U pp inverted world. AB Volvo missed profit expectations, but shares went up. Now meet the new CEO Martin Lundstedt a tough 2016 in which everything points to a worse result than last year. Nevertheless, Volvo is on the right track.
Martin Lundstedt. Photo: Anders Wiklund / TT
When Volvo swings, turns Sweden. As described Pehr G Gyllenhammar, Volvo pompously in the early 80s. Today is the second beats: When the world economy swinging, swinging the world’s only truly global heavy vehicle manufacturers – Volvo.
At the economic differences between world regions accounted icy clear on Friday morning. Then Prime soared new CEO Martin Lundstedt up to the podium of the Match The palaces in central Stockholm and delivered results for the fourth quarter.
He was approved and shares rose – despite Volvo missed analysts’ expectations. Full-year operating margin (excluding restructuring costs) landed on good 8.2 percent. That compares with 3 percent last year.
A quick review shows to plant the machines, which account for one fifth of net sales, was bleeding in the fourth quarter and lost sales due to the large drop in China, Russia and Brazil. However, was cautious profit for the full year.
But there is a truck part that stands for seven-tenths of consolidated sales which are clearly important: Sales stood still overall with a healthy Europe, which compensated for a North America where net orders fell as much as 58 percent in the fourth quarter.
lorries profit margin for 2015 was still 10.1 percent, the highest in many years – all with a good cash flow and low debt.
However, although there: the forecast ahead is a shocker: North American market for trucks is expected to go down 14 percent this year and Brazil is expected to fall 16 percent from already low levels. China (which lost a quarter of its truck market in 2015) stands with the rest of Asia and stomps. While the movers are few and uncertain light in the tunnel.
Volvo has previously been slow to meet the right swings. Now Lundstedt big test: In the United States will now be output quickly down 30 percent, including layoffs and even murmur, only about details on this.
In order to get increased profitability presents Martin Lundstedt no magic bullet, but … drum roll. ..a organizational change! It came to light a week ago where the four truck brands Volvo, Renault, Mack divided into separate business areas in which every penny will count.
The background is that Leif Johansson, CEO of 1997 and 2011, bought companies around the world and doubled sales. Until 2011, the activities in principle unintegrated, with meager profit margins. The successor to Leif Johansson, Olof Persson saved 10 billion, collapsing all makes of trucks to get to the right synergies in everything from overhead costs to product development. It was like shaking a hornet’s nest heavily – and Olof Persson was fired after he had not received any of them.
Now, Martin Lundstedt reap the benefits of savings and he was turning back the organization pendulum, but only in part; he retains integrated sourcing and product development but depresses the responsibility to bring up the profitability of the brand managers. We should remember that both Mack Renault have lost market share – not to mention the problem child UD Trucks in Japan.
The question is, organizational change hands. Did Lundstedt seriously he would keep separate accounts for each brand digits. He does not – the reason will be that the organization must have a good chance to sit down.
However, given the bleak outlook in virtually all markets except – and that there are still owner-votes (read Christer Gardell ) who want rapid improvement – and may wish to push out construction equipment, perhaps he would have to do it. But despite the Volvo on the right track.
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