Volvo profits plummet as global sales slump

Swedish carmaker Volvo reported an 84 percent drop in operating profit through the first half of the year compared to 2011 amid slumping sales and tough competition.

Volvo profits plummet as global sales slump

Volo Cars, owned by China’s Geely Holdings, reported operating profit of 239 million kronor ($35.63 million) in the first six months of 2012, compared to 1.53 billion kronor during the same period last year.

Turnover rose to 65.3 billion kronor from 62.8 billion kronor the year before, while global sales also dropped 4.1 percent to 221,309 cars.

According to Volvo Cars CEO Stefan Jacoby, the economic uncertainties plaguing many of the carmakers major markets are likely to continue through the end of the year, and competition remains fierce.

“We find ourselves in a transition,” he told reporters in Stockholm on Wednesday.

“We need to get used to the fact that we live in an unpredictable global environment.”

Jacoby said a looming recession in the eurozone has already resulted in lower sales in southern Europe and Sweden.

Through August, Volvo sales in Sweden are down 12.4 percent to 32,145 cars.

Jacoby however rejected rumours of trouble with the building of Volvo’s planned factory in China, saying the plant was scheduled to be in operation by 2014.

The worsening market conditions mean that Volvo will reduce production to 50 cars per hour at its factory in Torslanda near Gothenburg, resulting in the shedding of 287 positions provided by a staffing company.

But Jacoby said no layoffs of permanent staff were planned.

“For the moment, we have no ambitions to get rid of any of our full-time workers or managers,” he said, according to TT.

TT/The Local/dl

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Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.