(Yicai Global) July 20 -- Second-quarter operating profit at Volvo Cars, owned by China's largest private automaker Geely Holding Group, climbed almost 29 percent to the company's highest ever for a three-month period buoyed by strong gains in global sales.
Profit minus operating expenses hit a record SEK4.2 billion (USD471 million) in the three months from a year earlier, the Swedish auto giant said in a statement released yesterday. Revenue gained 27 percent to SEK66 billion, buoyed by a near 15 percent increase in retail sales to 170,232 cars.
"I set a sales target of 800,000 by 2020," Geely Chairman Li Shufu told Yicai Global. "Many directors felt it would be difficult to reach, but for now the company is on track to meet this target, which included 200,000 annual vehicles sales in China alone." The carmaker's global sales were just 370,000 units when Hangzhou-based Geely acquired it in August 2010.
In addition to robust sales, Volvo's strong performance was also boosted by management efforts to balance growth with development through continuous reinvestment.
"Volvo will spend close to 8 percent of its sales revenue on research and development each year," Li said.
Volvo laid out a global revitalization plan the year after its takeover with USD11.5 billion of planned investment. Only a very limited amount of that comes directly from Geely, Li said, adding that more comes from bank loans and Volvo's own profit.
For the first half, operating profit at Volvo climbed 16 percent from a year earlier to the highest ever for a six-month period, reaching a record SEK7.8 billion, on a 24 percent gain revenue to SEK122.9 billion. Sales jumped 14 percent to 317,600 vehicles.
"These results confirm that Volvo Cars is now well-positioned for a new period of sustainable global growth," President and Chief Executive Hakan Samuelsson said in the statement. "I expect us to achieve another year of record sales in 2018, as we aim to establish ourselves as a diversified, global mobility provider under our new vision Freedom to Move."
Editor: William Clegg