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BUSINESS

Volvo posts better-than-expected results despite supply issues

On Thursday, Swedish car manufacturer Volvo Cars on Thursday announced better-than-expected quarterly results despite supply chain problems linked to the war in Ukraine and the Covid pandemic.

Volvo posts better-than-expected results despite supply issues
Volvo's factory in Torslanda outside Gothenburg. Photo: Adam Ihse/TT

The Gothenberg-based company, majority owned by China’s Geely Holding, said net profit rose to 3.9 billion Swedish kronor (380 million euros, $400 million) against 5.7 billion kronor a year earlier.

Its first-quarter operating profit fell to 6.0 billion kronor, while turnover rose 11 percent to 15.7 billion kronor, beating analyst forecasts.

A global shortage of semiconductors has forced Volvo and other carmakers to cut vehicle output despite robust demand.

The new Covid lockdowns in China and the Russian invasion of Ukraine have exacerbated the problem, Volvo said.

The Ukraine conflict “sent already rising inflation to new heights and further disrupted supply chains that were already fragile”, Volvo chief Jim Rowan said.

“Volvo Cars sold a total of 148,295 cars in the first quarter as the supply chain constraints affecting the company continued to slowly ease,” a statement said.

This was 37,000 fewer than the previous year.

“However, late in the quarter the company was hit by a shortage of a specific component, which will also impact production during the second quarter,” it added.

Volvo however underscored that this was “a temporary setback”, adding it expected “marginal growth in sales volumes for the full year 2022, compared to 2021, although uncertainty is high”.

Volvo sales in its main markets fell 26 percent in Europe, 21 percent in China and 16 percent in the United States.

However, the company, which aims to have an all-electric fleet of cars by 2030, said sales of rechargeable vehicles were rising and represented 34 percent of the total volume in the first quarter.

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BUSINESS

Philip Morris offers $16 bn for Swedish smokeless tobacco firm

Marlboro-maker Philip Morris International said on Wednesday that it had offered $16 billion to acquire smokeless tobacco company Swedish Match as the US group aims to move away from its traditional cigarette business.

Philip Morris offers $16 bn for Swedish smokeless tobacco firm

The board of Swedish Match recommended that its shareholders accept the bid of 106 Swedish kronor per share, nearly 40 percent above its closing share price on Monday, the companies said in separate statements.

The deal would total 161.2 billion Swedish kronor (15 billion euros).

Stockholm-based Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zyn brand of nicotine pouches.

Philip Morris announced in 2016 a long-term goal to stop selling cigarettes and replace them with alternatives that it says are less harmful.

The US company sells cigarette brands such as Marlboro and Chesterfield in 180 markets outside the United States and has invested billions of dollars since 2008 in vapor products, oral nicotine and other “reduced-risk” products.

Last year it clinched a controversial takeover of British breathing inhaler manufacturer Vectura, despite fierce opposition from health campaigners and medical groups.

The group plans to generate at least $1 billion in annual net revenues from nicotine-free products by 2025.

Philip Morris and Swedish Match had confirmed the takeover talks on Monday following a Wall Street Journal report.

“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” the US company’s chief executive, Jacek Olczak, said in a statement.

“Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion — strengthened by complementary geographic footprints, commercial capabilities and product portfolios — and open up significant platforms for growth in the US and internationally,” he said.

Swedish Match chairman Conny Karlsson told AFP that the deal was a “good offer” for shareholders.

“It’s great to have the chance to broaden the distribution of our products, which can compete with cigarettes,” Karlsson said.

Snus scandal

Swedish Match is also known for making cigars and “snus”, a form of snuff particular to Nordic countries.

The sale of snus, a moist powder tobacco originating from dry snuff, is illegal across the European Union, but Sweden has an exemption. It contains nicotine and comes in teabag-like pouches that are placed under the lip.

In 2012, Swedish Match said an associate to the EU’s then health commissioner had sought a 60-million-euro payment from the company to push for a proposed tobacco law that would lift the snus ban.

The firm filed a complaint with the European Anti-Fraud Office and the health commissioner, John Dalli, resigned from his post.

Dalli appeared in a Maltese court this year on charges of bribery and trading in influence over the lobbying scandal.

Swedish Match shares rose by almost nine percent to 103.50 kroner following the takeover bid.

Philip Morris, listed on the New York Stock Exchange, was up 0.6 percent to $99.47 in electronic trading before the stock market opened.

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