Volvo Cars reports best ever second-half performance in 2020
Volvo Cars reported its best-ever second half profit and sales volumes in 2020, illustrating the company’s success in mitigating and recovering from the impact of the coronavirus pandemic earlier in the year.
The company reported revenue of 151 billion SEK ($23 billion) and an operating profit of 9.5 billion SEK ($1.4 billion) for the second six months of 2020. Profits increased by 8.2 per cent during the period, while revenues were up by 4.9 per cent. The profit margin came in at a strong 6.3 per cent.
The result reflects the company’s best ever second half in terms of sales, driven by strong demand for Volvo Cars’ Recharge line-up of chargeable cars. Volvo Cars sold 391,751 cars in the second six months of 2020, an increase of 7.4 per cent compared with the same period in 2019, taking market share in most markets.
For the full year 2020, Volvo Cars reported revenue of 263 billion SEK ($40 billion) and an operating profit of 8.5 billion SEK ($1.29 billion). It managed to reduce fixed costs in combination with growth, which had a positive influence on cash flow and liquidity.
“We acted decisively to limit the impact of the pandemic,” said Håkan Samuelsson, chief executive officer. “After a safe restart of our operations, we recovered strongly and reported the best second half in the company’s history. It is also promising to see the fast-growing demand for our Recharge line-up of chargeable cars, which we expect to continue in 2021.”
The share of Recharge cars as a percentage of total sales more than doubled in 2020, compared with 2019. In Europe, sales of plug-in hybrids represented 30 per cent of total volumes, making Volvo the leading plug-in premium brand measured as a share of its total sales volume. In the US, Volvo is also a leading plug-in hybrid brand in the market.
In China and the United States, its two largest individual markets, the company reported growing sales for the full year as it managed to recover a pandemic-related sales drop in the first half. In Europe it reported a small second-half decline due to a sluggish overall market.
During 2020, Volvo Cars also saw an accelerated move towards online sales as a result of the pandemic, a development that the company expects to continue in 2021. In 2020, Volvo Cars more than doubled its number of subscriptions sold online versus 2019. Conquest rates via this channel continued to be high, supporting the increases in market share.
For 2021, the company anticipates continued growth in sales volume and revenue as it benefits from a strong product offering and further increases in online sales. Assuming market conditions continue to normalise, this growth as well as continued cost management are anticipated to improve profitability to pre-corona levels.
With ongoing investments in new technologies and new products, the company foresees a similar level of capital expenditure as in 2020. Cash flow is expected to remain strong. It also expects a continued reduction in its overall CO2 emissions per car, in line with the company’s ambition to reduce these by 40 per cent by 2025.
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