Volvo plans to raise 500 million euros in first bond issue
STOCKHOLM -- Volvo Car Group says it aims to raise 500 million euros ($571 million) by issuing the first corporate bond in its 89-year history.
The Sweden-based company, bought by China's Zhejiang Geely Holding from Ford Motor Co. in 2010, said it would begin a roadshow for potential investors on May 9.
"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," Volvo said in a statement Friday.
The company swung to a profit in the first quarter, helped by new upmarket models seen as key in its quest to carve out a niche in the premium car market.
Operating earnings rose to 3.1 billion Swedish crowns ($382 million), compared with a loss of 11 million in the same quarter last year. The company's profit margin in the quarter was 7.5 percent compared with 0 percent during the same period last year, Volvo said on Wednesday.
Volvo, a small player compared with Daimler's Mercedes-Benz and BMW, has said it must boost profitability to the level of rival premium carmakers in the coming years, viewing an operating margin of about 8 percent as a benchmark.
The company, one of Sweden's biggest by sales and staff numbers, is banking on a 75 billion crown investment plan in new models and plants to secure a firm foothold in a premium market where it had struggled to make inroads under Ford.