Geely expected to close Volvo deal

In what has been a tumultuous month for the Swedish auto industry, Chinese carmaker Zhejiang Geely Holding could close a deal with American Ford on Wednesday for the purchase of Volvo cars, Swedish public television reports.

Although Ford and Geely were close to agreement on some key aspects, Volvo plants in Belgium and Sweden “were among issues still on the table” according to a Tuesday report from the Financial Times.

Citing unidentified sources close to the deal, Swedish television said that the parties are currently holding negotiations in London and an agreement might be expected today.

“We do not comment on the sales process,” Volvo spokeswoman Maria Bohlin told Swedish news agency TT, saying the question should go to representatives of Ford and Geely.

Geely’s spokesman in Sweden said he would not comment either.

“The only thing I can say is that the negotiations are continuing according to plan, as they always have,” Anders Fogel told TT.

Volvo Cars was founded in the western Swedish city of Gothenburg in 1927 and counts some 22,000 employees worldwide, around 16,000 of whom work in Sweden.

Ford, the number-two US carmaker, announced in December 2008 it wanted to sell the premium Swedish brand, which it fully acquired in a 6.4 billion dollar deal in 1999.

The troubled US company said in October it had tapped Geely as preferred bidder for Volvo.

Geely last month said it had reached an agreement with Ford to own the intellectual property rights to Volvo’s key technologies, including those related to safety and the environment.

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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.