Volvo Cars to cut costs by 18 billion Swedish crowns as earnings drop
[STOCKHOLM] Sweden-based Volvo Cars launched cost cuts of 18 billion Swedish crowns (S$2.4 billion) on Tuesday (Apr 29) as its operating profit fell heavily amid difficult market conditions for the automotive industry.
Operating profit at the company, which is majority-owned by China's Geely, was 1.9 billion Swedish crowns for the January to March period against a year-earlier 4.7 billion crowns.
The cost cuts, part of a new 'cost and cash action plan', will include layoffs and a larger decrease in investment than earlier expected, the company said, adding that it had withdrawn its financial guidance for the next two years.
The company's share price fell to record-low levels in recent months as it grappled with mounting tariff pressures, the continued slowdown in electric vehicle demand and global uncertainty.
In a first sign that Volvo was taking steps to address the situation, the automaker made an unexpected management shake-up this month by axing CEO Jim Rowan and bringing back former CEO Hakan Samuelsson, and a few weeks later also replacing its CFO.
'Given the turbulence in the market, we need to further improve our cash flow generation and lower our costs,' Samuelsson said on Tuesday.
'While we still have a lot to do, our direction going forward is focused on three areas: profitability, electrification and regionalisation,' he added. REUTERS
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