volvo Cars firmly on course to report another record full-year."
Volvo Cars has had a run of strong results in recent years, as it takes on rival brands such as Mercedes-Benz and BMW, and Geely is understood to be considering floating the business later this year.
Volvo Cars recently opened its first plant in the US, which will focus on the production of its S60 saloon. The US is Volvo Cars' fastest-growing market, with sales up 40% in the first-half.
But despite the investment, its flagship XC90 SUV model continues to be imported to the US from China, leaving Volvo Cars potentially vulnerable to any escalating trade war between Washington and Beijing.
Samuelsson said the company had begun to "reshuffle" production between factories in Europe and China produce to cope with new tariffs.
Geely hired Citigroup, Goldman Sachs and Morgan Stanley to prepare the Swedish subsidiary for an initial public offer this year, it was reported by Reuters recently, with an estimated potential market valuation of at least €14bn.
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