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VOLVO

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.

Published: 19 July 2014 09:21 CEST
Volvo trucks profits up after layoffs

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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VOLVO

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.

Published: 3 February 2021 12:21 CET
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.

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