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CHINA

Chinese VP to Stockholm for Geely-Volvo deal

Chinese Vice President Xi Jinping is due to arrive in Stockholm on Saturday for a four-day visit, reinforcing speculation that Chinese carmaker Geely might soon formalise its purchase of Swedish auto brand Volvo from American Ford Motor Company, state Xinhua news agency reported.

Xi is expected by many to replace Chinese President Hu Jintao by 2013, according to state Xinhua news agency.

The visit comes after the chairman of China’s Zhejiang Geely Holding Group, Li Shufu, told the Wall Street Journal last week that he expected to complete the deal to acquire Volvo by the end of the month as planned. Geely reportedly secured the financing needed for the purchase earlier this month.

But there were still unspecified problems at Ford holding up the definitive accord, Li said.

Geely spokesman Yuan Xiaolin told AFP on Friday that the company had no update on the deal’s status.

Ford announced in December that it had agreed on the main terms of the sale of its loss-making Swedish subsidiary Volvo Cars to Geely, one of China’s largest private automakers, for a reported $2 billion.

If completed, the deal will bring to an end Ford’s decade-long association with the premium Swedish brand, known for its sturdy, family-friendly cars.

Ford had said it anticipated “a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals”.

Volvo has 22,000 employees worldwide, including 16,000 in Sweden. The deal with Geely has raised fears among Swedish trade union leaders of cuts at the firm.

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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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