Languishing sales in China and Europe took a heavy toll on
the car industry in 2012, sending Volvo’s operating profit
plummeting to 18 million Swedish crowns ($2.76 million).

A sale of Volvo technology to parent Zhejiang Geely Holding
Group Co. kept the company profitable at an operating
level last year, following a profit of 2.0 billion in 2011.

“The ambition is to reach break even this year on an
operative basis – by selling cars,” Volvo Chief Executive Hakan
Samuelsson said at a news conference.

Volvo, based in Gothenburg in western Sweden, said the
Chinese and U.S. markets would grow this year but was cautious
about demand in Europe – its biggest market.

“It is likely that the challenging economic environment will
continue to affect the European car market,” the company said.

It could still take another year or two before it reaches
break even on a net level. Its net loss for the year was 480
million crowns, compared with a 1 billion crown profit in 2011.

Volvo is seeking to cut costs, while it also needs to fund
development of new car models to secure its future in the highly
competitive auto industry.

The carmaker cut hundreds of temporary contracts in its
production last year and in February unveiled plans to shed
1,000 more jobs on the consultant and white-collar side in a bid
to lower costs.

Volvo, wholly owned by China’s Zhejiang Geely Holding Group
Co. since 2010, said sales were 124.5 billion crowns
in the full year against 125.7 billion the previous year. Sales
fell in both Europe and China, while they rose slightly in the
United States.

Volvo, whose owner is also the parent of Hong Kong-listed
Geely Automobile Holdings Ltd., has been aiming for
rapid growth in China to underpin a target of reaching sales of
800,000 cars by 2020, but so far progress there has been slow.

Sales in what the group labels its second home market
slumped more than 10 percent last year, though cheating by car
dealers seeking to win cash rebates meant sales were inflated in
2011 and under-reported in 2012.

Volvo, bought from Ford Motor in a $1.8 billion deal,
aims to sell 200,000 cars in China by 2020, almost five times
its current sales, and expects a new plant in Chengdua, in
central China, to be up and running in the second half of 2013.

($1 = 6.5245 Swedish crowns)

(Additional reporting by Mia Shanley; Editing by Alistair
Scrutton)

The Swedish group, which makes heavy-duty trucks under the
Renault, Mack, UD Trucks and Eicher brands as well as its own
name, said on Thursday orders rose 11 percent year-on-year
compared with a 15 percent fall forecast by analysts.

“We saw this big uptick in the order intake come in at the
end of the quarter,” Chief Executive Olof Persson told a news
conference.

“The uncertainty we had in the market during the second half
of last year and in the beginning of this year has been replaced
with more stability and our customers had more confidence to
actually place orders.”

Volvo’s comments come after domestic rival Scania
reported a 28 percent rise in orders earlier this week, and
world No. 1 Daimler Trucks forecast a slight rise in
2013 sales.

Persson said Volvo and its suppliers would raise production
during the second quarter – a challenge as output of a slew of
new vehicles such as the new flagship FH series is ramped up.

The Gothenburg-based company would add around 400 staff in
its European production system in the second quarter, but only
on a temporary basis as it continued to treat evidence of
improving markets warily.

Volvo’s caution was also reflected in its decision to leave
unchanged a 2013 outlook for roughly flat European and North
American truck markets and a forecast for 20 percent growth in
Brazil driven by government subsidies.

“What I can say is the good demand we have seen continued
also in the first weeks of the second quarter,” Persson said.

Volvo shares, which had already racked up gains earlier in
the week, were up 1.9 percent to 92 Swedish crowns by 1010 GMT,
while Scania was up 0.1 percent, Daimler 1.3 percent and German
rival MAN SE 0.3 percent ahead of results on Friday.

“Many investors were very sceptical ahead of the Q1
earnings, so there should be some short positions to be closed
today,” Carnegie analyst Kenneth Toll Johansson said in a note.

While a recovery may be just over the horizon, for now the
slow order intake at the end of last year is weighing heavily on
truck industry earnings.

Volvo, which also makes buses, construction equipment and
engines, reported a 92 percent plunge in first-quarter operating
earnings to 482 million crowns ($72.7 million), well below the
2.02 billion seen by analysts, as sales fell to their lowest
level since the 2008/2009 financial crisis.

The company, which unlike Scania sells into a relatively
sluggish U.S. market, last year launched a sweeping efficiency
programme running through 2015 to boost its profitability.

