Volvo in two, billion-dollar deals
Large Cap Stockholm (VOLV)
Today, AB Volvo announced two separate billion-kronor deals, where they are divesting in China and buying in Sweden. One part is that they are divesting their entire 70 percent stake in Shandong Lingong Construction Machinery Co for 8 billion kronor.
The second deal is here in Sweden where AB Volvo buys Swecon for 7 billion kronor. In short, Swecon is a company that sells and rents construction machinery .
I don’t have much to say about the deal in China other than that it has probably been a door opener in the Chinese market during the approximately 20 years in Volvo’s ownership. I think the deal here in Sweden is a good way to go. You get closer to the end customer in this deal. It’s a good way to secure the deal with your machines and it removes one party from the deal, which leads to more profit for Volvo.
Right now, Volvo is trading at SEK 262.6 and is up just over 2 percent for the day. This is in line with the stock index, which is up 1.9 percent. In my eyes, the share is clearly in an attractive position. It is something of a mid-year for Volvo and its sector, but better times are ahead. Sales and profits are expected to be even higher in the coming years. In 2024, Volvo made a profit of SEK 24.78 per share and for 2025, the profit is expected to be lower. Assuming that it will be SEK 21 per share, the P/E today is 12.5. Now, it is not primarily this year that we should weigh Volvo against. In 2026 and 2027, profits are expected to be significantly higher and thus the valuation is even lower compared to those years.
Now in the spring of 2025, Volvo has paid a hefty dividend of 18.5 kronor, of which 10.5 kronor was a bonus dividend. They usually increase the regular dividend by 50 ore per year, so it can be assumed that it will be 8.5 kronor next year. On top of that, a bonus dividend is expected, but whether it will be as large as this year remains to be seen.
I own Volvo and think it is a fantastic company. They perform efficiently at a level that is top-notch among the truck manufacturers. The future is bright with expected increased demand for Volvo products for decades to come.
Busy And Useful 