Swedish auto firms secure European loans

Swedish car maker Volvo Cars, and truck makers Volvo Trucks and Scania, have secured loans totalling €1 billion ($1.26 billion) from the European Investment Bank (EIB), it was announced on Wednesday.

Volvo Trucks and Scania will receive €400 million each on Thursday and Volvo Cars will get 200 million euros, Sveriges Radio reported on Wednesay.

“If all the paperwork is ready and all the conditions are met, we will make the payments,” Mats Gunnarsson, an EIB advisor who is processing the loans, told the radio station.

The three companies are part of a group of eight auto firms whose EIB loan applications will be considered on Thursday.

Volvo Trucks, Scania and Volvo Cars have all applied for loans for projects aimed at developing new cleaner engines.

Gunnarsson said the EIB would not demand any guarantees for the loans to Volvo Trucks and Scania.

“These are two companies with very good credit-worthiness,” he stressed.

However, for Ford-owned Volvo Cars the EIB would demand guarantees from the Swedish state.

“For Volvo Cars we have been told that the government is ready to issue a state guarantee, even though the details aren’t wound up yet. In this case, it is a prerequisite for an EIB payment,” he said.

Gunnarsson said no decision had been made about a loan to Sweden’s other beleaguered car maker, General Motors-owned Saab Automobiles, which has launched a legal restructuring process in order to avoid bankruptcy after GM effectively abandoned the company to focus its own financial woes.

“There is still a great amount of uncertainty about whether (Saab) will receive state guarantees. We’re waiting for that uncertainty to be clarified,” he said.


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.