Volvo Opts To Divest Arquus Defence Unit
Portfolio Pulse from Shivani Kumaresan
Volvo (OTC:VLVLY) has agreed to sell its Arquus defense unit to John Cockerill Defense. The transaction is expected to be completed after staff consultations, concluding in Q1 2024. Volvo anticipates an operating loss of 900 million Swedish crowns ($87.44 million) due to the sale, impacting Q4 2023 earnings. Arquus, which contributes about 1% to Volvo's revenues, employs around 1,200 people in France. The loss will be reported under 'Group Functions & Other' and won't affect adjusted operating income. VLVLY's stock closed up 0.62% at $24.32.
January 16, 2024 | 12:11 pm
News sentiment analysis
Sort by:
Ascending
NEGATIVE IMPACT
Volvo is selling its Arquus defense unit, anticipating an operating loss of 900 million Swedish crowns ($87.44 million) in Q4 2023. The loss will be reported separately and won't affect adjusted operating income. Arquus accounts for about 1% of Volvo's revenues.
The divestiture of Arquus is likely to have a negative short-term impact on Volvo's stock (VLVLY) due to the anticipated operating loss of $87.44 million. Although the loss is significant, it will be reported separately from the adjusted operating income, which may mitigate the impact. The fact that Arquus represents only 1% of Volvo's revenues suggests that the long-term impact on the company's financial health may be limited. However, investor sentiment in the short term may be affected by the size of the loss and the divestiture news.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 100