Volvo Cars pulls sales guidance on Chinese outlook and slow US rebound
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The logo of Volvo on display at the Everything Electric exhibition at the ExCeL London international exhibition and convention centre in London, Britain, March 28, 2024. REUTERS/Peter Cziborra
STOCKHOLM, Oct 2 (Reuters) - Swedish-based Volvo Cars will not achieve its previous full-year sales volume and cash flow guidance owing to an increasingly challenging market and deteriorating near-term outlook, it said on Friday.
Volvo Cars, which is majority owned by China's Geely Holding, has struggled to meet previous profitability targets because of tariffs, weaker electric vehicle demand and high development costs.
It said in a statement that the market backdrop had resulted in lower than expected sales and a weaker full-year outlook for the company. It did not specify new guidance.
"This is partly expected because we've seen that the market has been very tough," Handelsbanken analyst Hampus Engellau said of the pulled sales guidance.
Shares in the company were down 3% at 0800 GMT after losing as much as 4% in early trade to a record low of 14.60 crowns per share. The shares have lost about 50% of their value this year.
"The decline is primarily driven by further deteriorating market conditions in China and slower than expected recovery in the US, while Europe remains resilient," Volvo Cars said.
In a separate statement, the company said it sold 141,609 cars in the third quarter, down 11% from a year earlier.
Industry volumes remained under significant pressure in China, with the market downturn showing no signs of easing, it said, adding that recovery in the premium segment of the US market had been slower than expected.
Previous guidance, given in July, was for significantly stronger sales in the second half of the year and strong positive free cash flow towards the end of the year.
The company said last month that Skoda boss Klaus Zellmer would become its chief executive within a year as it seeks to revive sales in an increasingly competitive market.
(Reporting by Anna Ringstrom and Marie MannesEditing by David Goodman)
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