STOCKHOLM -- Volvo reported its operating earnings tripled in the first half and said a further rollout of new, more up-market models left it confident about reaching record sales and earnings for the full year.
Volvo said in a statement today that operating earnings rose to 5.59 billion Swedish crowns ($649.8 million) up from 1.66 billion in the same period last year.
Sales at the automaker in the January to June period rose to 83.65 billion crowns from 75.22 billion a year ago, underpinned by strong demand for Volvo’s flagship XC90 SUV. The automaker said the launch of its S90 sedan and V90 station wagon would provide a further boost in the second half.
Volvo is banking on a 75 billion crown investment plan in new models and plants to secure a foothold in the global premium market. The automaker has undergone a major turnaround since being bought in 2010 by China’s Zhejiang Geely Holding from Ford Motor.
"This robust first-half financial and operational performance combined with a positive product pipeline allows me to state confidently that Volvo Cars expects to report another record full year in 2016 in terms of sales and profitability," Volvo CEO Hakan Samuelsson said in the statement.
Samuelsson gave an upbeat outlook for auto markets in the second half after Volvo, which is aiming to compete with larger premium rivals such as Mercedes-Benz, BMW and Audi, grew unit sales by 11 percent in the first six months of 2016.
"We are positive about the development in the U.S. as well as in Europe, where we are both taking market share and have a strong underlying market which after many years is finally coming back," Samuelsson told Reuters.
"In China, above all in the premium segment, we expect further steady growth."
Launch costs for the new S90 and V90 models meant Volvo's operating margin dipped relative to that reported for the first quarter, but it still stood at 6.7 percent versus the 2.2 percent posted in the first half of last year.
Samuelsson said costs related to the launches would continue to have an impact in the third quarter.