VOLAF - AB Volvo: Aftermarket Will Come In Clutch

2024-03-16 05:21:44 ET

Summary

• The book to bill points to worsening conditions across the board, and AB Volvo is very aware of that.
• They have measures to limit negative operating leverage, and are also being more modest with inventory buying meaning slower delivery into even some apparently stronger markets.
• The services business is substantially higher margin, and we expect it to grow in the mix to make income resilient. In general, we don't foresee much if any income declines.
• However, valuation doesn't compel us to go more than a hold rating on AB Volvo.

AB Volvo ( VOLVF )( VOLAF ) doesn't make cars, that brand has been sold, but they still make the trucks, buses, construction equipment and even have a battery storage solution business. The bottom line for the quarter is that the current results are good, but there is some meaningful slowing down going on, and the strikes in the US didn't help matters where the company has been losing market share. China which is already an issue, is forecast to continue to be an issue next year but mainly in the construction equipment business. Buses is the area where there is a more solid pickup thanks to the end of COVID-19....

For further details see: