Volvo Cars plunges deep into the red
Swedish car manufacturer Volvo Cars, which has a factory in Ghent, plunged deep into the red in the second quarter. This is mainly due to a previously announced write-down.
Volvo Cars suffered an operating loss (EBIT) of 10 billion Swedish kronor, or 884 million euros, in the second quarter. Revenue fell 8 per cent to 93.5 billion kronor, or 8.3 billion euros. The decline in revenue is due to slumping sales of new Volvo cars. Volvo Cars sold 181,600 cars in the second quarter, 12 per cent less than in the same period last year.
“The market remained challenging in the second quarter,” CEO Håkan Samuelsson said in a press release. “Demand is under pressure from the macroeconomic environment, uncertainties surrounding import tariffs and stronger competition.” He is referring, amongst others, to the global trade war started by US president Donald Trump.
Turnaround plan
Exceptional costs weighed on profits. Volvo Cars recorded a one-off write-down of 11.4 billion Swedish kronor, about 1 billion euros, due to delays in the production of the EX90 and ES90 models and the rising cost of the tariff war. Added to this is a restructuring cost of 1.4 billion kronor – 124 million euros – for the elimination of 3,000 jobs, mainly in Sweden. 1,100 people have already left the company, according to the car manufacturer.
The car manufacturer, which is owned by the Chinese Geely Group, emphasised that the turnaround plan is “fully on track” and is delivering its first positive results. “When the market rebounds, Volvo Cars will be in a good position for profitable growth,” it says.
Volvo Cars’ Ghent factory is the last major car factory in Belgium. Earlier this year, the first EX30, a compact electric SUV, rolled off the production line there.
The Volvo factory in Ghent © BELGA PHOTO Nicolas TUCAT / AFP
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