Volvo Cars logs 17% jump operating profit in 2014 to $271 million

Article by Christian Andrei, on March 4, 2015

Volvo Cars posted a 17-percent jump in operating profit in 2014 to SEK2.25 billion ($271 million) from SEK1.92 billion in 2013. The carmaker also logged a 6.3-percent jump in revenue to SEK130 billion. Volvo chief executive Hakan Samuelsson remarked that the carmaker is currently in an investment phase, which fruits will start to be felt from this year.

The carmaker also posted record sales of 465,866 cars in 2014, although that would be just over half of its 2020 sales goal of 800,000 cars. However, that figure means the carmaker is slowly penetrating a premium market lorded over by German luxury groups BMW, Audi and Mercedes-Benz.

Samuelsson remarked to Reuters that the carmaker expects to sell around 500,000 cars this year by outgrowing underlying markets in Europe and China and posting gains in the United States. He said that Volvo plans to post a new sales record this year as well as a clear improvement in profitability during the second half.

With the need to sell enough vehicles to cover the billions of dollars invested in new models, Volvo is relying on continued gains in China, although it also has to grow elsewhere. For instance, the carmaker’s revenue in the US has dropped over the past decade due to lack of new models and lack of financing options.

Likewise, it has no production base in the US, which means it has become sensitive to shifts in currency exchange. Volvo also saw its sales in 2014 drop 7 percent.

To halt that downward movement, Volvo has started to implement some measures like placing a new management while it tries to ship China-made models to the US. In the second quarter of 2015, the carmaker will commence deliveries of the new XC90 SUV, the first vehicle to be launched following a five-year, $11 billion investment program.

“Looking back at 2014’s performance gives me confidence in our future performance,” said Mr Samuelsson. “By any measure, Volvo Cars is performing well. Sales are growing, a range of all new products are on the way, we are leading the field in new technologies and Volvo Cars is well positioned for the future.” [source: Volvo]

Topics: volvo, profit

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