Restructure extends the losses at Volvo
By Karl Ritter |
February 6, 2010, Saturday
|
Print Edition
Print Edition
TRUCK maker AB Volvo yesterday said its losses widened by 47 percent in the fourth quarter due to restructuring costs and declining sales but forecast growth in key markets this year.
The Swedish company, which makes Volvo, Mack, Renault and UD trucks, posted a net loss of 1.99 billion kronor (US$271 million), compared with a loss of 1.35 billion a year earlier.
Sales dropped more than 20 percent to 59.8 billion kronor from 78 billion kronor.
The results were weaker than expected but investors appeared encouraged by Volvo's market outlook and improved cash flow. Volvo shares rose more than 3 percent to 66.80 kronor in Stockholm.
Volvo, which also makes buses, engines and construction equipment, said demand remains weak in Europe and North America but is picking up in India and China.
It forecast the market for heavy trucks to grow this year by 10 percent in Europe and 20 to 30 percent in North America.
After five straight quarterly losses, Volvo depends on a strong turnaround in those markets, which collapsed amid the global credit crunch.
"I think it's fair to say we've reached bottom," Evli analyst Michael Andersson said. "The question is how strong the increase will be."
Volvo booked restructuring and lay-off related charges of about 700 million kronor during the period and a similar amount in write-downs, but said the cutbacks and increased productivity were yielding a good effect on operating costs and cash flow.
The company cut 2,000 jobs in the quarter and has reduced its global work force by more than 10 percent to about 90,000 employees in the past year.
The Swedish company, which makes Volvo, Mack, Renault and UD trucks, posted a net loss of 1.99 billion kronor (US$271 million), compared with a loss of 1.35 billion a year earlier.
Sales dropped more than 20 percent to 59.8 billion kronor from 78 billion kronor.
The results were weaker than expected but investors appeared encouraged by Volvo's market outlook and improved cash flow. Volvo shares rose more than 3 percent to 66.80 kronor in Stockholm.
Volvo, which also makes buses, engines and construction equipment, said demand remains weak in Europe and North America but is picking up in India and China.
It forecast the market for heavy trucks to grow this year by 10 percent in Europe and 20 to 30 percent in North America.
After five straight quarterly losses, Volvo depends on a strong turnaround in those markets, which collapsed amid the global credit crunch.
"I think it's fair to say we've reached bottom," Evli analyst Michael Andersson said. "The question is how strong the increase will be."
Volvo booked restructuring and lay-off related charges of about 700 million kronor during the period and a similar amount in write-downs, but said the cutbacks and increased productivity were yielding a good effect on operating costs and cash flow.
The company cut 2,000 jobs in the quarter and has reduced its global work force by more than 10 percent to about 90,000 employees in the past year.
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