Volvo announces 2,400 more job cuts as truck sales drop

STOCKHOLM - Swedish truck maker Volvo is cutting 2,400 jobs in addition to 2,000 cuts the group announced in October, hoping to boost falling profitability it said on Thursday.

The group faced a tough 2013, with sales falling by 9.0 per cent from the 2012 level to 272.6 billion kronor (30.9 billion euros, US$41.7 billion), the truck market being closely linked to economic activity.

Annual net profit fell by two thirds to 3.80 billion kronor.

Volvo is the second-biggest truck maker in the world after Daimler of Germany.

The job cuts - affecting management, administrative staff and consultants worldwide - are part of a restructuring launched in September and "a majority will be implemented during 2014," the company said in a statement.

"We have not yet communicated how many per country, and the reason for that is that we are in negotiations with our unions around the world," chief executive Olof Persson said at a press conference.

"How much that will affect Sweden for instance, that we need to negotiate now with our unions."

At the end of last year, the company had 95,500 people on its payroll and employed nearly 15,000 consultants.

Last year Volvo had to make investments to guarantee the most sweeping renewal of its line of products since 1993 and a transition to comply with the Euro 6 emission legislation, which came into force last January 1.

The group's gross margin fell for the second year in a row to 21.1 per cent from 22.1 per cent in 2012 and 23.7 per cent in 2011.

"During 2013, extra costs associated with the product renewal put pressure on the group's profitability, and this was also the case in the fourth quarter," Persson said.

"We have a further couple of quarters before we are through the industrialisation of the new generation of trucks and the phase-out of the old generations."

In the fourth quarter, revenue grew by eight per cent to 76.64 billion kronor, while net profit fell by 41 per cent to 485 million kronor.

For this year, the company expects "a slight improvement in market demand, mainly driven by China and Europe".

As for its other businesses, construction equipment was affected by a slowdown in the mining sector and the bus market was globally "weak", just like that of boat engines.

Volvo shares were 4.39 per cent higher in midday trading on the Stockholm stock exchange, which was by up by 1.00 per cent.