“Are we satisfied? Absolutely not. Will we improve? We have
to. Will we do it? Absolutely,” Persson said. “But I have to
remind you this is a 3-year plan, so we have 33 months to go.”

($1 = 6.6300 Swedish crowns)

(Additional reporting by Helena Soderpalm; Editing by Mark
Potter)

Sandvik, which along with domestic rival Atlas Copco
supplies more than half the global market for
underground mining gear like drill rigs and crushers, said on
Tuesday mining orders dropped 30 percent in the quarter,
excluding currency swings.

The firm, whose mining division is its largest by sales,
said operating earnings fell to 2.56 billion crowns ($392
million), missing analysts’ average forecast of 2.97 billion in
a Reuters poll.

“The earnings and considerations about future profitability
mean that estimates need to come down quite substantially,”
Handelsbanken Capital Markets analyst Peder Frolen said,
referring to forecasts for future earnings.

Sandvik shares, which have already fallen 12 percent this
year, were little changed at 92.3 crowns in early trading.

Investors had been braced for bad news after Caterpillar Inc
, the world’s biggest maker of mining and construction
gear, on Monday cut its 2013 sales outlook due to a fall in
demand for equipment from mining customers.

Miners are scaling back investment plans against a backdrop
of slumping prices for commodities such as coal and copper,
weighing on bookings of new equipment from the likes of Sandvik.

Firmer demand elsewhere, such as in the oil and construction
industries, limited Sandvik’s total order fall to 18 percent,
stripped of currency swings and acquisitions. However, the 22.3
billion crowns in orders still fell short of the 22.8 billion
seen in a Reuters poll of analysts.

“Sandvik’s business areas generally reported stable or
slightly improved market conditions, apart from Sandvik Mining,
which continued to be affected by weaker demand and uncertainty
from the mining industry,” the company said.

Sandvik said mining activity in Africa was down somewhat
from high levels due to lower prices for gold and copper while
demand from coal and iron ore mines in Australia was especially
weak.

“We have seen the sentiment weaken also in the gold sector
due to the weaker gold price,” Sandvik Chief Executive Olof
Faxander said in a conference call with journalists.

“We see a rather stable situation in the after market, but
in terms of both mining systems and equipment sales demand is
falling right now as a consequence of mining companies slowing
their pace of investment.”

Order cancellations still remained at low levels and
amounted to less than 100 million crowns in the first quarter,
he added, while losses on bad debts were negligible.

Among Sandvik’s peers in the sector, Finland’s Metso
is due to report on its first quarter later on
Tuesday while Atlas Copco does the same on Monday, April 29.

($1 = 6.5285 Swedish crowns)

(Additional reporting by Helena Soderpalm; Editing by Alistair
Scrutton and Mark Potter)

The Swedish company, a gauge of manufacturing activity as
its bearings are used in sectors ranging from household
appliances to nuclear power plants, has suffered five straight
quarterly falls in sales volume, including a 9 percent drop in
the first quarter.

It forecast flat demand in the second quarter of this year,
but Chief Executive Tom Johnstone saw light on the horizon.

“When I look at our business we can see the turning point
coming and we believe that unless there is another major shock,
we will move into a somewhat better business environment in the
second half of this year,” Johnstone told Reuters after SKF
reported a bigger-than-expected fall in first-quarter earnings.

Johnstone said the Gothenburg-based company was seeing
better activity among customers in sectors such as energy,
particularly in China, while the hard-hit car and truck industry
was stabilising.

SKF shares initially fell as much as 2.5 percent to their
lowest in some five months, but were buoyed by Johnstone’s
comments and edged 1 percent higher to 154.7 crowns by 1048 GMT.
The European industrials index was down 1.4 percent.

Squeezed by weak demand, first-quarter operating profit fell
to 1.48 billion crowns ($232.1 million) from a year-ago 2.14
billion, falling short of a mean forecast of 1.54 billion in a
Reuters poll of analysts.

“There is continued uncertainty and cautiousness in the
market place and this impacted our sales more than expected,
especially in our industrial businesses and in North America,”
Johnstone said in the report.

SLOW IMPROVEMENT

SKF, which earlier this year unveiled plans to cut 2,500
jobs, said it expected only Latin America to show growth in
business activity among major regions in the second quarter.

