Recent reports had Volvo Trucks’ chief executive officer Olof Persson ousted from his position due to criticism of the Swedish truck maker’s performance, but the company’s chairman Carl-Henric Svanberg denied any measures had been taken.
A newspaper recently reported the chairman was seeking a suitable replacement for the CEO position after investors expressed dissatisfaction with his progress on the firm’s profitability drive. But the executive seems to have offered some relief to Persson, though after starting the performance boost strategy back in 2011 he needs to show progress soon to deal with investor concern. Back in 2011, when Persson took over the chief executive officer position, he promised the company would surge to a profit margin 3 percent higher by the end of 2015 – but the goal now seems increasingly tough to achieve. In 2014, the Volvo Trucks earnings margin skidded to just 2.1 percent, a huge distance from the 8.7 percent level it had achieved before the efficiency scheme was introduced.
Now analysts and industry experts believe the truck maker – which competes with rivals Daimler and VW AG for leadership of the global truck market – could only go as high as having an operating profit margin of 7.1 percent by the start of 2017. Since the efficiency drive was launched in 2011, the company invested massively in the introduction of new models and the needed technology to cope with increasingly tougher emission standards. The strategy was hit by numerous problems though: weaker demand in Latin America, a slower than expected European market recovery and a fall in construction equipment sales in China.