Volvo reports big losses for 2012

Swedish car-maker Volvo is set to report a big operating loss in China for 2012 as thin sales and a costly new factory weighed on results, Swedish daily Svenska Dagbladet reported on Thursday, quoting sources.

Volvo Car Corp., wholly owned by China’s Zhejiang Geely Holding Group Co. since 2010, is set to report a loss of between 2 billion ($308 million) to 4 billion Swedish crowns ($615 million) in China, the paper reported.

It said high costs for a new plant in the southwestern Chinese city of Chengdu, nearly complete, plus expenses related to building up a network of Chinese dealers and weak overall sales in the country were to blame.

The losses in China are not unexpected after Volvo suffered a 11 percent fall in sales there last year while it has been investing heavily to establish its first local production in the world’s biggest auto market.

The struggling Swedish brand has also been busy cutting jobs and costs as European sales have taken a hit due to the crisis.

Volvo earnings before interest and tax slumped to 239 million crowns ($35.6 million) in the first half of 2012 from a year-earlier 1.53 billion, but at net level the group made a loss of 254 million crowns.

Source

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