How Volvocar’s profits become a loss

Friday, 15 June 2012
Volvo's profit for 2011 was a loss of Skr7.3 billion - not a profit of Skr1.6 billion as CEO Stefan Jacoby reported in early May.

When Volvo Cars in May reported its financial results for last year, it said that its earnings stood at Skr1.6 billion before taxes. But according to the annual report which has now been submitted to the Companies Registration Office, it became instead a loss of Skr7.3 billion before interest, according to Swedish business daily, Dagens Industri.

The reason for the big difference is changes in accounting principles, according to a source to the paper.
“If you had stayed with the old accounting system from the United States, then operating income would have become positive,” the source said.

Linn Fort Gens, head of investor relations at Volvo Cars, confirm that different accounting policies have been used. According to Fort Gens CEO Stefan Jacobys referred the May figure for the total profits of Volvo Car Group, which, Volvo Cars is a major component of the business.

Linn Fort Gens, said that investing heavily in marketing and recruitment is behind the loss - more than 2,000 people have been hired in 2011.The cost of research and development has increased by Skr2.5 billion during the same time. In addition, factors in the weakening krona, a weaker dollar and rising commodity costs have negatively affected the company’s performance in terms of financial reporting
By Scancomark.se Team

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