How are Volvo Trucks, Daimler Truck and Paccar performing and what are their prospects?

Volvo Trucks, Daimler Truck and Paccar are three of the six companies that dominate the European truck market. Feedback on their financial performance and outlook:

In short:

  • Truck manufacturers saw significant year-over-year operational improvements in 1Q22.
  • Order books remain healthy and no cancellations have been noted so far.
  • Supply chain issues are fading but are still present this year.

A confident start to the year for Daimler Truck

Daimler Truck had a strong start to 2022, with increased unit sales, revenue and adjusted operating profit in the first quarter of the year. During this period, the company achieved unit sales of 109,300 truck and bus units (+8% YoY), revenues of 10.6 billion euros (+17% YoY ) and adjusted earnings before interest and tax (EBIT) of 651 million euros (+11%). % Annual). Encouragingly, at Daimler Truck’s Annual General Meeting (AGM) held on June 22, company management indicated that the first quarter could be the weakest this year due to bottlenecks. bottleneck in deliveries, which also affected the previous year and was felt more acutely between January and March.

Daimler Truck believes that overall macroeconomic conditions continue to be relatively supportive of global commercial vehicle demand for 2022. The company expects industrial business unit sales to increase in the range of 500,000 to 520,000 in 2022 ( of 455,400 units in FY2021). The truck manufacturer continues to aim for a significant increase at group level in fiscal 2022 and has raised its full-year sales target from 48.0 billion euros to 50.0 billion euros following to first quarter results from €45.5 billion to €47.5 billion previously (and from €39.8 billion in FY2021). In addition, Daimler Truck expects a “significant increase” in adjusted EBIT in fiscal year 2022. The updated outlook reflects the currently anticipated effects of the Russian invasion of Ukraine and shortages of semi- ongoing drivers, while the additional uncertainty of a potential new Covid-19 pandemic remains. On February 27, 2022, Daimler Truck suspended all business activities in Russia until further notice and took a charge of €170 million, with an expected additional charge of €200 million to be taken possibly later.

Company management also said at its AGM that due to supply chain bottlenecks, there was a significant number of unfinished truck inventories at the end of 1Q22, with some critical parts being still missing. Daimler Truck expects these inventories to remain high in the coming quarters, but to gradually decrease by the end of this year. In this context, the order book is very important according to the company. Management believes that customers are so behind in renewing their fleet that they are not in a good position to postpone new purchases, despite the deteriorating global macroeconomic outlook. Overall, so far Daimler Truck is not seeing any order cancellations and therefore remains optimistic for the rest of the year.

Paccar – still anticipates market growth this year

Paccar reported strong Q1 2022 figures with global net sales and revenues of $6.5 billion (up 11% YoY), including net sales and revenues in the Trucks segment , parts and others of $6.1 billion (up 13% YoY). Paccar delivered 43,000 trucks during the quarter. According to the company, truck unit sales reflected increased shipments to Europe, partially offset by lower unit shipments to the United States and Canada due to shortages of semiconductor chips and components across the board. industry. Paccar predicts that shortages will continue to affect deliveries in 2022.

The company’s truck revenue was $4.7 billion in 1Q22, up 11% year-on-year, primarily due to higher realized truck prices. In the United States and Canada, Europe and Mexico, South America, Australia and others, truck sales increased 1%, 29% and 18% year-on-year, respectively, for the current quarter.

In terms of profitability, the Trucks, Parts & Others segment’s pretax profit was $627 million, up 19% year-on-year for the quarter. Truck revenue (before income taxes) was $277 million, up 2% year-on-year.

At the time of the first quarter announcement, the company’s fiscal 2022 outlook forecast truck industry heavy-duty retail sales in the U.S. and Canada to be between 260,000 and 290. 000 units, compared to 250,000 in 2021. In Europe, Paccar expects the truck industry 2022 registrations of vehicles over 16 tons will reach 270,000 to 300,000 units compared to 278,000 in 2021. In North America South, Paccar forecasts heavy truck industry registrations in 2022 to reach 125,000 to 135,000 from 127,000 in 2021. Parts sales are expected to grow 12 to 15 percent annually, reflecting strong freight demand.

The Volvo Group also sees demand before its available supply

In 1Q22, the Volvo Group achieved sales of SEK 105.3 billion, up 12% year-on-year and 11% year-on-year after adjusting for currency fluctuations and the divestment of UD Trucks. Volvo Group’s Trucks division contributed SEK 69.6 billion in the quarter under review, up 31% year-on-year on a like-for-like basis excluding the effect of the divestment of UD Trucks, and up 23% year-on-year also excluding currency effects. In 1Q22, the company reported adjusted operating profit of SEK 12.7 billion, up 7% year on year, with respective margin down to 12.0% from 12.6% in the comparable quarter of the previous year. The increase in adjusted operating income reflects the effect of higher prices and sales volumes, partially offset by higher material and transportation costs as well as lower profits from joint ventures.

Trucks Division EBITA was SEK 8.7 billion, up 16% YoY, with a respective divisional margin of 12.5% ​​(vs. 12.8% in 1Q21 ). Volvo Group’s unadjusted operating income was SEK 8.6 billion, down 29% year-on-year, due to Russia-related charges taken in the quarter under review. The company had total assets of SEK 9 billion linked to Russia and took provisions of SEK 4.1 billion. The operating result in 1Q22 also reflected a positive effect of SEK 1.3 billion related to currency fluctuations.

The Volvo Group noted that transport activity in most regions was quite good and demand for trucks was high. The company said it has large order books and current delivery times are long, making the group more restrictive in its order window. This had a negative effect on order intake in the current quarter (truck order intake down 43% year-on-year in 1Q22, excluding UD Trucks) from particularly high levels in 1Q21.

The supply chain continued to be strained, primarily due to shortages of semiconductors and other components combined with a lack of freight capacity. This caused production shutdowns throughout 1Q22 which are expected to reoccur in the future. However, in 1Q22, truck deliveries increased 6% year-on-year to 55,600 vehicles (a record high for a first quarter). The Volvo Group also pointed to cost inflation and expects inflationary pressures to continue. On a more positive note, the Volvo Group received an order from Maersk for 110 Volvo electric trucks in March, the company’s largest commercial order for electric trucks.