Michael Vilenius: Volvo slowly on the right track – Dagens Industri

Updated 2016-02-05 12:22. Published 2016-02-05 12:15

Same great leap is not likely to result 2016 judging by the fourth quarter, Volvo’s market forecasts, lowered the rate of production and new CEO Martin Lundstedt message.

* Fourth quarter. Sales declined organically by 1 percent. Order intake turns on all truck markets except Europe and do it faster than analysts anticipated. For all markets except South America, order bookings decreased also faster than Volvo’s deliveries and the company is forced to cut production brake.

* Market forecasts. Truck forecasts adjusted down North America, the market has peaked, and Brazil, the economic situation has worsened. The two markets are expected to shrink this year by 14 and 17 per cent in 2015. For glimmer Europe where athletes run for high pressure was raised slightly the forecast and 4 percent growth in 2016 believed the move of the North American in the number of trucks. Volvo also retains basically the bleak outlook for civil construction markets mainly suffering from China’s mining, construction and infrastructure industry is on its knees. 2016 believe the company is unchanged in Europe and down in all other parts and signals with a small prognosnedjustering of the North American market will decline in oil prices also hitting the Volvo.

* Loan losses. Fears increased credit losses in China came to naught, they were just 0.2 billion kronor in the quarter.

* Savings Programme. The grips as will cut costs by 10 billion goes according to Volvo as it should, all activities are completed and last year lost 5,000 employees from the Group. Yet, so far, less than half materialized in lower costs and less than 70 percent in local currencies. The question mark is composed both of how much Volvo is able to realize and how much they are in the tough competition and declining markets to keep.

* Margins. The question is unless the operating margin for the truck movement peaked in the fourth quarter. It was 7.9 percent when adjusted for arbitration, highest since the second quarter of 2012. At the same time, Volvo successfully limit losses in the construction machines and the declining market there will probably be difficult to do it so much better than to hibernate in a still difficult year 2016.

* dividend. Remained unchanged of SEK 3 per share despite an extremely strong cash flow of SEK 15 billion in industrial operations and Volvo’s industrial operations are also completely free of debt before retirement obligations.

Martin Lundstedt more has not presented any miracle cure or given investors something big and fancy to hope. Instead, it has so far been mostly talk about the increased focus on customers and continuous improvement. The only concrete grip is to give back power to the heads of Volvo’s four truck brands – Volvo, Renault, Mack and UD Trucks – right for them to take greater responsibility for the business and the customers. But he keeps them in sufficiently tight rein he risks becoming a puppet.

share is with a P / E ratio of 11-12 times earnings in 2016 and 2017 priced worse times. The report did nothing to change that image.