Volvo Cars, the premium car
maker, has announced it is seeking to raise Euros 500m (Rs 3798 crore) from a
bond issue, its first foray into the global corporate bond markets in its 89
year history. The Swedish company will begin a road show for potential
investors on May 9, 2016.
Volvo Cars has secured
corporate credit ratings from Standard & Poor’s (S&P) of BB with a
S&P said in its analysis:
“The Company’s business risk profile is supported by a well-established market
position as a mid-sized car manufacturer, being active in Western Europe, Asia,
and North America, helped by a track record of safety, reliability, innovation,
and technological expertise.
“We expect Volvo's strategy will enable the
company to benefit from stronger market demand, higher pricing and wider profit
margins, which will improve its competitive position. We also envisage that the
transition to more flexible and cost-efficient manufacturing platforms, which is
currently underway, will support profitability and product quality.”
The proceeds from the bond issue are being raised for general corporate purposes and are aimed at increasing the company’s financial flexibility and diversifying its funding sources.
Earlier this week Volvo Cars announced a robust start to 2016 with revenues for the quarter up 24 per cent year-on-year to SEK41.7bn (Rs 34,129.9 crore approximately), generating an operating profit of SEK3.1bn (Rs 2537 crore approx.) and an operating profit margin of 7.5 per cent.
Hakan Samuelsson, president and chief executive of Volvo Cars, said: “Volvo’s global transformation is gathering pace. After a strong first three months of the year, both sales and profitability are expected to increase in FY2016 compared to last year.”
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