As it strives to get to a cost-savings target for 2015 in the ever limited sales prospects in the truck business, Volvo AB, which is currently the world’s second-biggest truck maker, will make an administrative job cut of 4,400 positions.
The job cutbacks will actually be a widening of an earlier program to eliminate 2,000 jobs, should be completed this year and would trigger along with other plans a reorganization cost of around 5 billion kronor ($766 million). The Gothenburg, Sweden-based company said in a statement these measures will lead to annual savings by 2015 of 4 billion kronor.
“The job cuts are in line with their restructuring plans,” and investors will appreciate that Volvo is keeping its dividend payment steady, said Thomas Besson, a Paris-based analyst at Kepler Cheuvreux.
“This year will be characterized by efficiency improvements, including a reduction in activities and costs, as well as personnel reductions,” Olof Persson, Volvo’s CEO, said in the statement. “This will play an important part in the work to achieve the group’s strategic and financial targets.”
According to Chief Executive Officer Olof Persson, Volvo AB ultimately wants to come to the highest operating margins in the world’s heavy-equipment industry – and the strategy includes a previously announced sale of its American construction-machinery rental unit in a deal completed on January 31.