Chinese-owned Swedish brand Volvo Cars has reported a robust 66 per cent increase in operating profit in 2016 to SEK11 billion and a new record as global sales hit 534,332 cars.
Net revenue for the period increased 10 per cent to SEK180.7bn compared to SEK164.0 bn in 2015 while the operating profit margin improved significantly from 4 per cent in 2015 to 6.1 per cent in 2016.
The results provide the latest proof that the premium carmaker’s on-going financial and operational transformation is gathering pace. Global sales rose 6.2 per cent, underpinned by an 11.5 increase in China and an 18.1 rise in the US, Volvo’s two largest individual sales markets.
“Volvo is going from strength to strength,” said Håkan Samuelsson, president and chief executive. “The 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 89 year history, it conducted a €500 m bond issue in May, followed in November by a SEK3 bn bond issue. In December, it raised a further SEK5 bn from the sale of equity to three institutions.
On the operational front, Volvo Cars completed the rollout 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,” said Mr Samuelsson.
Volvo has been in operation since 1927. Today, Volvo Cars is one of the most well-known and respected car brands in the world with sales in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010.