STOCKHOLM (Oct 24): Volvo Cars reported a sharp rise in third-quarter revenue and profits on Thursday helped by cost savings, but also sees market conditions continuing to pressure margins this year.
Carmakers are under pressure from trade conflicts, investments to develop electric and driverless cars and an overall downturn in the car industry.
Volvo, part of China's Geely group, said its quarterly operating profit rose 90% to 3.49 billion crowns (US$362 million), with revenues improving by 14% to 64.8 billion crowns. Its results were also boosted by strong demand for its SUV models.
It said its sales growth had outpaced the industry in Europe, China and the United States, as it sold 166,878 cars globally in the quarter.
"The growth in unit sales, revenue and profit was driven by a strong demand for our SUV range as well as cost efficiency," Chief Executive Hakan Samuelsson said in a statement.
Volvo — which said in July it would cut fixed costs by 2 billion crowns with measures to be completed by the first half of 2020 — aims to produce premium cars to rival BMW and Daimler's Mercedes-Benz.
It repeated on Thursday that market conditions would continue pressuring margins this year, but that volume growth and cost measures would boost profits in the second half compared with the same period last year.
Volvo said it expected a slightly lower level of capital expenditure, after an intense period of investments in its global footprint and new technologies.
French car maker Renault warned last week that its sales would fall this year and lowered its operating margin target, adding to signs of the sharp auto industry slowdown.
(US$1 = 9.6385 Swedish crowns)