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Volvo Cars credit rating upgraded by Standard & Poor’s

Volvo Cars, the premium car maker, has had its credit rating upgraded by Standard & Poor’s, the global credit rating agency, from BB with a positive outlook to BB+ with a stable outlook, underlining S&P’s faith in its ongoing global financial and operational transformation. The new rating places Volvo Cars one step below an investment … Continued

Volvo Cars, the premium car maker, has had its credit rating upgraded by Standard & Poor’s, the global credit rating agency, from BB with a positive outlook to BB+ with a stable outlook, underlining S&P’s faith in its ongoing global financial and operational transformation.

The new rating places Volvo Cars one step below an investment grade rating.

Volvo Cars is also rated Ba2 with a stable outlook by Moody’s Investors Service, a global credit rating agency.

Volvo Cars has been implementing a broad transformation plan since it was acquired by Zhejiang Geely Holdings, the Chinese industrial holding company, in 2010. This transformation has seen it return to sustainable profitability and achieve a series of record sales years.

S&P’s decision to upgrade the company’s rating highlights its faith in the credibility of Volvo’s ongoing transformation. The company expects to report another record sales year in 2017.

Volvo Cars reported an operating profit of SEK3.5 billion for the first three months of the year, up 11 per cent from SEK3.1 billion during the same period last year. The increase was mainly driven by strong demand for the company’s XC60 and 90 series cars.

It said its first quarter operating profit margin was 7.3 per cent, down from 7.5 per cent last year. Profitability was partly offset by costs related to the launch of the new 90 series cars and the new XC60, as well as continuous investments in new technologies and a rising number of employees. Since the first quarter of 2016, Volvo Cars has welcomed almost 5,000 new employees, bringing the total global work force to 33,000.

Global retail sales increased by 7.1 per cent to 129,148 cars in the January to March period, resulting in a first quarter revenue of SEK47.6 billion, up 13 per cent from SEK42.0 billion last year.

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