Volvo Cars eyes cost cuts as Q1 profit drops

STOCKHOLM (Reuters) -Sweden-based automaker Volvo Car Group reported a smaller than expected fall in first-quarter operating earnings on Thursday and said that while overall demand remained healthy, it may cut costs as the global economy slows.

Volvo Cars, majority-owned by China’s Geely Holding, said operating earnings fell to 5.1 billion Swedish crowns ($494.63 million)in the quarter from a year-ago 6.0 billion, beating a mean forecast of 3.6 billion, according to Refinitiv estimates.

The automaker reaffirmed its outlook for “solid double-digit growth” in retail sales this year, provided there were no major supply disruptions.

While demand for the company’s cars was healthy, macroeconomic conditions were challenging, CEO Jim Rowan said.

“Given the long-term nature of the headwinds our industry is likely to face, we are also evaluating the need for further targeted cost actions that are sustainable over time and that will contribute to our growth,” Rowen said in a statement.

The CEO also said that lithium prices, a large source of cost for electric cars, had started to decline.

($1 = 10.3107 Swedish crowns)