Volvo Cars smashes profit forecasts as cost cuts deliver

Core Viewpoint - Volvo Cars exceeded third-quarter profit forecasts due to effective cost-cutting measures, resulting in a significant increase in share prices [1][3]. Financial Performance - The company reported an operating profit before one-off costs of 5.9 billion Swedish crowns ($627 million) for July-September, surpassing analysts' consensus forecast of 1.6 billion crowns [3]. - Despite a 7% decline in sales, the gross margin improved to 24.4% from 17.7% in the previous quarter [4]. Management Actions - New CEO Hakan Samuelsson has focused on cost reductions, including cutting 3,000 jobs and slowing investments to mitigate pressures from U.S. tariffs and competition [2][5]. - The management's strategy has shifted from growth and market share to prioritizing cash flow and profitability [5]. Market Conditions - Volvo Cars has been affected by U.S. import tariffs, but recent trade negotiations have reduced these tariffs from 27.5% to 15% retroactively from August 1 [6]. - The company plans to move some hybrid production to the U.S. to further mitigate tariff impacts [6]. Stock Market Reaction - Following the positive earnings report, Volvo Cars' shares rose by as much as 40%, marking one of their strongest daily performances [1][4].