On Wednesday, Volvo reported pre-tax profits of 660 million kronor ($103.8 million) for the fourth quarter 2012, down from 6.39 billion kronor for the same period the year before.
Analysts had expected Volvo’s quarterly results to land at 1.77 billion kronor, according to poll carried out by the Reuters news agency.
Overall for 2012, Volvo’s pre-tax profits amounted to 15.36 billion kronor, compared to 24.93 billion kronor for 2011.
And Volvo expects the tough times to continue.
“On a Group level the first quarter of 2013 will also be difficult as a result of the low order intake in many markets during the fourth quarter of 2012. Profitability will be affected by low capacity utilization, high spend levels in research and development and costs associated with the launch of new products,” CEO Olof Persson said in a statement.
“However, we expect market conditions to gradually improve during the course of 2013 when economic growth across the world gains momentum.”
Fourth quarter turnover came to 71.79 billion kronor, compared with 86.51 billion kronor in the fourth quarter of 2011.
The board has recommended a 3.00 kronor per share dividend, the same as last year.
According to Persson, the lower turnover is a result of reduced economic activity in Volvo’s main markets and continued uncertainty about the future, causing customers to exercise caution.
“However, overall we have maintained our market positions with some regional variations,” the Volvo CEO added.