Volvo Car scrapped its full-year guidance after warning that a further deterioration in the Chinese auto market and slow recovery in the U.S. led to lower-than-expected third-quarter sales and a weaker outlook. In a statement on Friday, the Swedish carmaker—which is majority-owned by China’s Zhejiang Geely Holding Group—said the market developments will also have a “significant negative impact” on third-quarter core earnings and cash flow, beyond previously highlighted raw material, currency and amortization and depreciation headwinds. As a result of the increased market uncertainty, Volvo Cars has also taken the decision not to provide any updated short-term forward-looking statement.
The company said it sold 141,609 cars in the third quarter, an 11% drop on year as sales in the Greater China region plunged 41% and Americas saw a 14% decline. The market downturn in China showed no signs of easing, and the recovery in the U.S. premium segment remained below our earlier expectations, said Chief Commercial Officer Erik Severinson. The company had previously guided to stronger sales in the second half of the year and strong positive free cash flow in the late second half of the year, which was expected to see cash flow end the full year approximately at break-even.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing