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August 21, 2020

Half-year financial results – rising to the challenge in the coronavirus era

2020 will be remembered for the coronavirus pandemic and the challenges it created for people, governments and businesses worldwide. At Volvo Cars, in the years to come, we’ll reflect on this year with pride in our resilience and what we achieved during this difficult time. A glimpse at our results for the first half of 2020 shows the unavoidable impact – and the beginning of an inspiring response to unprecedented challenges.

The first half of our 2020 was unexpected, as your 2020 has no doubt been for you. The coronavirus pandemic altered our momentum after great success in 2019, when we achieved our sixth consecutive year of record sales. Nevertheless, our underlying performance in 2020 remains strong and we’re determined to overcome the coronavirus challenges.

 

“The downturn we saw in the first half is a temporary one,” said Håkan Samuelsson, our chief executive. “We expect to see a strong recovery in the second half of the year and our Recharge range of electrified cars puts us in a strong position to meet the emerging trends we are seeing.”

 

Fundamentally, our company is healthy and we’re optimistic about the remainder of 2020. China and the US have returned to growth, and the signs of recovery across Europe are encouraging.

 

More and more people are choosing to go electric and our Recharge line-up of chargeable models, with a fully electric or plug-in hybrid powertrain, continue to grow in popularity. The share of Recharge models sold more than doubled in the first seven months, compared with the same period last year.

 

According to recent data by market researcher IHS, Volvo Cars was the leading electrified premium brand in Europe during the first half of 2020, with our Recharge cars making up almost a quarter of total deliveries in the region.

 

“This pandemic has strengthened our confidence that our strategic ambitions are the right ones and that an accelerated transformation of our business will lead to long-term growth,” said Mr Samuelsson. “We will continue to focus on and invest in electrification, online sales and connectivity.”

 

Our quick and proactive action during the pandemic outbreak helps us now. We mitigated the impact in a safe and pragmatic way and we had one of the shortest downtimes across the industry. As a result, our manufacturing network is ready to pounce in the second half of 2020 and beyond.

 

We’ve also been careful to manage our cash flow during the first six months, protecting our business. Managing costs, reducing non-essential spending and a few new credit lines give us the liquidity we need to keep our operations humming along nicely. It also puts us in a good position to keep investing and benefit from the recovery that we expect in the second half.

 

The first-half results

The coronavirus pandemic has affected every market we operate in and the economic downturn has been significant in many countries. We recorded an operating result of -989 million SEK over the first six months of 2020, as revenue fell by 14.1 per cent to 111.8 billion SEK.

 

While sales fell in absolute numbers during the first half, we took market share in China, the US and Europe, where Germany was among the strongest performing markets. We also saw a strong increase – of 79.8 per cent – in demand for our chargeable plug-in hybrid models sold under the Volvo Recharge brand, plus we experienced strong growth in consumer interest in our online sales channels.

 

We returned to sales growth in China in the second quarter and made up much of the ground lost in the first quarter, recording an overall sales drop of only 3.0 per cent in the first half.

 

The US also returned to growth in June, although sales fell by 13.7 per cent year-on-year in the first half, while sales in Europe were 29.5 per cent lower during the six-month period.

 

The overall passenger car market in China declined by 26.0 per cent in first half, while the US and Europe fell by 24.0 per cent and 38.1 per cent respectively during the same period.

 

Our global sales during the first six months of 2020 fell by 20.8 per cent to 269,962 cars, as governments in many key markets implemented stay-at-home orders or other restrictions on movement, severely affecting economic activity and showroom traffic.

 

Samuelsson said: “If the market recovers as we expect, we anticipate sales volumes to return to the levels we saw in the second half of 2019 and it is our ambition return to similar profit levels and cash flow.”

 

Full details on Volvo Cars’ financial results for the first half of 2020 can be found HERE

 

 

Did you know?

We’re the only car maker to offer a plug-in hybrid variant on every model in our portfolio. Later this year, we’ll start production of the XC40 P8 Recharge – our first fully electric model and the first of several fully electric models to be launched in coming years.