Volvo reports sales boost after vehicle recalls

Swedish auto manufacturer Volvo Cars announced on Thursday that its already-record sales year of 2018 ended with a 20 percent increase in net revenues in the year's final quarter.

Volvo reports sales boost after vehicle recalls
Volvo president and CEO Håkan Samuelsson at Thursday's press conference in Stockholm. Photo: Jonas Ekströmer/TT
Despite the sales increase, the Swedish company said its margins are being pushed as a result of increased price pressures and trade restrictions. Volvo's operating profit margin for 2018 was 5.6 percent, a drop from 6.7 percent in the previous year. 
“We had a good result but we didn’t achieve the growth that we had expected with that volume increase,” Volvo president and CEO Håkan Samuelsson told TT. 
Samuelsson said the company’s tighter margins are due to increased price pressure within the market and the effect of trade tariffs. 
The company’s operating profit in the fourth quarter of 2018 was 4.5 billion kronor, a 25 percent increase over the corresponding period in the previous year. Volvo sold 169,700 vehicles in 2018’s final quarter, a 7.3 percent jump over the corresponding period a year earlier.
The roughly 642,000 vehicles that Volvo sold throughout 2018 set the company’s single-year sales record and Samuelsson said he anticipates that 2019 will follow suit. 
“We expect that 2019 will be another year with increased volumes, in line with our long-term ambitions,” he said. 
Volvo’s encouraging numbers came after two major recent vehicle recalls. The company announced on Wednesday that it is recalling 13,000 vehicles in Sweden, and 167,000 cars worldwide, because the power-operated tailgate may stop functioning in cold climates. That came just two weeks after Volvo recalled 219,000 vehicles to fix potential fuel leaks in the engine compartment. 

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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.