Volvo posted SEK254 million in net losses for the first six months of 2012, in contrast to SEK1.21 billion in net profit for the first half of 2011. The Swedish carmaker’s earnings before interest and tax also dropped to SEK239 million ($35.63 million) in the first half of 2012 from SEK1.53 billion in the same period in 2011.
The carmaker blamed the net loss to lower sales volume in the review period, which dropped 4 percent to 221,309 cars year-on-year.
Volvo chief executive Stefan Jacoby attributed the company’s dismal sales performance to the current financial crisis in the euro zone. Jacoby quipped that the markets were not what the company originally planned, noting that the southern European crisis is spreading to the north.
Jacoby remarked that the car market in this period has the been the most unpredictable it had ever been. For the January to August 2012 period, Volvo’s sales dropped 5.2 percent, suffering from lower sales in south Europe and home market Sweden.
Jacoby confirmed that the carmaker would cut production at its western Sweden factory to 50 cars an hour from the current 57, and it would also not renew the contracts of 285 temporary staff to help reduce costs.
Volvo had said it had invested money into its program of transformation, which includes the new plants in China, as well as on the unveiling of an all-new version of its V40 model. The company added it had been compelled to sweeten car sales with incentives to buyers, but not to the same extent as other carmakers.