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Volvo axes 4,400 jobs as profits slide

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The popular 'Epic split' video couldn't help Volvo's poor fourth quarter results. Photo: YouTube
07:55 CET+01:00
Volvo AB will cut 4,400 white-collar jobs in 2014, the company announced on Thursday, as fourth quarter results failed to meet expectations. But the news wasn't all bad for the Swedish truck maker.

The planned job cuts more than double the 2,000 redundancies included in a major restructuring plan Volvo announced in September 2013, and amount to about four percent of the company's total workforce.

Volvo refused to specify how many of the staff reductions will take place Sweden, where the company has roughly 25 percent of its workers.

"There won't only be cuts in Sweden; this affects the entire company the world over, but I can't say how large a percentage will be in Sweden. Sweden will be affected, as well as other important countries for Volvo like France and Japan," Volvo spokeswoman Karin Wik told the TT news agency.

Included in the job cuts are the previously announced redundancies of 2,000 consultants and other employees.

While Volvo's fourth quarter operating income rose to 3.08 billion kronor ($471.65 million), up from 2.19 billion in 2012, the results were still well below the 3.8 billion kronor projected by analysts polled by Reuters.

"During 2013, extra costs associated with the product renewal put pressure on the Group’s profitability, and this was also the case in the fourth quarter," Volvo CEO Olof Persson said in a statement.

Sales fell by 9.0 percent from the 2012 level to 272.6 billion kronor ($41.7 billion) last year, the group said. The truck market is closely linked to economic activity..

Pre-tax profits amounted to 237 million kronor, compared to pre-tax profits of 706 million kronor for the same period in 2012.

On the bright side, however, orders were up 12 percent.

"We knew that this would be a tough quarter for Volvo. Despite the low expectations, these results are worse than expected," Hampus Engellau, an analyst with Handelsbanken bank told TT.

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Engellau added that the positive developments for Volvo orders would likely send shares higher, despite profits missing the mark.

At the end of last year, the company had 95,500 people on its payroll and employed nearly 15,000 consultants.

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