Record losses for Sweden's Volvo Group
AFP/The Local · 21 Jul 2009, 08:49
Published: 21 Jul 2009 08:49 GMT+02:00
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The world's second-biggest truck maker said it made a net loss of 5.57 billion kronor ($722 million) in the period from April to June, down from a net profit of 5.15 billion kronor the same time a year ago.
Credit losses, personnel cutbacks and the costs of a deal struck with the United Auto Workers Union over healthcare, deepened its losses by 3.2 billion kronor, Volvo said in a statement.
The agreement with the US union representing auto workers absolves Volvo's Mack brand of responsibility for healthcare benefits for retired employees.
Volvo chief executive Leif Johansson said the company was also hit by weakening demand for its heavy goods and buses.
"The second quarter of 2009 remained difficult in terms of earnings in the wake of the exceptionally rapid decline in demand that followed the crisis in the financial system," Johansson said in the earnings statement.
He said that the truck market "remains weak" in Volvo's key markets of Europe, North America and Japan and reiterated the company's industry forecast for the rest of the year.
"We maintain our assessment that the total European market for heavy trucks will be at least halved in 2009 compared with 2008 and that the North American will decline by 30 percent to 40 percent," he said in the statement.
Volvo's net sales fell by a third in the second quarter compared with the same period a year earlier.
The Swedish group's net sales fell by 32.7 percent to 53.9 million kronor in the April to June period.
Adjusted for currency changes and other factors, the decline was 45 percent.
Evli Bank analyst Michael Andersson told Dow Jones Newswires that there were some positives in Volvo Group's second-quarter performance, pointing to an increased cash flow in the company's industrial operations, which includes its truck and bus divisions.
"The worst bleeding has been stopped, that's clear. I wouldn't be surprised if the market reacts positively," Andersson was quoted as saying.
Volvo Group's main area of business is building heavy goods vehicles and buses, but it also develops engines and construction equipment.
The company's truck division includes several brands: Volvo Trucks, Renault Trucks, Nissan Diesel and Mack.
It is separate from Volvo Cars, which is owned by the US automaker Ford.
In morning trading on the Stockholm exchange, shares in Volvo Group were up 1.89 percent to 53.75 kronor in an overall market up by 3.74 percent.