Stockholm (Reuters) – Swedish automaker Volvo Cars announced on Tuesday cost reductions of 18 billion Swedish crowns (1.64 billion euros) including layoffs, while its operating profit has dropped sharply due to the difficult conditions of the automotive industry.
The operating profit of the company, mainly owned by the Chinese group Geely, was 1.9 billion Swedish crowns for the period January-March, against 4.7 billion crowns the previous year.
The cost reductions, which are part of a new “cost and cash action plan,” will include layoffs and a larger investment reduction, said the company, adding that it had abandoned its financial forecasts for the next two years.
The Volvo Cars action course has reached historically low levels in recent months, while the manufacturer is faced with increasing tariff pressures, the continuous slowdown in the demand for electric vehicles (VE) and the global uncertainty.
Volvo Cars proceeded earlier in April to an unexpected reshuffle of his management by dismissing the president and chief executive officer Jim Rowan and by reintegrating Hakan Samuelsson in this position. He also replaced his financial director shortly after.
“Given the market turbulence, we must continue to improve our cash flow and reduce our costs,” said Hakan Samuelsson in a statement released on Tuesday.
“Although we still have a lot to do, our future orientation focuses on three areas: profitability, electrification and regionalization,” he added.
(Written by Marie Mannes, Kate Entringer, edited by Augustin Turpin)
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