Volvo announces major restructuring plan

Sweden's Volvo Group, the world's second biggest lorry manufacturer, announced Tuesday a 5 billion kronor ($780 million) restructuring plan over two years.

Volvo announces major restructuring plan

“The programme encompasses both reduction of white collar employees and consultants and efficiency enhancements in the global industrial system,” the company wrote in a statement, without indicating the number of jobs affected.

The Volvo Group, which also makes buses, construction equipment and engines, indicated that the restructuring would mainly concern its lorry business.

The company added that most of the changes “are expected to impact operating income during 2014”, creating savings in the region of 4 billion kronor annually “with full effect achieved by the end of 2015”.

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Volvo has reported disappointing results during the last year and a net loss in the first quarter of 2013, but posted a second quarter profit of 72.8 billion kronor – a 25-percent increase compared to the “weak start” to 2013.

In January the group announced an alliance with Chinese manufacturer Dongfeng aimed at challenging German lorry maker Daimler for the world’s top place.

The Volvo Group employs 112,000 worldwide, including 16,000 consultants and temporary workers.

AFP/The Local/og

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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.