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CHINA

Volvo Cars expected to post major losses

Volvo Cars, owned by the Chinese auto maker Geely, is expected to post heavy losses in 2012 in China where sales were weaker than expected while investments were substantial, daily Svenska Dagbladet (SvD) reported on Thursday.

Volvo Cars expected to post major losses

The paper, citing “well informed sources”, said that Volvo Cars would report losses of two to four billion kronor ($307 to $615 million) in China for the year.

Volvo Cars was acquired by Geely in 2010, but the Swedish brand has seen its market share decline and profits dwindle since then while Geely, which sells the cheaper brands Geely, Gleagle, Emgrand and Englon, remains in good health.

Volvo Cars has been struggling in western Europe, its biggest market, and has had a hard time breaking into China, the world’s biggest auto market.

In March, Volvo said it had discovered problems with its sales figures in China, implying that they had been exaggerated. Officially, the company sold 11 percent fewer cars in 2012 than in 2011.

Volvo Cars does not announce in advance the publication date for its earnings reports.

In the first quarter of 2013, it sold 8.0 percent fewer cars than in 2012, but reported a rise of 27 percent in China.

AFP/The Local/og

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VOLVO

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.

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