Skip navigation
Newswire

Cevian's Gardell: new cost cuts show Volvo on track to double digit margin

STOCKHOLM, Oct 24 (Reuters) - Activist fund Cevian Capital, Volvo's second largest owner by votes, said third quarter results and plans for more cost cuts showed the Swedish truck maker was on track to reach a double digit profit margin.

Christer Gardell, co-founder and managing partner of Cevian which owns Volvo stock totalling 13.3 percent of votes, told Reuters that Swedish group's new measures vouched for sharply higher profitability ahead.

"The actions being taken are right in line with our views and strenghtens our belief that we are heading towards double-digit (margins)," he said in a brief phone interview, adding he expected this level to be reached in "a not too distant future".

Volvo's operating margin excluding restructuring charges rose to 4.3 percent in the third quarter from a year-ago 3.9 and it said it aimed for savings of 10 billion crowns ($1.4 billion) in 2016 versus 2012, up from a previous target of 6.5 billion.

Cevian has been vocal in pushing Volvo to take bold steps to lift profitability, a process which has seen the group sell off its aerospace business and begin a review of its IT unit.

The truck maker posted a surprise rise in core quarterly profit earlier on Friday as cost cuts began to have an impact, sending its shares up as much as 14 percent. (1 US dollar = 7.2510 Swedish crown) (Reporting by Johannes Hellstrom; writing by Niklas Pollard; Editing by Alistair Scrutton)