Margin lower than expected

At a first glance, the Volvo group’s interim report looked set to ignite a stock market rally; the group posted a 22% per cent increase in orders and an operating profit of SKr 8,540 million in the second quarter and raised its forecast for the North American truck market and the all-important Chinese construction equipment market.

But, when the Stockholm stock exchange opened the group’s share price fell and at close was down 3.4%. The main reason for this was that the Trucks division, which is Volvo’s largest business area, reported an operating margin of 9.6% for the quarter, which was 1.1 percentage points lower than expected. The margin was weighed down by delivery disturbances, mainly in Europe, and problems in the supplier chain.

Volvo hopes to resolve the problem over the summer and expects the impact of the disturbances to be lower in the third quarter.

String of bad news

The honeymoon for Ericsson’s new CEO Börje Ekholm is over. A string of bad news brought Ericsson’s shares down by 15.6%, the biggest negative reaction to a report since Q2 2002.

For the eleventh quarter in a row, turnover fell organically, now by 16% and all three of the company’s business areas Network, IT & Cloud and Media shrank. Lower software sales brought down gross margins to 30%, adjusted for structural costs – the lowest level for a second quarter during the 2000s and for the third quarter in a row the company reported an operating loss, this time of 1.2 billion kronor.

CEO Börje Ekholm has said that the launch of Ericsson’s focus strategy to regain Ericsson’s leadership meant tackling costs. Now they are to be lowered by 10 billion kronor by next summer. “We need to be in more of a hurry than we previously thought. The ambition is more than those ten, but that is what we must deliver.” There will be staff cuts in Sweden and abroad.

Skanska takes a hit

During 2016 Skanska’s shares improved by 30%. It went particularly well for the construction company during the second half of the year after Donald Trump was elected president in the USA and promised investment in infrastructure.

However despite great hopes for 2017, profitability has not kept up. In the first quarter operating margins were only 1.6%. On Friday the company notified of a write-down of 420 million kronor for its civil operations in the USA and a write-down of 360 million kronor for its British operations.

The profit in the group’s construction operations was only 0.2 billion kronor, which means the quarter’s profits are expected to fall to 1.5 billion kronor from 1.7 billion during Q2 last year.

Lift for Swedish business

Prior to last week’s G20 summit Japan and the EU announced an agreement on a free trade deal. The Swedish government expects 97% of Japan’s and 99% of the EU’s tariffs will be scrapped. Ann Linde, the minister for EU affairs and trade, stresses the importance of the agreement, saying that two-thirds of companies exporting to Japan today are SMEs.

Five years ago a similar agreement was signed with South Korea, and since then exports have increased by 55%, according to the minister.

Sweden’s services, retail trade and food sectors could all benefit from the agreement, say experts Dagens Nyheter has spoken to.

Prosecutor ends inquiry

Prosecutor Alf Johansson has decided to end the inquiry into elk hunting trips organised by paper making giant Holmen. Anders Borg, the former finance minister, investor Fredrik Lundberg and Pär Boman, chairman of Handelsbanken, were among those questioned by prosecutors investigating allegations of bribery connected to the hunting trips.

Anders Borg expressed relief after the prosecutor ended the inquiry, saying: “I have been certain all along that I acted correctly, but it is still a huge relief that the process has come to an end”.

According to Holmen CEO Henrik Sjölund, the company intends to continue with its hunting trips.

Sweden focuses on rail network

One year ago during Almedalen week, a group made up of Ramböll, FS Links, Setterwalls law firm, a number of consultants and the US company Hyperloop One, presented plans to build a hyperloop high-speed transportation network, linking the Finnish capital Helsinki to Stockholm.

According to FS Links Mårten Fröjdö, the Swedish government has since been in contact with the group’s consultants, but Infrastructure Minister Anna Johansson says she is unaware of this. While the government is interested in following developments and receiving an idea of the investment cost, Johansson considers a hyperloop network theoretical at the moment, although it could be of interest in the future. The minister says the government’s focus is instead on the plans to build a high-speed rail network, linking Sweden’s three main cities.

In Finland, meanwhile, the group has plans to make the city of Salo home to the first test station for the hyperloop technology.

Johansson era almost over

Two major changes in the ownership of Ericsson in the past couple of years have dramatically changed the playing field in the telecoms giant and have now led chair Leif Johansson to throw in the towel.

The first incident was a shift of power at Ericsson’s principle owner Industrivärden in 2015. This change led indirectly to Christer Gardell, of Cevian Capital, seizing a chance to buy as many shares as it could in Ericsson, making it the largest owner in terms of capital. With Christer Gardell, who clearly wanted Leif Johansson out of the post of chair, at the top of the owners’ list, and a new management at Industrivärden with little sympathy for Johansson, it was difficult for even Investor to save the chair.

Leif Johansson’s time as chair of Ericsson has been a disaster in terms of the company’s progress and how the board has managed its duties. As he leaves the post an era in Swedish business comes to an end. For almost three decades he has been one of the heavyweights in Swedish business although his star status has dipped as it became clear the returns he brought shareholders were no longer in the top league.

Confidence in Kinberg Batra at rock bottom

A new Dagens Industri (DI) barometer shows a majority within the business world believe Moderate leader Anna Kinberg Batra should resign. According to 1,100 business leaders that took part in the survey, a majority, 52%, believe she should resign, and only 34% believe she should stay.

The barometer also shows that support for her from business has collapsed over the past year and that Centre leader Annie Lööf has more than doubled her figures, while Sweden Democrat leader Jimmie Åkesson is also closing in.

EBM drops investigation

The Swedish Economic Crime Authority (EBM) has dropped its investigation into suspected manipulation of Fingerprint Cards’ share price by five US hedge funds in 2016, saying that trading in the share was not unusual at the time.

However, prosecutor JanTibbling did say that a number of transactions named in the report submitted to EBM were subject to scrutiny in other investigations concerning Fingerprint Cards.

New innovation centre

China Euro Vehicle Technology (CEVT), Geely Holding Group’s development company in Gothenburg, has grown rapidly since its start in 2013. Among other things, the company has developed a new and smaller platform for Volvo and Geely cars, launching a new car brand, Lynk & Co.

Geely has already invested some SKr 10 billion in CEVT, which is outgrowing its present premises, and has decided to build a new innovation centre with offices and housing on Lindholmen. The 80,000 square metre property will also house Geely’s sales and marketing unit, ahead of the launch of Lynk & Co in Europe. CEVT currently has 2,000 in its employ and expects to create a further 1,500 jobs once the centre is built.