Operating Earnings Plummet 84% at Volvo Car

Volvo Car Corp. posted operating income of 239 million kronor ($36 million) in the first half of this year compared with 1.5 billion kronor ($227 million) in the same period of 2011.

The company swung to a net loss of 254 million kronor ($38 million) from a 1.2 billion-kronor ($178 million) profit a year earlier.

Volvo, a unit of Zhejiang Geely Holding Group Co., generated 65.3 billion kronor ($9.7 billion) in revenue from January through June, up 4% year over year. The Swedish brand's sales slipped 4% to 221,300 vehicles.

CEO Stephan Jacoby tells The Wall Street Journal it will be difficult for Volvo to make a profit this year. He confirms the company will slow the line speed 12% at its main plant in Gothenburg, Sweden, and shed 300 contract workers in response to weak sales.

Jacoby tells reporters that despite a cash outflow of 2.3 billion kronor ($342 million) in the first half, Volvo remains committed to its five-year, $11 billion investment plan. In April the company outlined a program to develop new vehicles, powertrain and technology and erect three factories in China.

Cutting such spending can "destroy the future" of a carmaker, he says, citing the example of bankrupt Swedish rival Saab Automobile.