By Alessandro Parodi
Feb 5 (Reuters) – Sweden-based Volvo Cars on Thursday reported a 68% dive in fourth-quarter profit and said it was bracing for a persistently tough external environment, putting its shares on track for their biggest daily fall on record.
Operating profit before one-off items at the group majority-owned by China’s Geely Holding, which exports most of its U.S.-bound cars from Europe, fell to 1.8 billion crowns ($199.9 million) from 5.6 billion a year earlier.
“External factors (affected) our performance, such as EU-U.S. import tariffs and the negative currency effect of a stronger Swedish krona,” CEO Hakan Samuelsson said in a statement.
“On top of that, revenues were affected by weak demand putting pressure on pricing, and the removal of EV incentives in the U.S., which negatively impacted sales.” Sales in the period fell 16%.
Analysts at JPMorgan said in a note to clients that both profits and sales lagged market expectations. Volvo Cars’ shares were down 16% in early trade, taking a three-month drop to 26%.
VOLVO CARS’ TRUMP TARIFF HIT
U.S. President Donald Trump initially hiked import tariffs on cars from the European Union to 27.5% from 2.5% as part of his push last year to reset Washington’s global trade relations. That was later reduced to 15%, applied retroactively to August 1.
Volvo Cars’ gross margin – a metric monitored by analysts to assess the impact of tariffs – was 15.8%, against 20.4% in the third quarter and 17.1% a year earlier.
Samuelsson told analysts and media in a call that, following a fairly big hit from U.S. tariffs in the fourth quarter, he saw more opportunities in 2026 to mitigate tariff-related costs.
Volvo Cars also said it aimed to return to year-on-year volume growth in 2026, and that an ongoing turnaround plan was on track.
Samuelsson said that in the short term, the group would focus on efficiencies and lower its cost base. “This will help us mitigate the challenges posed by a persistently tough external environment,” he said.
Chief Financial Officer Fredrik Hansson told Reuters the company had a long list of cost savings ideas which it was yet to execute.
“We also see that in terms of synergies and collaborations with Geely to reduce costs, especially on mechanical components, we’ve only started to scratch the surface,” he added.
The company proposed no dividend for 2025.
($1 = 9.0039 Swedish crowns)
(Reporting by Alessandro Parodi, additional reporting by Marie Mannes; writing by Anna Ringstrom; editing by Joe Bavier and Jan Harvey)
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