Volvo AB, the world's second- largest truckmaker, may need more government support in France, where its Renault Trucks unit is lagging behind a global recovery and aid conditions rule out job cuts until late 2012.
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Renault Trucks wants to extend a state-subsidized partial shutdown for several months and may seek further help after the program reaches a 12-month legal limit in September, spokesman Bernard Lancelot said today in an interview.
"Given that the situation isn't improving at all, we're asking for a new facility for the next few months," Lancelot said by telephone. "If there's still no recovery, we expect the state to continue showing flexibility. There may have to be another program."
Volvo's French unit is already in a third government-funded slowdown, with its 10,500 employees working a three-day week for 95 percent of their salary. Renault Trucks is more dependent on sluggish southern European economies than its Volvo sister brand, which last month announced production increases to meet resurgent demand from South America and Eastern Europe.
"Renault Trucks is more exposed to France, Italy and Spain, so it's in a very tough situation and recovery may take some time," said Michael Andersson, an analyst at Stockholm- based Evli Bank, which has a "reduce" recommendation on Volvo shares.
"They can extend temporary leave to some extent, but then they can't fire people and they're stuck," Andersson said. "Renault Trucks could become a drag on the group's profits this year and next."
