The Swedish truck maker has recently announced its strategy to lower costs and incur a savings goal have been hampered by the weak domestic currency and also said it was previewing slow sales increases in the near future across the key North American market.
The statement managed to offset the target-beating quarterly financial results that were posted by the country’s largest company by sales and the biggest private-sector employer, triggering a stock drop of almost 5 percent. Volvo competes on the global truck market with Germany’s Daimler and Volkswagen AG and has announced a cost cutting drive of 10 billion crowns ($1.2 billion) per year. Still, up to now, just around a third of the savings drive has been achieved, with investors now increasing their pressure on the group to meet the internal goal during the period remaining until the year ends. Jan Gurander, the acting chief executive officer until Martin Lundstedt assumes the position starting this October, pointed out to the slowing Swedish crown, which has dropped against global currencies, especially the dollar, since October, weighed on the company’s expenses overseas when put into the local currency.
“We are committed to the 10 billion (of cost cuts) and we are trying to offset this as much as possible,” the executive said during a media brief, where he added the already implemented costs of around 3.8 billion crowns would have been around two billion higher if the currency remained stable. Volvo added its North American market, which makes up around 20 percent of sales was seen at the peak of the cycle for the trucking industry.