Sweden’s Volvo Cars has reported its best-ever second-half profit and sales volumes in 2020. The company reported revenue of 151 billion SEK and an operating profit of 9.5 billion SEK for the July-December 2020 period. Profits reported an uptick of 8.2 percent during the said period, while revenues were up by 4.9 percent.
Profit margin is also pegged to be robust at 6.3 percent in H2 2020, defining the company’s successful mitigation of the global impact of the Covid-19 pandemic.
The results reflect the company’s performance in terms of sales, which were driven by strong demand for Volvo Cars’ Recharge line-up of electrified / chargeable cars. Volvo Cars sold 391,751 cars in H2 2020, registering an increase of 7.4 percent compared to the same period in 2019, thus, clinching more market share in most markets.
For the full year 2020, Volvo Cars reported revenue of 263 billion SEK and an operating profit of 8.5 billion SEK. 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, Volvo Cars.
“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,” he added.
The share of Recharge cars as a percentage of total sales more than doubled in 2020, compared to 2019. In Europe, sales of plug-in hybrids represented 30 percent 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 from apandemic-related sales drop in the first half during the second half of the year. 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 we benefit 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.
In India, Volvo Cars recently introduced its midsized sedan – Volvo S60 – and has commenced bookings for the CKD model that is slated to start getting delivered to customers from March.