Volvo Cars reports loss amid bump in sales

Volvo Cars on Wednesday reported an operating loss of 577 million kronor ($87 million) for the first half of the year, but expects to break even as the year as sales rose in August.

Volvo Cars reports loss amid bump in sales

The result is a stark contrast to those reported for the same period last year, when the company, now wholly owned by China’s Zhejiang Geely Holding Group, earned 349 million kronor.

The company attributed the negative result to high discount levels and unfavourable exchange rates.

“The result is as expected and in line with the challenging targets we have set ourselves,” Volvo Car Group CEO Håkan Samuelsson said in a statement.

“We are adjusting to market circumstances by implementing a cost-savings programme and reviewing costs in all areas of our business.”

Volvo also reported a monthly global retail sales rise of 4.7 percent for August compared to 2012, selling 26,998 units for the month in 2013. In China, Volvo sales jumped up by 66 percent for August. However, global sales remained down by 2.5 percent globally from January through August.

IN PICTURES: Take a look at some classic Volvo cars through the ages

While sales in Sweden also dipped by 1.2 percent in August to 2,981 cars, the company said it maintained a leading position in the market.

The United States, meanwhile, became Volvo’s number one market in August, will 5,519 cars sold, despite a decrease of 11.9 per cent compared to the same month 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.