Danske Bank: Volvo – Intends to distribute SEK19bn to shareholders from UD trucks divestment

Volvo (MW): Has proposed an extraordinary c. SEK19bn dividend to shareholders following the divestment of UD trucks back in late 2019. The distribution would have probably been made earlier had it not been for the pandemic putting a freeze on shareholder pay-outs (UD trucks was sold for around SEK22bn). According to End Q1 21 financials, the distribution would take Volvo’s adj. net debt to EBITDA from -0.1x to 0.3x i.e. still well below the 1.5x that S&P’s views as commensurate with the current ‘A-‘ rating. Hence this is, in our view, only slightly credit negative and most likely expected by the market.