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VOLVO

Volvo sells aerospace unit to Britain’s GKN

Sweden's Volvo AB announced on Thursday it was selling its Volvo Aero aerospace engine subsidiary to British vehicle engineering group GKN for 6.9 billion kronor ($987 million).

Published: 5 July 2012 11:18 CEST
Volvo sells aerospace unit to Britain's GKN

“GKN is a strong new owner for Volvo Aero,” Volvo CEO Olof Persson said in a statement.

“GKN will provide Volvo Aero with the best possible conditions for continued advancement in its industry.”

According to Volvo, the transaction is set to be completed during the third quarter of 2012 and is expected to generate around 400 million kronor in capital gains, as well as add about 200 million kronor to Volvo Group’s third quarter earnings.

The Swedish maker of heavy vehicles has been looking to offload Volvo Aero since November 2011 in order to focus on its core product line.

The sale to GKN is also expected to wipe around 5 billion kronor in debt off Volvo Group’s debt.

“Volvo Aero has attracted considerable interest, but in our opinion, GKN can offer the best conditions for Volvo Aero’s future advancement,” said Persson.

“This transaction will improve our chances to further refine and develop our core business in commercial vehicles, while providing Volvo Aero with an owner that has both the drive and the capacity to advance and strengthen the company.”

GKN also hailed the deal and offered assurances that the company had no plans to reduce current Volvo Aero operations in Sweden, the TT news agency reported.

“The combination of GKN Aerospace and Volvo Aero creates a world leader in both aero structures and aero engine components,” it added.

GKN’s share price rocketed 13.61 percent following the announcement in early trading on London’s benchmark FTSE 100 index, which was flat overall.

TT/AFP/The Local

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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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