Volvo projects operating profit this year to be 'very tough'
Source: Bloomberg News |
December 4, 2012, Tuesday
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Print Edition
Print Edition
VOLVO Cars, the Swedish automaker owned by Chinese manufacturer Zhejiang Geely Holding Group Co, said it'll be "very tough" to make an operating profit this year because of investment spending and declining sales.
"Unfortunately, there are no positive signals on the European car market," CEO Hakan Samuelsson said yesterday in Gothenburg, where Volvo Cars is based. "In the first half, we had significantly higher volume than we have now in the second half." Breaking even before interest and taxes will be "very tough."
Volvo's deliveries are about 6 percent lower now than a year ago, and the CEO is "especially" dissatisfied with "flat" sales in China as that market has failed to compensate for declines in the company's home region, he said.
Volvo hired Samuelsson, 61, as CEO on October 19 to replace Stefan Jacoby as the company works on boosting earnings and increasing sales in China. The carmaker is slowing production and cutting about 1,000 temporary workers in Sweden and Belgium as Europe's automotive market heads for a 17-year low in 2012 amid a recession in countries using the euro.
First-half earnings before interest and taxes at Volvo dived 84 percent from a year earlier to 239 million kronor (US$36 million) as the carmaker ramped up spending on new models and factories. The company reported a net loss of 254 million kronor compared with net income of 1.21 billion kronor in the 2011 period.
Volvo, which Zhejiang Geely bought from Ford Motor Co in 2010 for US$1.8 billion, reiterated a plan to invest US$11 billion in plants and technology through 2015. Almost half of that figure will be spent in Sweden, mostly for a new platform for vehicle production that will make its first car, a revamped version of the XC90 sport-utility vehicle, in 2014.
"We must continue to prioritize long-term investments," Samuelsson said. "It's completely key to Volvo's future."
"Unfortunately, there are no positive signals on the European car market," CEO Hakan Samuelsson said yesterday in Gothenburg, where Volvo Cars is based. "In the first half, we had significantly higher volume than we have now in the second half." Breaking even before interest and taxes will be "very tough."
Volvo's deliveries are about 6 percent lower now than a year ago, and the CEO is "especially" dissatisfied with "flat" sales in China as that market has failed to compensate for declines in the company's home region, he said.
Volvo hired Samuelsson, 61, as CEO on October 19 to replace Stefan Jacoby as the company works on boosting earnings and increasing sales in China. The carmaker is slowing production and cutting about 1,000 temporary workers in Sweden and Belgium as Europe's automotive market heads for a 17-year low in 2012 amid a recession in countries using the euro.
First-half earnings before interest and taxes at Volvo dived 84 percent from a year earlier to 239 million kronor (US$36 million) as the carmaker ramped up spending on new models and factories. The company reported a net loss of 254 million kronor compared with net income of 1.21 billion kronor in the 2011 period.
Volvo, which Zhejiang Geely bought from Ford Motor Co in 2010 for US$1.8 billion, reiterated a plan to invest US$11 billion in plants and technology through 2015. Almost half of that figure will be spent in Sweden, mostly for a new platform for vehicle production that will make its first car, a revamped version of the XC90 sport-utility vehicle, in 2014.
"We must continue to prioritize long-term investments," Samuelsson said. "It's completely key to Volvo's future."
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