Volvo Group Logs Record Loss

The world's second-biggest truck maker points to credit losses, personnel cutbacks and the costs of a deal struck with the United Auto Workers Union over healthcare as causes.

Truck maker Volvo Group posted its biggest-ever quarterly loss on July 21 as write-offs amounting to more than three billion kronor dented profitability. The world's second-biggest truck maker said it had a net loss of 5.57 billion kronor (US$722 million) in the period from April to June, down from a net profit of 5.15 billion kronor the same time a year ago.

Credit losses, personnel cutbacks and the costs of a deal struck with the United Auto Workers Union over healthcare, deepened its losses by 3.2 billion kronor, Volvo said. The agreement with the U.S. union representing auto workers absolves Volvo's Mack brand of responsibility for healthcare benefits for retired employees.

Volvo chief executive Leif Johansson said the company was also hit by weakening demand for its heavy goods and buses. "The second quarter of 2009 remained difficult in terms of earnings in the wake of the exceptionally rapid decline in demand that followed the crisis in the financial system," Johansson said.

He said that the truck market "remains weak" in Volvo's key markets of Europe, North America and Japan and reiterated the company's industry forecast for the rest of the year. "We maintain our assessment that the total European market for heavy trucks will be at least halved in 2009 compared with 2008 and that the North American will decline by 30%-40%," he said.

Volvo's net sales fell by a third in the second quarter compared with the same period a year earlier. In the April to June period, net sales fell by 32.7% to 53.9 million kronor (US$7 million). Adjusted for currency changes and other factors, the decline was 45%.

Volvo Group's main area of business is building heavy goods vehicles and buses, but it also develops engines and construction equipment. The company's truck division includes several brands: Volvo Trucks, Renault Trucks, Nissan Diesel and Mack. It is separate from Volvo Cars, which is owned by Ford.

Copyright Agence France-Presse, 2009

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish