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Volvo Cars reports record six-month performance in H1 2021

Volvo Cars today reported the best half-year results in terms of sales and operating profit in its 94-year history amid increasing demand for its cars across all regions.

The half-year financial report, which can be found here, showed the company achieved a revenue of 141 billion SEK, up 26 per cent, driven by strong demand and positive mix effects. Operating income was 13 billion SEK in the first six months of 2021, representing an operating margin of 9.4 per cent.

Sales volumes rebounded 41 per cent compared with the pandemic-affected period in 2020, but the company also saw strong growth of 12 per cent compared with the first six months of 2019, a more relevant comparison without the pandemic disruption. The 12-month rolling sales volume is approximately 775,000 cars, just shy of the 800,000 target set 10 years ago.

“The company continued to grow strongly despite the industry-wide semiconductor shortage, but more importantly, we demonstrated that we are a leader of the ongoing transformation in the automotive industry,” said Håkan Samuelsson, Chief Executive of Volvo Cars.

Volvo Cars aims to become the fastest-transforming company in the sector and to be fully electric by 2030.

The appeal of Volvo’s electric cars was demonstrated in the first half of the year by the demand for its Recharge models. Sales of both its fully electric and plug-in hybrid cars grew significantly, now making up 25 per cent of the global volume. This is the highest electrification share as a proportion of total sales among traditional car makers.

As part of the move towards full electrification, Volvo Cars launched its second fully electric model, the C40 Recharge. At the same time, the company firmed up its strategy of online sales to meet changing consumer behaviour. From now on, all fully electric models will be available exclusively through volvocars.com, and customers can order at their place of preference – from their home, at a Volvo studio, or together with a retailer. Volvo Cars is now operational with online sales in several markets, with transparent and flexible consumer offerings including care packages of service, wear and tear as well as insurance. Volvo Cars’ subscription offering, Care by Volvo, had a fivefold increase in the first six months of the year to more than 10,000 contracts.

Securing sustainable batteries is key for Volvo Cars’ transformation. The company is therefore planning to join forces with Northvolt as a strategic partner for joint development and manufacturing of next-generation battery cells.

To ensure focus on electrification, Volvo Cars is carving out its internal combustion engine operations into a new unit, Aurobay, in which Geely Holding will be a main shareholder. Through Aurobay, Volvo Cars will realise synergies as well as secure a supply of competitive combustion engines for its hybrid powertrains until the company is fully electric.

“Volvo Cars has a decade-long track record of successful transformation. The car industry is changing more than ever, and we have a strong determination to be the fastest transformer,” said Håkan Samuelsson.

In May, the Board announced that it is evaluating a possible initial public offering (IPO) on Nasdaq Stockholm. The evaluation process continues.

Looking at the remaining half year, Volvo Cars reiterates its full-year outlook. Unless supply of semiconductors improves, the company expects flat sales and revenue for the second half year compared with the same period last year, despite strong customer demand.

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