Volvo Car posted its worst quarterly profit in four years. Shares plummeted by 30%

Swedish automaker Volvo reported a sharp drop in operating profit in the fourth quarter, pointing to the impact of U.S. duties, the negative effect of currency fluctuations and weak demand. Against this backdrop, Volvo shares collapsed by almost 30% in Stockholm trading on February 5: this could be the worst trading day for the company in history, CNBC notes.

- Volvo Car Group said fourth-quarter operating profit excluding one-time factors was SEK1.8 billion ($200.5 million), down 68% from the same period a year earlier. Analysts had expected SEK4.7 billion, according to FactSet data cited by The Wall Street Journal. That marked the weakest quarterly operating profit in at least four years, the newspaper noted.

- The company sold 195,700 vehicles, down 3 percent from the same period a year earlier.

- The company's gross margin, a metric that analysts monitor to gauge the impact of duties, was 15.8%, compared with 20.4% in the third quarter and 17.1% a year earlier.

- The company warned that 2026 is likely to be another challenging period, with continued pressure on prices, the impact of duties, regulatory uncertainty and weakening consumer sentiment likely to continue to weigh on the industry.

The value of Volvo Car Group securities was down 29% to $20.9 krona ($2.3) during trading in Stockholm on Feb. 5.

This day may become the worst for Volvo Car Group quotations for the entire time of their circulation on the stock exchange, according to CNBC. Moreover, a much milder fall of 11.3% or more would have been enough, the channel noted.

Analysts' expectations were high after third-quarter earnings came in well above forecasts: the stock then, by contrast, jumped 38%, the WSJ writes. Papers, characterized by limited free float and high volatility, have now completely lost this growth, reports the edition.

Analysts at UBS said they expect to lower consensus forecasts for full-year 2026 earnings before interest and taxes (EBIT) by 10-15% - "possibly more, given that the underlying EBIT margin in the last three months of 2025 was close to 0%." Their estimate is published by CNBC.

Handelsbanken analyst Hampus Engellau said that sales incentivized by incentives and price discounts hit the company's earnings harder than the market expected, Reuters reports. Analysts at JPMorgan said in a note that both profits and sales - the latter down 16% in the quarter - were below market expectations, the agency said.

Most analysts advise holding Volvo Car shares: they have nine Hold ratings out of 14 total, WSJ shows. Another two recommend Buy, while three recommend Sell.

This article was AI-translated and verified by a human editor