Truck maker Volvo said its efforts to reach its cost-cutting target were being hampered by a weak Swedish crown, and warned it expected little growth in its crucial North American market in coming years. The comments overshadowed forecast-beating quarterly earnings from Sweden's biggest company by sales and top private-sector employer, and drove its shares down nearly 5 percent.
Volvo, locked in fierce rivalry with Germany's Daimler and Volkswagen, is seeking to cut 10 billion crowns ($1.2 billion) in annual costs. But with only about a third of the savings implemented so far, investors have ratcheted up pressure on the group to deliver the remainder on time by the end of 2015.
Jan Gurander, acting CEO until Martin Lundstedt takes the helm in October, said a weaker crown - it has fallen against the most major currencies, particularly the dollar, since October - was increasing the company's overseas costs when translated into the Swedish currency. He said the cost cuts already implemented - 3.8 billion crowns - would have been around 2 billion higher crowns higher at unchanged currency levels. "We are committed to the 10 billion (of cost cuts) and we are trying to offset this as much as possible," he told a conference call.