Volvo has reported an increase in sales at more than 7% on Friday after the company targeted the highest level of profitability aiming to reach an average operating margin above 10% over a business cycle. Over the past few years, Volvo has been going restructuring and heavy cost cuts which has lead to a profitability boost over the past 12 months. Volvo could have 1-2 years of continued structural improvements that will reach double digit margins possibly up towards 11-12%.
The company’s shares increased 7.6% which marked their year to date gain to 37% as investors were very impressed by improving margins, which was 9.4% in the first half of the year, up 7% from the previous year. Averaged annual operating margin was about 6%.
Volvo is in a phase where their main focus is on organic growth and improved profitability through continuous innovation and improvement.