STOCKHOLM (Reuters) -Sweden-based Volvo Cars is booking a impairment charge of 11.4 billion crowns ($1.2 billion) in the second quarter related to its ES90 and upcoming EX90 models, due to tariffs and launch delays, it said on Monday. The group, which is controlled by China’s Geely Holding, said it is currently unable to sell its […]
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Volvo Cars books $1 billion impairment charge due to tariffs, launch delays
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STOCKHOLM (Reuters) -Sweden-based Volvo Cars is booking a impairment charge of 11.4 billion crowns ($1.2 billion) in the second quarter related to its ES90 and upcoming EX90 models, due to tariffs and launch delays, it said on Monday.
The group, which is controlled by China’s Geely Holding, said it is currently unable to sell its Volvo ES90, which is built in China, profitably in the United States due to import tariffs, while profit margins for the same model are also under pressure in Europe for the same reason.
“The charge primarily reflects adjustments in expected volumes and planned lifecycle profitability associated with the platform for the EX90 and ES90 cars,” it said in a statement.
The impairment charge also reflects significant launch delays in the past and subsequent additional development costs, it said.
Out of the total amount, 4.0 billion crowns is estimated to impact cost of sales and the majority of the remaining amount affects the R&D line in the financial reporting.
Volvo Cars, which is due to publish second-quarter results on July 17, said the effect on net income in the period will be 9.0 billion crowns.
($1 = 9.6103 Swedish crowns)
(Reporting by Anna Ringstrom and Marie Mannes in Stockholm, editing by Essi Lehto and Tomasz Janowski)