Sweden-based Volvo Cars will take an impairment charge of 11.4 billion crowns (HK$9.4 billion) in the second quarter, related to its ES90 and upcoming EX90 models, the company said on Monday. The charge is attributed to tariffs and significant launch delays.
The automaker, controlled by China’s Geely Holding, said it currently cannot profitably sell the China-made ES90 in the United States due to import tariffs. Profit margins in Europe are also under pressure 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,” Volvo said in a statement.
The impairment also reflects substantial launch delays and additional development costs incurred over time, the company added.
Out of the total amount, 4.0 billion crowns is expected to impact cost of sales, while most of the remaining sum will affect the R&D line in financial reporting.
Volvo, which is set to report second-quarter earnings on July 17, said the charge will reduce net income by 9.0 billion crowns during the period.
REUTERS
