Volvo Group says no to French loan for Renault

Sweden’s Volvo Group has rejected a loan from the French government designed to help the truck maker’s troubled Renault Trucks subsidiary survive the current economic crisis.

In announcing the decision on Tuesday, the Swedish truck maker cited what it considered unacceptable conditions.

“The alleged conditions set forth by the French government to the French car industry… are such that we will not accept them,” Mårten Wikforss, a spokesman for the group, told AFP, referring to France’s plan announced Monday.

“With the loans it seems it’s not possible to get any new job cuts or close any factory,” Wikforss said.

“Conditions like that we will not adhere to.”

French President Nicolas Sarkozy on Monday announced state loans of almost €8 billion (more than $10 billion) for French carmakers, in exchange for pledges to keep jobs and assembly lines in France.

Sarkozy said that under the plan Renault Trucks would receive half a billion euros. French national champions Renault and Peugeot Citroen will each receive loans of €3 billion over five years.


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.