AB Volvo to slash 4,100 white-collar jobs to shore up finances amidst COVID-19

In its announcement on Tuesday, AB Volvo (OTCMKTS: VOLVF) said that it plans on cutting roughly 4,100 jobs from its white-collar workforce in the 2^nd half of 2020. The manufacturer of trucks and construction equipment attributed the move to the Coronavirus pandemic that has so far infected more than 8.2 million people worldwide and caused over 443,000 deaths.

Shares of the company ended almost flat on Tuesday. At £12.35 per share, AB Volvo is roughly 10% down year to date in the stock market after recovering from a low of £8.28 per share in March. Learn more about day trading.

25% of Volvo’s layoff will affect its workforce in Sweden

COVID-19 has weighed heavily on the global demand for tucks, buses, and construction equipment in recent months that pushed the Swedish multinational company and a range of its competitors into aggressive cost-cutting to cushion the economic blow. Volvo’s rival Scania also announced plans of slashing a significant chunk of its workforce in the first week of June.

According to CEO Margin Lundstedt of Volvo:

“The Corona epidemic and the global measures taken to fight it has led to a market situation impacting our industry severely. The effects are expected to lower demand going forward, and we need to continue to adjust our organisation accordingly. In parallel, we will accelerate the competence shift needed for new technologies and business models.”

Volvo also highlighted on Tuesday that about 25% (1,250 positions) of the expected layoff will affect its workforce in Sweden. As per the Gothenburg-headquartered company, roughly 15% of the job cut will be limited to consultant positions.

AB Volvo records a 75% decline in net order intake

AB Volvo currently has a workforce of 104,000 employees. In late April, the manufacturing firm reported an unparalleled 75% decline in its net order intake of trucks in March as compared to that of February.

CEO Lundstedt also said on Tuesday:

“The Volvo culture will continue to be our guiding star in this work, where we will work as one team together with the unions to make this adjustment in a responsible way. With these changes the Volvo Group will maintain a position of strength, be adapted to the new market situation and continue to be a leader in the transformation towards sustainable transport and infrastructure solutions.”

At the time of writing, the Swedish multinational manufacturing company has a market cap of £26.28 billion and a price to earnings ratio of 9.88.