Volvo Cars Corp, whose Chinese parent, Geely Holding Group (吉利控股), is considering an IPO of the Swedish automaker, said it is on track for another sales record despite rising trade tensions, after second-quarter profit rose on strong demand for its SUVs.
Operating profit increased 29 percent to 4.2 billion kronor (US$471.89 million) in the three months to June 30, on 66 billion kronor in revenue, up by more than a quarter.
The automaker previously reported a 14.4 percent increase in deliveries to 317,639 vehicles for the first half of the year.
Acquired by Geely in 2010, the maker of sleek-but-sober premium cars, such as the XC90 SUV and S60 sedan, has notched up four straight record sales years, raising its game against larger rivals Mercedes-Benz and BMW AG.
Geely has hired Citigroup Inc, Goldman Sachs Group Inc and Morgan Stanley to prepare Volvo for a stock market flotation this year, Reuters reported in May.
Pledging yesterday to hit a fifth record this year, chief executive officer Hakan Samuelsson said the first-half performance left Volvo “well positioned for a new period of sustainable global growth.”
The company recently opened its first US plant in Charleston, South Carolina, which is ramping up S60 production.
While the US$1.1 billion investment offers some protection against mounting trade tariffs, the company remains dependent on imports of the flagship XC90 in its fastest-growing market.
Volvo’s US sales rose 40 percent in the first half of the year.
Washington this month slapped 25 percent tariffs on US$34 billion of Chinese imports, including cars, and Beijing quickly retaliated with an increase in tariffs on US goods.
US President Donald Trump is also threatening tariffs against car imports from Europe, where Volvo has two car plants.
Volvo has so far made no changes to its announced plans to focus on sedan production in Charleston, while importing its flagship SUV to the US.
The company said it is shifting XC60 SUV production for the US market to Europe from China to avoid Washington’s new tariffs on Chinese imports.
Volvo builds the compact XC60 in Sweden for European customers and in China for other markets, including the US.
“We will of course reshuffle here and take XC60s for the US ... from our factory in Europe, and let China produce for other markets,” Samuelsson said, adding that the shift had already begun.
Chinese XC60 production previously shipped to the US would be reallocated to other markets, with some imported back to Europe, he said, adding: “That’s the sort of fine-tuning we can do within our production process.”
Volvo’s first-half profit rose 15.7 percent to 7.8 billion kronor on revenue of 122.9 billion kronor, up 23.6 percent.
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