Saab Looses Money, Blames Swedish Crown, Production and Marketing Costs

08/19/96

Reuters reported that Swedish carmaker Saab Automobile posted a pre-tax loss of $64.5 million for the first half of 1996 on Friday. Saab is jointly owned by the U.S.'s General Motors Corporation and Sweden's Investor AB.

In a statement the company said the strong performance of the Swedish Crown and the higher costs of products and marketing reduced its profits: "Compared with 1995 . . . there has been the negative impact of a stronger crown which has reduced profitability of export sales.

"Furthermore Saab Automobile has had higher costs for marketing and expenses for developing new products, some of which are expected to have a negative impact on profits over the coming year."

Saab's first half sales rang in at $152.8 million for 1996, down from 1995's first half figure of $165.7 million. On a unit basis, first half sales dropped 6% from 52,400 in 1995 to 49,300 this year.

The company pointed out, however, that sales for the second quarter matched what they had been during the same period a year ago, (26,900) looking better than what the company saw in the first quarter. Saab's sales in Britain and the U.S. were up.

"British sales have risen in the first half by 27 percent compared with the same period a year ago," the company reported. "Long-term work to increase production quality is just beginning to give results."

Saab noted that GM and Investor had agreed on measures that will allow the company to expand in its most important markets. Over the next two years Investor and GM will each put $262.4 million into the carmaker.

Explaining the investments, Saab said, "The reason for this capital injection is to increase sales volumes in the next five years, during which time Saab Automobile will introduce several new products and expand in its key markets in Europe, North America and in Japan."

Paul Dever -- The Auto Channel