STOCKHOLM -- Volvo Cars will pay a
dividend of 2 billion yuan (2.9 billion Swedish crowns and $311 million) after
record sales in 2018, the company said on Thursday, with almost
all of it slated to boost the coffers of its debt-laden Chinese
parent, Geely Automobiles.
The payment comes as automakers grapple with the
fallout of trade wars, rising costs for developing electric and
driverless vehicles, and an industry downturn that has dented even
the most profitable companies.
The trade war caused Volvo to postpone plans for an initial public offering last year and generated additional costs to retool its factories
to limit the tariff impact.
Daimler AG cut its dividend in
February after its fourth-quarter profit plunged. In the same
week Volvo reported a fall in 2018 profit margins and said
margins would remain under pressure this year.
Volvo has a stated goal to spend roughly 5 percent of its
annual revenue on building electric and autonomous cars, and a
spokeswoman said on Thursday Volvo believed it had enough cash
to cover both the dividend and its development costs.
It is the second time that Volvo has paid a dividend since being bought in 2010 by China's Zhejiang Geely Holding Group, which owns the Chinese car
brand of the same name.
Volvo paid a dividend of 2.2 billion crowns for 2016.
The Swedish carmaker said its owner will receive around 2.8
billion crowns of the dividend and Swedish insurance and savings
group Folksam and pension fund investor AMF, which hold
preference shares, will get around 125 million crowns.
Geely has taken on debt after making recent stake
acquisitions in Daimler and truck rival AB Volvo.
Volvo, which did not make a profit for a decade under
previous owner Ford, sold a record 642,253 light vehicles last year
and recorded an operating profit of 14.2 billion Swedish crowns.
It has set a goal of reaching sales of 800,000 cars and light trucks within the
next few years.