Volvo's First Half Report Looks Better than Expected

08/23/96

Reuters reported that Volvo's first half report exceeded expectations with a slightly higher than predicted first half pre-tax profit of 3.86 billion crowns. The Swedish carmaker says its major restructuring continues.

Volvo said its positive net interest income and share sales improved profit for the first half by 453 million crowns: "Net interest income of 633 million crowns and gains of 453 million crowns on the sale of shares contributed to net earnings on a level with first half 1995 results."

Volvo said its income for vehicle operations was substantially lower than in 1995's first half due to product and market development costs, the introduction of new products, and declining markets and profitability for Volvo Trucks in North and South America. The carmakers' sales for the first half of 1996 hit 78.06 billion crowns, while first half 1995 figures were at 85.13 billion.

Volvo said its two year old effort to concentrate on automotive operations was nearly complete, and that Volvo Car returned to the black in the second quarter of 1996, after two quarters in the red. The carmaker ascribed Volvo Car's recovery to cost cutting; it came even though the car division's sales were down 7% from a year earlier.

Volvo's chief executive Soren Gyl said, "Demand for the Volvo S40/V40 models is strong." He also said that problems with long delivery times were gradually improving and that new small models were not expected to have an impact on earnings until the second half of the year.

Paul Dever -- The Auto Channel