Volvo optimistic as losses mount

Swedish truck maker Volvo said on Friday that it sees signs of recovery in the global economy, despite reporting widening losses in the fourth quarter of 2009.

For 2009, a disastrous year for truck makers, Volvo reported a net loss 14.7 billion kronor ($1.96 billion) against a net profit of 10 billion kronor in 2008.

In the fourth quarter alone, Volvo’s losses widened to two billion kronor from to a loss of 1.36 billion kronor in the three months to December 2008.

“In the fourth quarter, demand remained generally weak in our principal markets although we can see signs of recovery in an increasing number of markets,” CEO Leif Johansson said.

Volvo said sales plunged 28 percent over the year to 218.4 billion kronor, and had fallen 23 percent in the fourth quarter to 59.8 billion kronor.

“Despite the sharp decline in sales, the underlying operating loss was limited due to cost-reduction measures and improved productivity,” Johansson said.

Volvo Group – which makes trucks, buses and boat and aircraft equipment, but does not include the Volvo Cars brand – said it would not distribute a dividend for 2009.

Its shares in were up 3.2 percent to 66.6 kronor on a Stockholm Stock Exchange down 4.4 percent at around 10 am.

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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.