Stockholm - Volvo AB, under shareholder pressure to boost profit margins, replaced Olof Persson as chief executive officer with Martin Lundstedt, the top executive at rival truckmaker Scania AB.
Jan Gurander, Volvo’s chief financial officer, will serve as president and CEO in the interim until Lundstedt assumes the position in October, the Gothenburg, Sweden-based company said in a statement on Wednesday. Volvo shares surged the most in more than six years.
The sudden change in leadership follows efforts by Volvo shareholder Cevian Capital AB to lobby the truckmaker to streamline operations and boost margins. Volvo is intensifying a push for growth and increased profitability, as the world’s second-largest maker of commercial vehicles faces increased competition from Volkswagen AG, which bought Scania and Germany’s MAN SE in recent years. Persson led the truckmaker for almost four years.
“After three years of focus on product renewal, internal efficiency and restructuring, the Volvo group is gradually entering a new phase,” Volvo Chairman Carl-Henric Svanberg said in the statement.
Volvo’s shares soared as much as 16 percent, the biggest jump since February 2009, and were up 13 percent to 114.70 kronor at 9.13am in Stockholm. That pushed the stock’s gain for the year to 36 percent, valuing the manufacturer at 244 billion kronor ($28 billion).
Fatter margin
Volvo also reported Wednesday that operating profit, excluding restructuring charges and a gain from the sale of shares in Eicher Motors Ltd., was 4.6 billion kronor in the first quarter. That boosted the margin to 6.1 percent from 3.9 percent. Including those items, operating profit was 7.07 billion kronor.
Net sales in the first quarter rose 14 percent to 74.8 billion kronor. Truck orders rose by 3 percent in the period, while construction equipment orders dropped 24 percent. The company posted a surprise fourth-quarter loss last year, partly due to a 30-percent plunge in construction-equipment deliveries, citing “weakness” in emerging markets.
Lundstedt has spent his career at Soedertaelje, Sweden-based Scania. He has been president and CEO of Scania since 2012 and now reports to Andreas Renschler, the former head of Daimler AG’s trucks division, the biggest in the world. Renschler joined Volkswagen this year to push integration between Scania, MAN and VW’s own commercial-vehicles business.
After Persson refocused Volvo on its truck and heavy-equipment divisions, including renewing models and expanding in China, “the Volvo group is considerably better positioned to compete for leadership in our industry”, Svanberg said.
* With assistance from Terje Langeland in Tokyo
Bloomberg