Volvo Cars, the premium car maker, has reported a robust 66 per cent increase in operating profit in 2016 to SEK11.0bn compared with SEK6.6bn in 2015, as global sales hit a new record of 534,332 cars.
Net revenue for the period increased 10 per cent to SEK180.7bn compared with SEK164.0bn in 2015, while the operating profit margin improved significantly, from 4.0 per cent in 2015 to 6.1 per cent in 2016.
The results provide the latest proof that Volvo’s ongoing financial and operational transformation is gathering pace. Global sales rose 6.2 per cent, underpinned by an 11.5 per cent 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,” 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.”
For the first time in its 89-year history, it conducted a €500m bond issue in May, followed in November by a SEK3bn bond issue. In December, it raised a further SEK5bn from the sale of equity to three institutions.
On the operational front, Volvo Cars completed the roll-out of its top-of-the-range 90 series cars 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.