Further out, Johnstone, a Scotsman and one of the few
foreign CEOs to be running one of Sweden’s blue-chip companies,
said mixed economic signals made demand difficult to predict,
but still made a case for a slow improvement.

“I expect as we go through the quarter that we will start to
see some signs that will help us in the third quarter, but at
this point it’s not enough to see us make a change in the second
quarter,” he told Reuters.

Johnstone, at the helm of SKF for more than a decade, also
said he saw “a little more upside than downside” to the outlook.

Johnstone’s comments helped offset the gloom over industrial
demand which enveloped Sweden’s coterie of exporting companies -
a group also including Sandvik AB and Atlas Copco AB
– after a dismal end to 2012, which was underscored
by signs government spending cuts were hampering the U.S.
economy, as well as unexpectedly weak growth in China.

The euro zone, SKF’s single biggest market, is also likely
to struggle to exit recession this year.

Industry analysts had been divided ahead of the SKF earnings
report on whether the Swedish company, a competitor of
U.S.-based Timken Co and Germany’s Schaeffler AG
, would forecast flat demand or pencil in a slight
rise in activity.

“The fact they are talking about flat sequential demand is
perhaps a small warning for the rest of the industrial sector,”
Handelsbanken Capital Markets analyst Peder Frolen said.

While the demand outlook remained clouded, sweeping
inventory cuts late last year left SKF able to run production at
a slightly higher pace in the first quarter and the company said
it expected its manufacturing level to be unchanged.
($1 = 6.3756 Swedish crowns)

(Additional reporting by Helena Soderpalm; Editing by Alistair
Scrutton and David Holmes)

Ericsson said it expected to close the deal for the
business, which employs more than 400 people worldwide, during
the second half of 2013. It did not disclose a purchase price,
though a company official provided a ballpark figure.

“This deal is within range where we previously bought a
company called Optimi for $99 million and where we also bought
LG Nortel for $234 million,” said Ove Anebygd, Vice President
and Head of TV at Ericsson. “So this is somewhere in between the
two.”

Ericsson said the deal would make the company, already the
world’s biggest mobile networks maker, the leading provider of
IPTV with a 25 percent market share. Microsoft’s website said
the Mediaroom platform was offered by more than 40 operators.

Internet protocol television (IPTV) uses the same technology
that powers the Internet to transmit multimedia content over
telecom and cable networks. Ericsson wants to cater to phone
companies that are competing with cable, satellite and web-based
media providers.

“This acquisition contributes to a leading position for
Ericsson with more than 40 customers, serving over 11 million
subscriber households,” said Per Borgklint, Ericsson Senior Vice
President and Head of Business Unit Support Solutions.

NICE FIT

The Mediaroom platform is the TV technology used by
television service providers such as AT&T, Deutsche
Telekom, Telefonica and Swisscom,
Ericsson said.

“This makes a nice strategic fit, but it is hard to estimate
the impact on key figures since they are providing no financial
information,” Alandsbanken analyst Lars Soderfjall said.

With competition from Chinese network providers stiff over
the last few years, Ericsson has focused increasingly on
services, such as managing networks for operators, and on
software, where it has more of a competitive advantage.

It is a leading player in solutions that enable operators to
charge for online services and as part of its shift from
hardware-based products has also built up a presence in IPTV, a
position underpinned by acquisitions such as that of video
technology firm Tandberg Television in 2007.

“This completes Ericsson’s IPTV offer, with … MediaRoom
nicely rounding up the Tandberg TV assets,” said Alexander
Peterc, analyst at Exane BNParibas.

“This makes Ericsson more of a go-to company for triple play
solutions for telcos, and likely a stronger competitor to ALU
(Alcatel-Lucent).”

Ericsson said the global IPTV market was estimated to reach
76 million subscribers in 2013 with revenues of $32 billion,
growing to 105 million subscribers and $45 billion in 2015.

Ericsson said the deal was subject to customary regulatory
approvals and that the business would be integrated into its
Support Solutions unit.

Tele2 Russia’s competitors MTS, Vimpelcom
and billionaire Mikhail Fridman’s A1 group are trying to
overturn Tele2′s decision to sell the business to
state-controlled bank VTB, hoping to get rid of a
cut-price rival.

With 23 million subscribers, Tele2 Russia is the country’s
fourth-biggest mobile operator after MTS, MegaFon OAO
and Vimpelcom. Should it land in the hands of
fifth-ranking Rostelecom – as some analysts have speculated – it
would mean stronger competition to the bigger players.

