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BANK

Second bank joins Sweden’s loan guarantee scheme

Volvofinans Bank AB has said it will apply to participate in the loan guarantee programme contained within the Swedish government's financial stability package.

Published: 26 November 2008 17:30 CET

The move makes the small bank, whose core business is auto financing linked to carmaker Volvo Car Corporation and its parent company, Ford Motor Co, the second bank to join the programme.

Swedbank is so far the only one of Sweden’s four big banks to participate in the loan guarantee programme.

The scheme was introduced last month as part of a package of measures to boost financial stability and allows banks a state guarantee for new funding in return for a fee of 0.5 percent of the loans or more.

Volvofinans Bank, in which Volvo car retailers own 50 percent while the Sixth AP pension fund owns 40 percent and Ford the remaining 10 percent, said in a statement it would submit its application to join the scheme in the coming days.

The bank has a loan portfolio of about 25 billion kronor ($3.15 billion), it added.

VOLVO

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.

Published: 3 February 2021 12:21 CET
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.

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