Volvo Group, the renowned Swedish industrial and truck manufacturing conglomerate, recently disclosed a downturn in its financial outcomes for both the fourth quarter and the entirety of 2025. This decline in performance was primarily influenced by escalating tariffs and a general weakening of demand across various global markets. Despite these challenges, the company's management has outlined strategies to navigate the economic landscape.
In the final quarter of 2025, Volvo Group's net sales experienced an 11% reduction, settling at SEK 123.8 billion, which translates to approximately $14.07 billion USD. However, upon adjusting for currency fluctuations and the divestment of SDLG, the revenue remained stable when compared to the previous year. Concurrently, the group's income for this period stood at SEK 9.61 billion, a notable decrease from SEK 10.81 billion reported in the corresponding period of the prior year. Currency exchange rate movements alone were responsible for a SEK 2.1 billion reduction in operating income. Nevertheless, both adjusted and reported operating profits managed to reach SEK 12.8 billion, pushing the operating margin to 10.3%.
The company also saw a decrease in its earnings per share, which fell to SEK 4.73. Industrial operations' operating cash flow also dipped to SEK 19.3 billion. Volvo Group pinpointed several reasons for the dampened profitability, including elevated tariff and raw material expenses, coupled with under-absorption within its U.S. manufacturing facilities. These negative impacts were partially offset by robust performance in its services division, reduced operational expenditures, and enhanced returns from joint ventures. The net tariff effect in the fourth quarter amounted to roughly SEK 800 million, with projections indicating an additional SEK 1 billion impact in the first quarter of 2026.
For the full fiscal year 2025, Volvo Group's net sales registered at SEK 479.2 billion. The annual income was reported as SEK 34.70 billion, a significant drop from SEK 50.57 billion in the preceding year. Adjusted operating income decreased to SEK 51.2 billion, and reported profit landed at SEK 48.5 billion, with profit margins narrowing to just above 10%. Earnings per share for the year declined to SEK 16.94, and the operating cash flow from industrial operations was halved to SEK 21.8 billion. In light of these results, the board has put forth a proposal for a total dividend of SEK 13 per share, comprising an ordinary dividend of SEK 8.50 and an extra dividend of SEK 4.50.
Regionally, the fourth-quarter performance presented a mixed picture. Europe witnessed a modest 1% growth, contrasting sharply with significant declines in North America, South America, and Asia. Both vehicle and service sales experienced contractions, and truck orders alongside deliveries also showed a year-over-year weakening. Martin Lundstedt, President and CEO of Volvo, highlighted the generation of an operating cash flow of SEK 21.9 billion, culminating in a strong net cash position of SEK 63 billion in Industrial Operations, excluding pension and lease liabilities. Looking ahead, Volvo anticipates approximately SEK 2 billion in negative currency effects on first-quarter 2026 operating income and forecasts a full-year research and development impact that, while net positive, will be weaker than in 2025.