Volvo ousts Chief Executive and turns to Scania for New Boss

Sweden’s Volvo (VOLVb.ST) named the head of Volkswagen-owned (VOWG_p.DE) Scania as its chief executive on Wednesday, replacing embattled Olof Persson who for nearly four years led a sweeping efficiency drive at the global truck maker.

Volvo, vying for global dominance with Germany’s Daimler (DAIGn.DE) and VW’s truck brands, also released better than expected quarterly earnings two days ahead of schedule and said it would seek an external partner for parts of its IT business.

Persson had led a restructuring programme aimed at cutting 10 billion Swedish crowns ($1.2 billion) in costs and boosting profitability to the level of more nimble rivals such as Scania.

But with the scheme having less than a year left to run and margins still below their level before it was launched, pressure on Persson from top owners such as activist fund Cevian Capital had been building.

“The action program that Persson initiated seems to be biting and he should get credibility for that,” Christer Gardell, managing partner at Cevian, Volvo’s second-biggest owner by votes, told Reuters.

“But at the same time we support the board’s decision to appoint Martin Lundstedt, who is widely recognised as one of the best leaders in the trucking world. Now he has the assignment to make Volvo the world’s best trucks company,” Gardell said.

Chairman Carl-Henric Svanberg, who as recently as April 1 had said he was confident in the work Persson was doing amid reports he would get the axe, said Lundstedt was being brought in to lead the next phase for Volvo.

Lundstedt is a 25-year veteran at Scania, whose flexible production system modelled on the ground-breaking techniques of Toyota (7203.T) in the 1990s has helped it outpace Volvo in terms of profitability over the past decade.

Lundstedt, whose easy-going manner endeared him to Scania staff and helped smooth its integration into VW, will assume his role in October, with CFO Jan Gurander serving as acting CEO in the interim.

Persson meantime delivered some of the strongest earnings of his tenure, as Sweden’s biggest listed company by sales and top private sector employer said adjusted operating profit rose to 4.60 billion crowns from a year-ago 2.59 billion, topping a mean forecast of 3.47 billion in Reuters poll of analysts.

To placate investors who have seen Volvo shares underperform for years, it has held out the possible sale of parts of its large IT unit while selling a stake in Indian partner Eicher Motors (EICH.NS).

Volvo, which also makes buses, construction equipment and boat engines, said it was looking to bring in a partner for parts of its IT business, opening the door to a deal.

Source: Reuters

Comments
Loading...