FILE PHOTO: Cars are displayed outside a Volvo showroom in west London, Britain October 4, 2013. REUTERS/Luke MacGregor/File Photo
Volvo's adjusted third-quarter operating profit rose to 7.02 billion Swedish crowns (US$861 million) from 4.85bn a year before. Luke MacGregor / Reuters

Volvo shares hit record as earnings top forecasts on surging truck demand



Sweden's Volvo reported a bigger-than-expected rise in quarterly core earnings on Friday as stronger demand for heavy trucks more than offset costs stemming from strains on its supply chain, sending its shares to a record high.

Sweden's biggest manufacturer by sales also raised its outlook for truck markets on both sides of the North Atlantic this year and forecast a further strong recovery in sales of commercial vehicles in North America in 2018.

"These are blow-out numbers," said analyst Hampus Engellau at Handelsbanken Capital Markets, which rates the stock "buy".

Shares in Volvo rose 7 per cent by 8am (Greenwich Mean Time) leaving the stock up 56 per cent so far this year.

Volvo and rivals in the truck industry such as Germany's Daimler and Volkswagen have hit a sweet spot this year, with rising or already robust demand in all major commercial vehicles markets.

The broad upturn in demand was also in evidence in Daimler's quarterly results, also released on Friday, with a double-digit rise in deliveries and a 32 per cent jump in earnings at its trucks division.

Yet the buoyant demand has also come at a cost, with pressured supply chains leading components maker SAF-Holland to scale back its 2017 margin outlook this month, while Volvo's profitability was dented in the second quarter.

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Geely's Volvo to go all-electric with new models from 2019

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Volvo said stretched components supply had continued to have an impact in the third quarter, but with a 13 per cent rise in truck deliveries and sharply higher earnings in its construction equipment arm, this was shrugged off.

Chief executive Martin Lundstedt, a former boss at rival Scania, said the bottlenecks that had mainly hit European truck manufacturing had eased somewhat in recent months, along with supplies of components for powertrains, or engines and axles.

"Still there is obviously a high level of pressure in the supply chain, but if you look through the quarter and after the vacation period it has been a continuous improvement, and we continue to see that," Mr Lundstedt told a news conference.

Volvo's adjusted third-quarter operating profit rose to 7.02 billion Swedish crowns (US$861 million) from 4.85bn a year before, beating a mean forecast of 6.2bn seen in a poll of analysts.

"There are really no negatives here," Mr Engellau said. "Construction Equipment is really strong and the trucks business continues to deliver in a seasonally weak quarter.

"Also order intake is extremely strong and it seems demand will accelerate even further ahead."

Volvo has begun reaping the benefits of a 10 billion crown cost-cutting drive and in August set a target to reach its highest profitability since the sale of its car making arm to Ford nearly two decades ago.

Gothenburg-based Volvo said order intake of trucks at the group, which also includes brands such as Mack, Renault and UD Trucks, grew 32 per cent in the quarter, beating the 15 per cent rise seen by analysts.

The Woman King

Director: Gina Prince-Bythewood

Stars: Viola Davis, Thuso Mbedu, Sheila Atim, Lashana Lynch, John Boyega 

Rating: 3/5

The specs

Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)

ANATOMY OF A FALL

Director: Justine Triet

Starring: Sandra Huller, Swann Arlaud, Milo Machado-Graner

Rating: 5/5

The Specs

Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat 

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

The essentials

What: Emirates Airline Festival of Literature

When: Friday until March 9

Where: All main sessions are held in the InterContinental Dubai Festival City

Price: Sessions range from free entry to Dh125 tickets, with the exception of special events.

Hot Tip: If waiting for your book to be signed looks like it will be timeconsuming, ask the festival’s bookstore if they have pre-signed copies of the book you’re looking for. They should have a bunch from some of the festival’s biggest guest authors.

Information: www.emirateslitfest.com
 

A QUIET PLACE

Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou

Director: Michael Sarnoski

Rating: 4/5

‘White Elephant’

Director: Jesse V Johnson
Stars: Michael Rooker, Bruce Willis, John Malkovich, Olga Kurylenko
Rating: 3/5

Company Profile

Company name: Hoopla
Date started: March 2023
Founder: Jacqueline Perrottet
Based: Dubai
Number of staff: 10
Investment stage: Pre-seed
Investment required: $500,000

COMPANY PROFILE

Company: Growdash
Started: July 2022
Founders: Sean Trevaskis and Enver Sorkun
Based: Dubai, UAE
Industry: Restaurant technology
Funding so far: $750,000
Investors: Flat6Labs, Plus VC, Judah VC, TPN Investments and angel investors, including former Talabat chief executive Abdulhamid Alomar, and entrepreneur Zeid Husban

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

RESULT

Manchester United 1 Brighton and Hove Albion 0
Man United: Dunk (66' og)

Man of the Match: Shane Duffy (Brighton)

The Last White Man

Author: Mohsin Hamid 

192 pages 

Published by: Hamish Hamilton (UK), Riverhead Books (US)

Release date: out now in the US, August 11 (UK)

JOKE'S ON YOU

Google wasn't new to busting out April Fool's jokes: before the Gmail "prank", it tricked users with mind-reading MentalPlex responses and said well-fed pigeons were running its search engine operations .

In subsequent years, they announced home internet services through your toilet with its "patented GFlush system", made us believe the Moon's surface was made of cheese and unveiled a dating service in which they called founders Sergey Brin and Larry Page "Stanford PhD wannabes ".

But Gmail was all too real, purportedly inspired by one – a single – Google user complaining about the "poor quality of existing email services" and born "millions of M&Ms later".

The years Ramadan fell in May

1987

1954

1921

1888

Champions parade (UAE timings)

7pm Gates open

8pm Deansgate stage showing starts

9pm Parade starts at Manchester Cathedral

9.45pm Parade ends at Peter Street

10pm City players on stage

11pm event ends

UAE currency: the story behind the money in your pockets

Directed by: Craig Gillespie

Starring: Emma Stone, Emma Thompson, Joel Fry

4/5

Juliet, Naked
Dir: Jesse Peretz
Starring: Chris O'Dowd, Rose Byrne, Ethan Hawke​​​​​​​
​​​​​​​Two stars

COMPANY PROFILE

Company: Educatly
Started: 2020
Based: UAE
Founders: Mohmmed El Sonbaty, Joan Manuel and Abdelrahman Ayman
Industry: Education technology
Funding size: $2 million
Investors: Enterprise Ireland, Egypt venture, Plus VC, HBAN, Falak Startups

The years Ramadan fell in May

1987

1954

1921

1888

All We Imagine as Light

Director: Payal Kapadia

Starring: Kani Kusruti, Divya Prabha, Chhaya Kadam

Rating: 4/5

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices