Volvo Cars profit slumps in 2012, Europe to remain tough

STOCKHOLM Fri May 3, 2013 7:43am EDT

A man walks past a Volvo advertisement in Beijing March 21, 2013. Picture taken March 21. REUTERS/Kim Kyung-Hoon

A man walks past a Volvo advertisement in Beijing March 21, 2013. Picture taken March 21.

Credit: Reuters/Kim Kyung-Hoon

STOCKHOLM (Reuters) - Chinese-owned carmaker Volvo VOLVO.UL saw operating profit plummet in 2012 and said on Friday it expected its largest market, Europe, to remain tough this year.

Operating profit was 18 million Swedish crowns ($2.76 million) in 2012, down from a profit of 2.0 billion in the previous year.

However, Volvo Cars slumped to a 480 million crown net loss from a profit of 1 billion crowns in 2011.

"The Chinese and U.S. markets are expected to grow on the back of increasing demand, whereas it is likely that the challenging economic environment will continue to affect the European car market," the company said in a statement.

Volvo, wholly owned by China's Zhejiang Geely Holding Group Co. GEELY.UL since 2010, said sales were 124.5 billion crowns in the full year against 125.7 billion the previous year.

($1 = 6.5245 Swedish crowns)

(Reporting by Niklas Pollard and Mia Shanley)