Volvo Cars have reported a robust 66 percent increase in operating profit in 2016 to SEK11bn (~R16.67bn), compared to SEK6.6bn (~R10 bn) in 2015, as global sales hit a new record of 534 332 cars.
Net revenue for the period increased 10 percent to SEK180.7bn (~R273.87bn) compared to SEK164bn (~R248bn) in 2015 while the operating profit margin improved significantly from 4 percent in 2015 to 6.1 percent in 2016.
The results provide the latest proof that Volvo’s ongoing financial and operational transformation is gathering pace. Global sales rose 6.2 percent, underpinned by an 11.5 percent increase in China and an 18.1 per cent rise in the US, Volvo’s two largest individual sales markets.
“Volvo is going from strength to strength,” says Håkan Samuelsson, president and chief executive. “Our new models are successful, sales are at record levels and profits are up substantially, reflecting the contribution of all our employees. On the back of these achievements, I foresee that 2017 will also be a record year in terms of sales.”
The last financial year was an important one for Volvo Cars. For the first time in its 90 year history, it conducted a €500m bond issue in May, followed in November by an SEK3bn bond issue. In December, it raised a further SEK5bn from the sale of equity to three institutions.
These moves underline Volvo Cars’ growing attraction to global investors and bring the company in line with best global practice by diversifying its sources of capital.
On the operational front, Volvo Cars completed the roll-out of its top-of-the-range 90 series during 2016, successfully repositioning the brand as a genuine premium competitor.
Volvo Cars also announced two significant new alliances in 2016 that reinforce its leading position in autonomous driving, connectivity and safety. In August, it joined forces with Uber, the ride-sharing company, to develop next generation autonomous driving cars. In September it announced plans to create a new joint venture with Autoliv, the worldwide leader in automotive safety systems, to develop autonomous driving software – the first time a leading premium car maker has joined forces with a tier one supplier to develop new ADAS and AD technologies.
“With these alliances, Volvo Cars is positioning itself for coming changes in the automotive industry. These themes of sustainable profitability, rising sales and new business initiatives will be continued in 2017,” concludes Samuelsson.