By Niklas Pollard
STOCKHOLM (Reuters) - Geely-owned Volvo Car Group returned to a solid profit last year as firmer sales, above all in China, and a firm lid on costs helped it overcome a weak start to 2013 and lingering weakness in the U.S. market.
The company, one of Sweden's biggest by sales and number of employees, is banking on strong sales of increasingly locally-made Volvos in China to reach a target of roughly doubling sales by 2020 and securing its future in a cut-throat car industry.
The Gothenburg-based company said 2013 operating earnings rose to 1.92 billion Swedish crowns ($301.9 million) from 66 million in 2012, a year in which one-off gains from the sale of technology to its parent helped keep the carmaker in the black.
The sharp rise in earnings came despite Volvo having posted a 577 million loss in the first half and full-year revenues edging lower to 122.25 billion crowns from 124.55 billion.
"This strong turnaround from the first half of 2013 is further tangible proof of Volvo Car Group's progress in implementing its transformation plan," the company said.
Volvo, bought by China's Zhejiang Geely Holding Group Co. from Ford Motor Co. in 2010 amid a deep auto industry crisis, has said it expects sales to grow by "a good" five percent this year from the 427,840 cars sold in 2013.
China has become a key bright spot for Volvo as it seeks to take on larger global luxury brands such as BMW , Daimler's Mercedes and Volkswagen's Audi and generate volumes sufficient to foot the bill for billions dollars of investment in new vehicles.
Volvo's sales in China shot up nearly 50 percent last year, leaving it the group's top market alongside the United States, and it expects new models and a further expansion of its dealer network in the world's biggest car market to underpin growth.
But while turnover in China have taken off, a lack of new models saw sales in the United States slide 10 percent last year to stand at only roughly half of what they were a decade ago.
Acknowledging disappointment at progress, Volvo has replaced top management in North America and hopes sprucing up a string of existing models and a launch of its V60 sports wagon will revive sales in the fiercely competitive U.S. market.(Editing by Alistair Scrutton)
- Company Earnings