Volvo trucks profits up after layoffs

Volvo trucks profits up after layoffs
Swedish heavy truck and construction equipment maker Volvo Trucks on Friday reported strong profit growth for the second quarter 2014 as the company continue to cut back labour costs.

But it reported a sharp fall in the Chinese market for construction equipment.

Net profit was up by 22 percent to 2.472 billion kronor ($362 million) compared to the level a year earlier, while revenue was little changed at 72.601 billion kronor.

"An important part of our strategy is the efficiency program, which we launched last year," chief executive Olof Persson said in a statement

"The program is progressing according to plan."

The group announced 2,000 job cuts in October 2013 and another 2,400 in February, hoping to boost profitability.

According to Volvo, the firm had reduced its number of employees by 1,200 at the end of the second quarter since the cost-cutting plan started last year.

"During the quarter, the Swedish voluntary leave program was completed and more than 500 regular white-collar employees will leave the group toward the end of the third quarter," Persson said.

The goal is to complete the programme with its 4,400 layoffs by the end of this year, according to the company.

In the truck business, Volvo said it saw positive trends in market share in North America and Japan, while Europe was gradually recovering after a weak first quarter.

"With respect to Construction Equipment, the second quarter has been characterised by a considerable decline in the Chinese market," Persson said.

Volvo hopes that the measures currently being implemented will enable the company to reach the expected nine-billion-kronor earnings improvement by the end of 2015.

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