Volvo's operating profit slumps in 2012
STOCKHOLM (Reuters) -- Volvo Cars said it aims to break even on an operating level this year without help from one-off gains that kept the carmaker in the black in 2012.
Volvo's operating profit fell to 18 million Swedish crowns ($2.76 million) in 2012, down from a profit of 2.0 billion crowns in the previous year, the company said in a statement on Friday.
Net loss for the year was 480 million crowns, compared with a 1 billion crown profit in 2011.
A sale of Volvo technology to parent Zhejiang Geely Holding Group Co. kept the company profitable at an operating level last year.
"The ambition is to reach break even this year on an operative basis - by selling cars," Volvo CEO Hakan Samuelsson said at a news conference on Friday.
Volvo said the Chinese and U.S. markets would grow this year but was cautious about demand in Europe - its biggest market. "It is likely that the challenging economic environment will continue to affect the European car market," the company said.
Volvo said it could still take another year or two before it reaches break even on a net level.
Volvo is seeking to cut costs, while it also needs to fund development of new car models to secure its future in the highly competitive auto industry.
The carmaker cut hundreds of temporary contracts in its production last year and in February unveiled plans to shed 1,000 more jobs on the consultant and white-collar side in a bid to lower costs.
Volvo, wholly owned by Zhejiang Geely Holding since 2010, said sales were 124.5 billion crowns in the full year against 125.7 billion the previous year. Sales fell in both Europe and China, while they rose slightly in the United States.
Volvo, whose owner is also the parent of Geely Automobile Holdings, has been aiming for rapid growth in China to underpin a target of reaching sales of 800,000 cars by 2020, but so far progress there has been slow.
Volvo's vehicle sales in China slumped more than 10 percent last year, though cheating by car dealers seeking to win cash rebates meant sales were inflated in 2011 and under-reported in 2012.
Volvo, bought from Ford Motor in a $1.8 billion deal, aims to sell 200,000 cars in China by 2020, almost five times its current sales, and expects a new plant in Chengdua, in central China, to be up and running in the second half of 2013.
Read more: http://www.autonews.com/article/20130503/ANE/130509946#ixzz2SOvDa2RD
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