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VOLVO

Volvo Cars to refinance loans with Chinese help

Volvo Cars, owned by the Chinese automaker Geely, said Thursday that it had received a loan of €922 million ($1.2 billion) from the state-owned China Development Bank to refinance Volvo's other loans.

Volvo Cars to refinance loans with Chinese help

The loan which matures in 2020 will improve the structure of Volvo Cars’ borrowings, with the company having approximately 600 million euros due in the coming years, Volvo Cars said in a statement.

“The loan agreement is testament to China Development Bank’s belief in the strength and viability of the Volvo Cars global business plan and corporate strategy,” said the automaker.

Volvo Cars, which was acquired by Geely from Ford in 2010, is seeking to boost sales in China as the European market continues to skid.

China Development Bank says on its website that in addition to financing infrastructure and public development projects in the country, it also finances cross-border investment and global business cooperation.

AFP/The Local/og

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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.

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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