TRUCK maker Volvo posted a sharp drop in third-quarter profit, after its performance was hit by a strong Swedish currency and the costs of its biggest ever introduction of new models.
Volvo, Sweden’s largest private-sector employer, also said it will cut 2,000 jobs as part of a plan announced in September to generate annual savings of four billion Swedish crowns.
The cuts, which represent just under two per cent of the Gothenburg-based company’s workforce, will affect white-collar staff and consultants and come as the European truck market makes a modest underlying recovery.
Volvo, which sells under the Renault, Mack and UD Trucks brands, is in the middle of rolling out more than a dozen new Volvo and Renault models ahead of tougher new vehicle emissions rules.
This is putting pressure on its production systems, which are making old and new models in parallel. As a result, the group missed out on a spike in demand for cheaper, older models before the emission rules come into force at the year-end.
Volvo, which vies for market leadership by trucks sold with Germany’s Daimler, said third-quarter orders rose 11 percent in Europe, its biggest market. Total orders rose seven percent, short of a forecast 31 percent rise.
“The available (production) slots for 2013 for (older) Euro 5 trucks from Volvo were sold out during the third quarter, which had a dampening effect on order intake,” the company said, adding orders at Renault suffered in a similar way.
By contrast, Scania reported an 84 percent increase in orders in Europe earlier this week.