Volvo Group Profit Falls 30% Due To US Tariff Uncertainty

Swedish heavy truck maker, Volvo Group, announced a 30% drop in net profit for the first quarter on Wednesday, citing a 9% decline in vehicle sales due to uncertainty over trade tariffs. Volvo Group manufactures all of its vehicles for the U.S. market in the United States, but tariffs could impact the components used in production.

“Recent tariffs and other trade restrictions imposed or considered to be imposed by the US and other countries have significantly increased uncertainty about trade conditions in markets where the Group is present, as well as in relation to global and regional supply chains,” Volvo Group said in a statement.

“The situation is fast-changing and complex to assess, and no predictions can be made on future developments, potential impacts on the Group or whether trade restrictions may impact the Group more severely than main competitors.”

The company stated that it had revised its full-year forecast for heavy-duty truck sales in the United States, lowering it by 25,000 to 275,000 units, while maintaining its outlook for Europe and China. Volvo Group’s net profit for the first quarter fell to 9.98 billion kronor ($1.03 billion), down from 14.1 billion kronor in the same period last year, which aligned with analysts’ predictions, according to Bloomberg.

Operating profit dropped by 27 percent to 13.2 billion kronor, compared to 18.1 billion kronor a year earlier. The operating margin also contracted, falling from 13.8 percent to 10.9 percent.

Net sales dropped by seven percent, adjusted for currency fluctuations, to 121.8 billion kronor, while truck deliveries decreased by 12 percent during the quarter. Volvo Group attributed this decline to the uncertainty surrounding trade tariffs and U.S. emissions legislation, which led U.S. customers to adopt a “wait and see” approach. However, the company saw a positive trend in order intake, which increased by 13 percent to 55,227 trucks in the same period.