By Staff Reporter
Volvo Cars has reported a mixed bag of results for the first half of 2019. Revenue and sales grew but operating profits declined. This has prompted the company to implement cost saving measures. South Africa will not be affected though.
Volvo Cars posted a record revenue for the first six months of 2019 of SEK130.1 billion, up from SEK122.9 billion year-on-year. This was on the back of the best first half-year sales performance in the company’s history. For the first six months, sales amounted to a record 340,286 cars, a year-on-year increase of 7.3 per cent. During the period, Volvo Cars grew consistently faster than the overall market.
The company has gained market share across the US, China and Europe, with the UK and Germany recording growth of 30 per cent and 32 per cent respectively. The overall passenger car market in the US declined by 2.0 per cent in first half, while China and Europe fell by 9.3 percent and 3.1 percent respectively during the same period.
Operating profit for the first half of 2019 was of SEK5.5 billion, compared with a SEK7.8 billion operating profit for the same period last year. For the second quarter of the year, operating profit fell to SEK2.6 billion, while revenue rose to SEK67.2 billion.
The first-half operating margin fell to 4.2 per cent from 6.4 per cent, while the operating margin for the second quarter of the year amounted to 3.9 per cent.
Volvo Cars has initiated additional cost measures within the company on top of already planned measures, which combined, aim to lower fixed costs by SEK2 billion. These actions will come into effect in the second half of the year and running into the first half of 2020.
According to Greg Maruszewski, Managing Director of Volvo Car South Africa, these cost-cutting measures will have no impact on South Africa. “We are not cutting jobs or drastically cutting costs either. We are in an extremely fortunate position in that, while the passenger car market in South Africa is declining (it fell by 3.2% in June 2019) as is the premium market (it fell by 19% in June 2019), we are growing both our volumes and our market share. This is due to both our product range – which has been comprehensively renewed – as well as our improved customer satisfaction results which has improved our overall appeal.”
Based on this success, Maruszewski is cautiously optimistic about prospects for the balance of 2019. “We have the right products and the right dealer support. This is the optimal combination,” he concludes.
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