Volvo’s Chinese owner interested in Saab: report

China's Geely, owner of Volvo Cars, has indicated an interest in acquiring a stake in troubled Swedish automaker Saab Automobile, according to media reports.

Volvo's Chinese owner interested in Saab: report

According to the Dagens Nyheter (DN) newspaper, Saab’s Chinese partner Youngman, which had previously promised to pay the cash-strapped car maker 640 million kronor ($93 million), may be backing out of the deal.

Instead, Geely, which acquired Volvo from Ford in 2010, has expressed an interest in Saab.

“One sign of this is that Geely has approached Saab’s reconstructor, lawyer Guy Lofalk,” a source told the newspaper.

Lofalk, the court-appointed administrator of Saab’s reconstruction, recently visited China as a part of his work on Saab’s reorganisation.

According to DN, Geely has been watching Saab’s struggles with interest, but has stayed cautious about entering the fray.

However, amid fears that a Saab bankruptcy could mean the end of the brand, the Chinese automaker appears to view ownership as a viable option.

On Wednesday, Saab confirmed that an expected payment from Youngman would be delayed and that it remained unclear when the funds may arrive.

A Volvo spokesperson refused to comment on the report, deferring inquires to Geely.

Saab has been under bankruptcy protection since September 21st when a Swedish appeals court approved the company’s request to carry out a business reorganisation, giving Saab a reprieve from creditors.

After 12 weeks, the bankruptcy protection would be lifted if no extension request had been filed and granted, it said.

Saab’s Dutch parent company Swedish Automobile has argued it only needs to keep its creditors at bay until regulatory approval goes through for its anticipated cash injection of €245 million ($335 million) from its Chinese partners Pang Da and Youngman.

The company, which says it has about €150 million in outstanding debt, has said it expects this cash influx in November. 

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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.