Volvo Cars Shares Drop 8% Due to Declining Sales in China and Rising Costs

Volvo Cars shares fell 8% at the market opening, marking the worst performance since February. The company warned of rising raw material prices and slowing sales in China, where sales have dropped by 35%. The operating profit for the second quarter was 800 million Swedish kronor, significantly lower than the 1.6 billion kronor reported in the first quarter. CEO Håkan Samuelsson highlighted the tough situation in China due to intense price competition. Volvo is also facing challenges from geopolitical conflicts, including the blockade of the Strait of Hormuz, which has led to rising oil and raw material prices. CFO Fredrik Hansson stated that the company will feel the raw material impact in the second half of the year, despite partial hedging. Management is optimistic about improving profitability in the second half of the year, thanks to the launch of the new electric crossover EX60 and an expected 10% increase in sales. The company is also successfully implementing a cost restructuring plan of 18 billion kronor, having saved 5 billion kronor six months ahead of schedule.