Volvo’s success right now is a bit of the opposite of how Volvo Cars is performing. This weeks report was no exception and the company is pushing an extra dividend that all dividend hunters should love.
The report shows very good figures where profit and turnover came in higher than analysts’ expectations. On the other hand, it is likely that the market will not lift the share when you raise a warning finger for the future.
Order intake was lower than expected, with CEO Martin Lundstedt announcing that there is currently a normalization of demand. Since the market is forward-looking, this is supposed to be what you stick to. I therefore do not predict that there will be any rush on the share despite a good report.
“Order intake decreased in the ongoing normalization of demand, which reflects somewhat lower transport volumes and a weaker macro economy,” writes Martin Lundstedt.
The dividend landed at SEK 18, of which SEK 7.5 is ordinary and SEK 10.5 extra dividend. In recent years, Volvo has had a trend of throwing out powerful extra dividends and despite that, the coffers have always overflowed.
I know that many expected a higher dividend, however, and some believed that anything below SEK 20 had been considered a sign of weakness from the company. A lower dividend than that could show that Volvo has a negative view of the future, which was also announced in the report.
In any case, this dividend is the largest ever from a Swedish listed company. No company in Sweden has previously shared more than the SEK 36.6 billion that Volvo is now proposing.
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