Gardell: I don’t want to break up Volvo

Financier Christer Gardell said on Friday morning during a radio interview on Swedish Radio’s P1 his fund Cevian is interested in being a long term owner of Volvo and is not interested in breaking the company up.

“To break up Volvo and sell the parts works against existing synergies, is industrial and financial madness, and is nothing we support,” Gardell said.

“Volvo has improved considerably, but valuation has not kept pace,” he said. “We want to work hard from a board position to ensure that Volvo goes from being a good company, to becoming a fantastic one.”

He said is sure a “sensible” solution will be found with Volvo’s election committee, and that Cevian will get a seat on it.

The decision comes after Gardell, through his fund Cevian Capital along with British Parvus Asset Management, bought 8 million A-shares at Volvo last week and demanded changes be made.

Cevian then said that the company had bought the equivalent of 5 percent of the votes at Volvo. The investment company Öresund, which controls 1 percent of the votes at Volvo, supports Cevian.


Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.