Renault sheds shares in Sweden’s Volvo Trucks

French carmaker Renault said Wednesday it had begun to sell off its remaining shares in Swedish truck manufacturer AB Volvo, which has a market value of around 13 billion Swedish kronor ($1.9 billion), to reduce the company's debt and raise funds for investment.

Renault sheds shares in Sweden's Volvo Trucks

“After this transaction is completed, the Renault group will no longer hold any shares in AB Volvo,” the carmaker said in a statement.

Renault gained the stake by selling its truck unit to AB Volvo in 2001, sold part of its holding in 2010.

The carmaker said the shares would be sold via an accelerated book building process and as well as private placements.

Renault said the funds raised would used to reduce the company’s debt, and support planned investments in France as well as internationally, in particular in Russia and China.

The company plans to disclose the value of the funds raised from the sell off on Thursday.

At Wednesday’s market prices the shares should raise 13 billion Swedish kronor, at Wednesday’s exchange rate.

Renault’s debt has dropped steadily from 70 billion kronor in 2008 to some 7.1 million kronor at the end of the first half of 2012.

Volvo AB is the world’s number two truck maker behind Germany’s Daimler, employing some 100,000 people at factories in 20 countries.

Last year Volvo AB posted a net profit 17.5 billion kronor on sales of almost 300 billion kronor.

AFP/The Local/at

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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.