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Volvo cuts 2,400 more jobs as truck sales drop

STOCKHOLM, SWEDEN - Swedish truck maker Volvo is cutting 2,400 jobs in addition to 2,000 cuts the group announced in October, in a move aimed at boosting falling profitability.
Volvo is cutting jobs to reduce costs and put it in a more profitable position. Image: Volvo
The group faced a tough 2013, with sales falling by 9.0 percent from the 2012 level to 272.6 billion kronor (30.9 billion euros, $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 in January.

The group's gross margin fell for the second year in a row from 23% in 2011to just 21.1%.

"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 phase-out old models," he added.

In the fourth quarter, revenue grew by eight percent to 76.64bn kronor, while net profit fell by 41% to 485m 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. The marine division was also weak.

Source: AFP via I-Net Bridge
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