Volvo Cars shares plunge on earnings fall, withdrawn guidance and major cost-cutting drive

Swedish-based automaker Volvo Cars on Tuesday introduced cost-cutting plans of 18 billion Swedish krona ($1.87 billion) and withdrew monetary guidance as its working revenue fell sharply within the first three months of the yr.

Volvo Cars, which is owned by China’s Geely Holding, reported first-quarter working revenue of 1.9 billion krona, down from 4.7 billion krona in the identical interval final yr.

Its margin on earnings earlier than curiosity and taxes (EBIT) narrowed to 2.3% from 5% a yr earlier, whereas income fell to 82.9 billion krona within the first quarter, down from 93.9 billion krona in the identical interval of 2024.

The corporate mentioned the outcomes mirror a drop in wholesales as a part of a deliberate stock discount in the course of the closing three months of 2024, adversarial foreign money results and broader automotive business turbulence.

Volvo Cars mentioned its so-called “price and money motion plan” would come with reductions in investments and redundancies at its operations throughout the globe. The corporate didn’t present additional info on the potential scale of the layoffs however mentioned it might replace with “extra particulars as quickly as potential.”

Volvo Cars mentioned it’s not offering monetary guidance for each 2025 and 2026, citing tariff strain on the automotive sector.

“There’s a quite heavy headwind on the market,” Volvo Cars CEO Håkan Samuelsson informed CNBC’s “Europe Early Version” in a Tuesday interview.

“There’s a quantity drop, and on prime of that additionally worth competitors, new gamers within the electrical section, particularly, but in addition influencing the costs typically. And on prime of that you’ve the turbulence now with extra tariffs, so all of that makes it very tough to foretell the longer term.”

Samuelsson added that the corporate was focusing on what it may possibly management through the price motion bundle.

Shares of Volvo Cars fell as a lot as 10% on Tuesday, earlier than paring a few of its losses. The agency was final seen buying and selling 8.8% decrease.

In its earnings report, the corporate mentioned it might sharpen its U.S. product line-up to focus on development and discover the way it may “higher use” its current manufacturing footprint within the coming years, as a way to produce “extra automobiles the place they’re bought.”

U.S. President Donald Trump imposed 25% tariffs on automobiles imported to the U.S. earlier this month. The White Home has mentioned it additionally plans to position tariffs on some auto components comparable to engines and transmissions, that are set to take impact no later than Might 3.

“We see long-term, we’d like, in fact, to come back again to some type of commerce take care of the U.S. In any other case, that is in fact going to be very tough for the enterprise within the U.S.,” Samuelsson mentioned.

Alongside making extra automobiles domestically, Samuelsson mentioned the automaker is exploring the way it can utitilize its South Carolina manufacturing unit extra successfully.

“We’re wanting into using our Charleston manufacturing unit higher. So, we’d like one other automobile into that manufacturing unit and that must be a best-seller for the U.S. market. It is one thing that we in any other case have to import and pay tariffs for. So, that is actually the countermeasures we’re taking,” Samuelsson mentioned.

Volvo Cars’ gross sales share of “electrified automobiles,” which it defines as any car with a charging wire, hit 43% within the first quarter. It goals for the class to signify 90% to 100% of its international gross sales quantity by 2030.