Truckmaker Volvo drives back to profit in 2010

Volvo Group, the second-biggest maker of heavy vehicles, said Friday it returned to a booming profit in 2010, thanks to a strong recovery across the sector and despite a slightly disappointing fourth quarter.

Truckmaker Volvo drives back to profit in 2010

Last year, Volvo saw its net profits soar to 10.9 billion kronor ($1.69 billion), up from a loss of 14.7 billion kronor in 2009, on sales up 21 percent to 264.7 billion kronor.

The company, which owns the Volvo Trucks, Renault Trucks and Mack brands, saw the number of trucks sold during the year balloon 41 percent to 179,989 vehicles, it said in its earnings statement.

For the last three months of the year, Volvo saw its net profit jump to 3.23 billion kronor from a loss of two billion kronor in the last quarter of 2009, on sales up 28 percent at 73.4 billion kronor.

Its truck orders meanwhile skyrocketed 60 percent in the fourth quarter, while deliveries soared 49 percent.

The company’s quarterly results nonetheless slightly missed the expectations of analysts polled by the Dow Jones Newswires, who had predicted a net profit of 3.87 billion kronor on sales of 74.4 billion.

Volvo’s chief executive, Leif Johansson, who is set to step down in the middle of the year, said the group had been affected by “production disturbances impacting productivity when the entire industrial system, including our subcontractors, raised its manufacturing pace to a higher level.”

Following the news, Volvo saw its stock price rise 1.31 percent to 108.30 kronor in late morning trading.

For 2011, the Swedish company said it expected to see even greater demand for its trucks in Europe and especially the United States, but cautioned demand in Japan would remain weak.

After several quarters deep in the red during the 2008-2009 financial crisis, when it laid off nearly 20,000 employees, Volvo returned to profit in the first quarter of 2010, boosted mainly by its activities in Asia and South America.

Volvo, whose truck business is second only to Daimler globally, is no longer linked to the Volvo Cars unit, which it sold in 1999 to Ford, which in turn sold it to Chinese Geely last year.

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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.