Volvo, Electrolux slash jobs in upset for Swedish economy
Stockholm (AFP) - Swedish industrial heavyweights Volvo trucks and Electrolux announced a total of 4,000 job cuts around the world on Friday when they published disappointing figures for the third quarter.
The two companies, major players in the auto and home appliance industries, will each axe 2,000 jobs, they said in separate statements.
Volvo's net profit was far below analysts' expectations, and profit at Electrolux slumped by nearly 30 percent.
Volvo, a leading manufacturer in the global truck industry, said: "As part of the previously announced Group-wide efficiency programme, a directional decision has been made to rationalise white collar staff and support functions by approximately 2,000 employees and consultants."
The firm said that third-quarter net sales fell to 64.9 billion kronor ($10.2 billion, 7.4 billion euro), a drop of five percent compared to the same period last year.
Net profits were also down one percent, to 1.4 billion kronor, sharply below analysts' expectations for about two billion kronor.
Volvo chief executive Olof Persson said the firm's third quarter "was characterised by the ongoing comprehensive product renewal in the group's truck programme and the fact that we entered a new phase of the group's development focused on taking actions to streamline and enhance the efficiency of our operations."
He told the Swedish news agency TT: "It's clear that we will see measures in our major markets such as Sweden, France, the United States and Japan."
The Volvo Group employs 112,000 worldwide, including 16,000 consultants and temporary workers.
Home appliance maker Electrolux also announced a cost-reduction programme that would kick in during the fourth quarter of 2013 and mainly affect operations in Europe, the Middle East and Africa.
"Approximately 2,000 employees are affected by these actions," the company said in a statement.
Among major steps foreseen by the company was the closure of a factory in Orange, Australia, with production to be concentrated at a facility in Thailand.
The Australian newspaper said that more than 500 jobs would be eliminated with the plant, which makes refrigerators and freezers.
The company unveiled the programme as it released figures for the third quarter, showing net sales rising by just 0.3 percent from the level a year earlier to 27.1 billion kronor.
The company reported net profits of 655 million kronor during the quarter, a drop of 28.9 percent from the same period in 2012.
"Demand in several of Electrolux core markets in Europe continued to decline," the company said, saying sales in western Europe dropped one percent during the quarter from a year earlier.
Electrolux currently employs 60,200 people globally.
Klas Fregert, an economist at Sweden's Lund University, said he was taken aback by the deep job cuts.
"It is very surprising. This could mean that there is something that has been missed and which is more serious than we thought," he said.
He said it went "totally against" figures on the Swedish economy also released on Friday.
The Economic Tendency Indicator, issued by the government-controlled National Institute of Economic Research, rose from 98.2 in September to 101.6 in October.
The indicator, based on interviews with thousands of businesses and households, is considered a key gauge of the mood of the Swedish economy.
By contrast, two major companies openly announcing sweeping cost cuts is "a sign of a weakening economy," said Fregert.
"If they go out now and say that they will lay off that many people, they have of course thought of this for several weeks, I assume," he said.
"If they are firing people, they assume that there is a downturn which will last for quite some time. Otherwise, you just keep people waiting for the upturn."
Both Volvo and Electrolux had dropped about seven percent on the Stockholm Stock Exchange by mid-day Friday.
