Volvo Group Tuesday said he would have sold his 70% participation in Shandong Lingong Construction Machinery Co (SDLG) in China and would have purchased his supplier of Swecon European construction equipment while he seems to refocalize on Core brands.Volvo said that his unit of building equipment (EC) will sell participation in a fund controlled by the Lingong minority group of 8 billion Swedish crowns ($ 837 million).
In a separate declaration Volvo said he would buy Swecon’s commercial operations in Swecon in Sweden, Germany and Balics for 7 billion crowns ($ 731 million).
Volvo is focusing on premium brands and more focused on customers, strengthening control over his European activity, taking a step back from the medium Chinese market while the industry is preparing with the change in the demand for consumers and commercial tensions.
“With the growing competition, the need to transform into new technologies and to strengthen the interaction with customers, we must re-focus,” said Melker Jennberg, head of the Volvo CE, in a declaration on the Chinese transaction.Volvo shares increased by 2.3% in the mid -morning trade.
Volvo CE represented 17% of group revenues in 2024, while Sdlg contributed to about 2%, said the company.
With full ownership SWECCs, Volvo will be able to directly manage most of his activities for European construction equipment, said Bernstein in a note for customers.
Analysts said that the SDLG exit reflects the wider challenges of operating in the Chinese -collapse construction market, while the Swecon agreement increases Volvo control in Europe.
The growing debt of Chinese owned developers dragged real estate prices and triggered a recession of buildings, affecting the demand for heavy machinery.
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