Volvo posts biggest loss since financial crisis

Swedish heavy vehicle maker Volvo on Thursday posted a quarterly loss of 101 million kronor ($15.3 million), which came as a shock to market analysts who had predicted profits of over 1 billion kronor.

Volvo posts biggest loss since financial crisis

The losses stand in stark contrast to the corresponding period in 2012, when Volvo’s quarterly profit was 5.6 billion kronor.

Analysts meanwhile were way off their mark in predicting a profit a 1.5 billion kronor for this year.

“It was an excellent quarter when it comes to the reception of new products, but a weak quarter when it comes to deliveries,” Volvo CEO Olof Persson said at a press conference.

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He added in a statement that the sales were the lowest since the financial crisis, and in line with the first quarter of 2009.

“Despite uncertainty in the global economy, order intake has improved and we have many new, competitive products on their way to the market,” he wrote.

“That being said, the second quarter of 2013 will pose a challenge for us and our suppliers, with respect to the changeover to new products and the ramp-up of the industrial system to higher volumes.”

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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.