Volvo credits China, Europe for first-half profitability

Fri, 22 Aug 2014

If everything goes to plan, Volvo might be showing the first signs of a turnaround after several years coping with old products and a staid image. The Swedish brand is imminently launching its next-gen XC90 SUV on a completely revised, modular platform and using a cutting-edge family of engines, and it has even more products to take advantage of the fresh components on the drawing board. "We are excited about the launch of the all-new XC90, which marks the beginning of the re-launch of the Volvo brand," said CEO Håkan Samuelsson in the company's announcement. In the meantime, the business is moving back to profitability and is even forecasting growth through the rest of 2014.

In Volvo's recently released financial and sales results for the first six months of the year, volume was up 9.5 percent to 299,013 cars. On top of that, operating income reached 1.21 billion Swedish krona ($175 million) after posting a loss in the same period in 2013. Net income was also improved to 535 million Swedish krona ($77.4 million), which was also a reversal from a negative last year.

With these great results, Volvo is now forecasting 10 percent sales growth worldwide by the end of the year, and the key to it is a booming market in some regions. China, home to parent company Geely, was up 34.4 percent first half of the year. It's now Volvo's biggest market in the world and helped by exclusive models like the S60L (pictured above) and S80L. "We are growing our presence in China and we expect to sell at least 80,000 cars there this year," said Samuelsson in the company's forecast.

Western Europe appears to finally be emerging from its doldrums, as well. Volvo sales there were up 8.7 percent and were improved in Sweden as well. The lone dark spot on the figures was the United States that fell to 29,311 cars in the first half of the year, compared to 32,578 in the first half of 2013. Scroll down to read the company's full announcements.

Volvo Car Group reports first half operating profit of SEK 1.2bn

Volvo Car Group has reported an operating profit for the first six months of 2014 of 1,210 MSEK on the back of strong demand in key markets such as China, Sweden and Western Europe.

Retail sales for the first six months of the year increased 9.5 per cent year on year to 229,013 compared to 209,117 for the same period last year.

"It has been a positive first half of the year," said Håkan Samuelsson, President and Chief Executive of Volvo Car Group. "This first half result is both solid and encouraging."

The first half profit reverses a loss of 577 MSEK for the same period in 2013 and comes on the back of Volvo's full year operating profit of 1,919 MSEK for 2013, highlighting the company's ability to generate consistent profitability and its success in implementing its transformation plan.

Revenue for the period was 64,785 MSEK against 56,364 MSEK last year, while net income amounted to 535 MSEK compared to a loss of 778 MSEK in 2013.

The positive result comes the week before the global launch of the all-new Volvo XC90. "We are excited about the launch of the all-new XC90, which marks the beginning of the re-launch of the Volvo brand," said Mr Samuelsson.

Full results for the first half of 2014 and a more detailed full-year outlook will be revealed today at 10:00 CET during a press conference at the Volvo Showroom in Kungsträdgården, Stockholm.

More information on Volvo Car Group's results over the first half of 2014 can also be found in the Group's Interim Report January-June 2014, which will be available for download on the Global Newsroom (media.volvocars.com) as of 10:00 CET.

Volvo Cars forecasts sales to grow 10 per cent in 2014: CEO

Volvo Car Group expects sales for the full year to increase by close to 10 per cent in 2014 driven by steady growth in key markets and an improving product offer, according to Håkan Samuelsson, president and chief executive.

Mr Samuelsson was speaking at the company's first half results announcement in Stockholm where he reported an operating profit of SEK 1,21bn for the first six months of 2014, with sales up 9.5 per cent to 229,013 and revenue of SEK 64,8bn. Net income was SEK 535m.

Volvo's profitable first half and encouraging full year sales forecast continues the positive momentum around the company, which is implementing a transformation plan and preparing for the imminent launch of the all-new XC90 next week.

"After this solid first half, we look forward from a position of strength. Growing demand for first-class safety and environmental performance will continue to support our global growth," said Mr Samuelsson. He added that at this stage he expects full-year operating income this year to be on par with 2013.

Sales of Volvo cars in China rose by 34.4 per cent during the first half of the year and Volvo Cars expects to continue to grow strongly in what is now its biggest market, helped by demand for new local models like the S60L and a refreshed S80L, as well as a further expansion of the dealer network.

"We are growing our presence in China and we expect to sell at least 80,000 cars there this year. The European market is also showing signs of recovery and growth and we are well placed to benefit further. We are committed to the US, where a new management team is implementing a revival plan to improve our performance," said Mr Samuelsson.

Volvo Cars strengthened its position as market leader in Sweden, with sales rising by 20.2 per cent in the first half. In Western Europe the continuing roll-out of the company's brand new, class-leading Drive-E engines boosted demand in important markets such as the UK, Germany and the Netherlands. Total sales in the region rose by 8.7 per cent over the first six months of 2014.

More information on Volvo Car Group's results over the first six months of 2014 can be found in the Group's Interim Report January-June 2014. The report contains more details on developments in Volvo Car Group's various markets, as well as in-depth financial information. The full report is available for download here. For more information on Volvo Cars Investor Relations, click here.

By Chris Bruce