Volvo disappoints after profits drop

The Local Sweden
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Volvo disappoints after profits drop

Swedish truck and bus manufacturer AB Volvo announced on Friday a 14.5 percent drop in net profit for the last quarter of 2005, blaming exceptional production costs linked to new environmental norms.


The company said that its net profit amounted to 2.99 billion kronor for the three months to December.

It said the figure fell 14.5 percent compared with the same quarter of 2004 because it had been affected by the need to operate two parallel production systems because of new vehicle pollution norms taking effect in Europe in October this year and in the US at the start of 2007.

Volvo said that operating profit had also fallen, dropping to 4.26 billion kronor in the period compared with 4.69 billion kronor in the fourth quarter of 2004.

Sales for the quarter rose by 14.5 percent to 65.28 billion kronor, exceeding the expectations of some analysts.

Net profit for the last three months of 2005 were hit by a 550-million-kronor depreciation charge on Volvo's stake in US bus construction company Blue Bird.

Results were boosted by a capital gain of 430 million kronor on the sale of services company Celero, however.

Shares in Volvo fell on the Stockholm market following the news. At 9.30 on Friday morning their shares were trading at 346 kronor, down 8 percent on Thursday's closing price.

AFP/The Local


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