Volvo revs up profit

Swedish truck maker Volvo Group posted soaring first-quarter profits on Friday, citing a successful restructuring plan that had claimed some 4,400 jobs in the past year, many of them white-collar.

Volvo revs up profit
Truck wheels in motion. File photo: Shutterstock

Net profits tripled compared to the figure a year earlier to 1.08 billion kronor ($165 million), close to the 1.16-billion-kronor expectation by analysts polled by Dow Jones Newswires.

Revenue rose by 12.5 percent to 65.65 billion kronor, slightly above the 65.38 billion kronor predicted by analysts.

"The measures that are being implemented to increase the group's profitability are running according to plan and are starting to have a positive impact on the gross margin and costs," chief executive Olof Persson said in a statement.

"But there is still more work to do in terms of cost reductions and this is the group's main focus for 2014."

The group announced 2,000 job cuts in October and another 2,400 in February, hoping to boost profitability. So far, 900 white-collar employees and consultants have been laid off.

In December 2013, the group had 95,500 staff and 15,000 consultants worldwide. Volvo said it had launched a voluntary leave programme in Sweden and that similar measures would be applied in other countries during 2014.

Sales in the first quarter improved in North America, Western Europe and Japan, while "the emerging economies in South America and Asia saw weaker demand."

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Profits plummet for Sweden’s Volvo Group

Swedish truck and heavy vehicles maker Volvo AB saw fourth quarter profits plunge, landing well below expectations, with year-end results also down compared to 2011.

Profits plummet for Sweden's Volvo Group

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.

TT/The Local/dl

Follow The Local on Twitter