Volvo Bolsters China Presence With JV Acquisitions
Executive Summary
The JVs include car-manufacturing facilities in Chengdu and Daqing, an engine-production facility in Zhangjiakou and an R&D center in Shanghai.
Volvo Cars takes control of its three joint venture operations in China, paying SK2.2 billion ($256.4 million) and saying it wants to more accurately demonstrate its growing presence in the world’s largest car market.
Volvo now owns 50% of its China JVs alongside parent Geely Holdings. Their joint ventures include car-manufacturing facilities in Chengdu and Daqing, an engine-production facility in Zhangjiakou and an R&D center in Shanghai.
Volvo says its move allows it to fully consolidate its China JVs into Volvo Car Group, providing a more accurate financial and operational picture of the company as it continues to expand in China.
President and CEO Hakan Samuelsson says the company’s latest interim financial results are the first to incorporate the China joint ventures.
“The incorporation of the Chinese entities is an important step towards the long-term objectives to capture the growth and sourcing potential in China,” Samuelsson says in a statement.
Volvo reports an operating profit of SK1.7 billion ($193.4 million) for the first half of 2015, up from SK968 million ($112.8 billion) year-ago. Revenue was SK75.2 billion ($8.8 billion), up from SK67billion ($7.8 billion) in first-half 2014.
Volvo sold 232,284 units in the first half, up slightly from year-ago’s 229,013, driven primarily by strong demand in Europe. Deliveries in China were flat while sales in the U.S. stabilized during the period.
“We have been implementing a transformation plan since 2010 and this financial result demonstrates that we continue to be on the right track,” Samuelsson says.
