Volvo Group finishes 2008 with huge loss

Volvo AB reported a pre-tax loss of 2.5 billion kronor ($300 million) in the fourth quarter, compared to a profit of 5.6 billion the same period a year before.

Volvo Group finishes 2008 with huge loss

But company shares shot up more than 14 percent in early trading as the performance was seen as less damaging than had been feared.

Volvo recorded a loss after taxes of 1.348 billion kronor in the final three months of 2008 against net profit in fourth quarter 2007 of 4.0 billion kronor.

Fourth quarter sales fell 9.0 percent to 76.95 billion kronor.

For the full year 2008 Volvo suffered a 33 percent plunge in net earnings to 10.01 billion kronor from sales that rose 6.0 percent to 303.66 billion kronor.

The company predicted a further erosion in the market in 2009.

Volvo CEO Leif Johansson refrained from making a forecast about the truck market for 2009, citing the difficult market conditions.

“In the prevailing market situation, it is difficult to make an assessment of the truck market trend for 2009,” he said in a statement.

“We do not expect a recovery in demand during the first half-year, but with agreed and already implemented actions progressively penetrating during the first six months, we are prepared to cope with the troubling situation.”

The statement said demand in North America and Japan in particular would remain sluggish in the first six months of the year.

Volvo delivered 251,150 vehicles last year, up 6.0 percent over 2007. But deliveries fell 22 percent in the fourth quarter.

During 2008 and 2009, a total of 16,255 permanent employees, part-time employees, and contract consultants will be given notice their jobs will be eliminated.

Nearly 7,700 of the positions to be cut are in Sweden.

Volvo shares were showing a gain of 14.33 percent at 39.90 kronor in early deals on the Stockholm exchange.

“The report was much better than feared,” analyst Michael Andersson of Finnish bank Evli told AFP.

“We know now that the economic environment is weak. But in that environment the company is still strong…. Cash flow was positive… which was quite unexpected and which leaves it in a very strong financial position.”


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.