Volvo Automobiles warned that larger tariffs on vehicles imported from Europe by the US can be a "blow" to the business, after a yr through which world commerce frictions put strain on margins.
revenue margins final yr, as the worldwide commerce conflict that pressured its Chinese language proprietor, Geely, to postpone a deliberate inventory market funding additionally affected its margins.
Volvo gross sales rose 21 p.c to 252.7 billion Swedish kronor ($ 27.5 billion), however web revenue fell four.three p.c to 9.78 billion kroner Sweden, whereas revenue margins fell to five.6% in 2018 from 6.7% beforehand.
Declining working margins put strain on Volvo's technique of catching up with the profitability of high-end rivals equivalent to Germany's Daimler and BMW, that are producing working margins for the primary time. About eight%.
Hakan Samuelsson The Managing Director of Volvo Automobiles mentioned the corporate had mitigated the US-China commerce conflict by transport XC60 sport utility automobiles from its Swedish factories in the US, fairly than its Chinese language services.
by the US can be a "completely completely different scenario".
"We don’t plan to mitigate that, it could be a blow," he informed the Monetary Instances. "That may imply we should always increase costs, that will imply costlier premium vehicles for shoppers" in the US.
We have to be real looking and acknowledge that margins will stay underneath steady strain
Donald Trump has threatened to boost tariffs on vehicles imported from Europe as a part of his technique to appropriate commerce imbalances and encourage US shoppers to purchase high-end US manufacturers fairly than German manufacturers equivalent to Mercedes-Benz or BMW.
Volvo lately opened a plant in South Carolina that it deliberate to make use of for world exports of the S60 sedan, however the firm mentioned it may reorient this facility if states States imposed a lot larger tariffs on imported vehicles.
The corporate targets annual gross sales of 800,000 automobiles, up from 640,000 final yr, and to extend revenue margins on the degree of its rivals by 2020, mentioned Mr. Samuelsson.
"We have to focus extra on profitability The corporate," he mentioned, nevertheless, dominated out any job losses equivalent to these introduced by different automakers equivalent to Ford, Jaguar Land Rover and Normal Motors.
Mr. Samuelsson was anticipating 2019 to be "robust" and added that We clearly see that the cyclical business was getting into a interval of contraction.
Volvo's outcomes lie amidst a torrent of revenue declines within the sector, with Daimler warning on Wednesday that 2019 can be "negatively affected", whereas Toyota has lowered its forecast by 21% to the 12 months of March.
Fiat Chrysler Cars and JLR will announce their outcomes on Thursday and may echo warnings concerning the outlook for the sector.
Wednesday, February 6, 2019
Volvo gross sales stay a file for the corporate and comply with a strong final quarter, with a 25% enhance in working income, to four.5 billion Swedish crowns, with margins 6.2%, in comparison with 5.9% in the identical quarter of the earlier yr. .
Within the fourth quarter, gross sales elevated by 7.three% to 169,700 automobiles, leading to a 20% income enhance to SEK 73 billion.
Final yr, Volvo proprietor Geely introduced his intention to launch an preliminary public providing. the automaker's shares on the ice due to fears that the worldwide commerce conflict is hitting the long-term worth of the corporate.
"In 2019, we’re seeing one other yr of quantity progress as we proceed to profit from our sturdy product program. and elevated capability, "mentioned Samuelsson. "However we have to be real looking and acknowledge that margins will stay underneath continued strain."