Volvo Cars reported this week a smaller-than-expected fall in first-quarter operating profit, but said the impact of a pull-back of subsidies and other developments in the United States had been worse than expected.
“We are not satisfied with our results … but despite a volume drop coming from external factors we are more or less flat in profitability … which I think is really well done internally with all the factors we can control,” CEO Hakan Samuelsson told Reuters.
The Sweden-based group, which is majority-owned by China’s Geely Holding, said it expects second-quarter profitability to be affected by continued headwinds and the production ramp-up of its new electric EX60.
“You can of course wish for a better market from the external world but we will now just concentrate in the second half of the year to come back to growth,” Samuelsson said.
Operating profit was 1.6 billion crowns ($172.4 million) against a year-earlier 1.9 billion, on an 11 per cent sales drop, with a gross margin of 18.5 per cent.
Analysts at Handelsbanken, Bernstein and JPM said the profit drop was smaller than expected, citing a consensus of 900 to 950 million crowns.
Volvo Cars said its cost cuts under a programme launched a year ago, and the fact it had kept its market share in the premium segment in Europe, supported profits.
However, Samuelsson said that it had been more severely impacted in the US than anticipated, as a critical $7,500 tax break for buyers was removed, which also impacted its plug-in model lineup in addition to its EVs.
The group had earlier warned that profit would be negatively impacted by tariff-related costs, currency translation effects, tough competition and geopolitical tensions.
Volvo Cars repeated that it aims for increasing group sales volumes in the full year.
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