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CHINA

Volvo partner blacklisted by Swedish pension fund

Dong Feng, owners of a Chinese truckmaker in which Volvo recently purchased a 45 percent stake, has been blacklisted by a major Swedish state pension fund for allegedly violating a United Nations weapons embargo.

Volvo partner blacklisted by Swedish pension fund

Sweden’s Seventh AP fund, as well as Norway’s oil fund, blacklisted Dong Feng because the company sold military equipment to countries currently under a UN weapons embargo, Sweden’s TV4 news reported on Monday.

“They are really the wrong partner for Volvo,” Anna Ek, head of the Swedish Peace and Arbitration Society (Svenska Freds- och skiljedomsföreningen) told TV4.

At the weekend, officials at Volvo AB hailed the 5.8 billion kronor ($900 million) deal as a “fantastic opportunity” for the Swedish truckmaker to take a leading position in China and in the global market for heavy trucks.

According to Volvo CEO Olof Persson the partnership was “the best of both worlds”, calling Dong Feng “a partner we know well”.

Volvo claimed the deal made it the largest manufacturer of large trucks.

The blacklisting by Sweden’s Seventh AP fund means the pension fund won’t be allowed to purchase any shares of Dong Feng.

However, there are no current plans to review the fund’s holdings in Volvo following the deal.

“We’ve told them what we think and they have told us that they don’t work like that any longer,” Volvo spokeswoman told TV4.

TT/The Local/dl

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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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