Tele2 said the sale to VTB is effectively closed but MTS,
Vimpelcom and Fridman’s A1 group are contesting it, launching
their own bids, suggesting a Tele2 shareholder revolt and, in
one case, threatening legal action.

Tele2 said on Tuesday its shareholders were in line for
extra cash if VTB sold on the assets within a year.

“If VTB were … to sell to another interested party for a
higher price, we would be entitled to 50 percent,” said Lars
Torstensson, group communications director at Tele2.

He said there was no way that Tele2 would go back on the
deal with VTB and there was no break clause which would allow
the company to revoke the agreement on payment of penalties.

“This deal is closed. It cannot be opened up,” he said. “We
are waiting for regulatory approval.”

But Vimpelcom and MTS said their joint offer for Tele2
Russia still stood.

“We plan to proceed with our offer, which we believe offers
greater value to the shareholders of Tele2,” said Vimpelcom
spokesman Bobby Leach.

CONSOLIDATION

The $3.55 billion deal was structured as $2.4 billion in
cash and $1.15 billion in debt, making it worth 4.9 times the
unit’s 2012 EBITDA of 4.744 billion Swedish crowns ($729
million)”, according to Reuters data.

A1, the investment arm of Russian billionaire Mikhail
Fridman, has offered $3.6-$4 billion for Tele2 Russia and may be
interested in buying the whole of Tele2. It has also threatened
Tele2 with legal action.

MTS and Vimpelcom have offered $4.0 billion to $4.25 billion
for the assets.

MTS said it was “strange and dubious” for management and the
board to ignore a financially superior offer.

But Kinnevik, Tele2′s biggest shareholder with a
stake of 30.5 percent of its capital and 47.9 percent of the
votes, fully supports the VTB deal.

Will James, manager of Standard Life’s European Equity
Income Fund, which has a stake in Tele2, also backed it.

“I think this (the VTB deal) is a sensible move, a pragmatic
move by a management and a board who are interested in creating
shareholder value,” he said.

“The market generally felt that if they hung around too long
they wouldn’t get an outcome that was particularly in the
interest of shareholders.”

James would not say what stake his fund has in Tele2.

Fridman’s investment partnership A1 said on Thursday it was
prepared to make an all-cash bid of $3.6-$4 billion for Tele2′s
Russian arm, which would top an agreed sale to VTB that puts an
enterprise value, or equity plus debt, on the business of $3.5
billion.

A1′s statement, which sent Tele2 shares 5.5 percent higher
when the market opened, raises the prospect of an almost
unheard-of Russian takeover tussle, pitting Fridman – flush with
billions from the sale of oil firm TNK-BP – against
the country’s No.2 bank.

“The price offered by VTB is below market and we’re prepared
to increase it,” an A1 spokesman said.

A1 did not indicate how much it might be prepared to pay for
all of Tele2, which had an equity market value of $7.5 billion
at the close of trading on Wednesday.

“A price for the entirety of Tele2 is in the works – we are
running the figures on a possible offer for the entire
business,” the spokesman said.

Stockholm-listed Tele2 said it was fully committed to the
sale of its Russian business to VTB. The deal values Tele2
Russia’s equity at $2.4 billion and includes the assumption of
net debt of $1.15 billion.

Swedish investment firm Kinnevik, which has a
47.9 percent voting interest in Tele2, said it was “completely
behind” the sale to VTB. Its shares rose 2.8 percent by 0830
GMT, while Tele2 pared early gains to trade 3.6 percent higher.

UNDERVALUED?

Analysts, briefed on a conference call by Tele2, said the
sale to VTB looked cheap, however.

“Whilst the deal presents Tele2 with a clean exit from
Russia we are surprised at the low multiple
paid even with Tele2′s lack of a data licence,” Andy Parnis,
telecoms analyst at UBS, said in a comment on the VTB deal.

Parnis said the deal implied an earnings multiple of 4.9
times for 2012, expressed as enterprise value to earnings before
interest, taxation, depreciation and amortisation (EV/EBITDA).
The ratio reflects a company’s ability to support the cost of
its equity and debt out of its core cash flows.

For 2013, the EV/EBITDA ratio falls to an estimated 4.5
times – a 21 percent discount to what UBS considers to be fair
value for the asset.

Moreover, the sale puts Tele2′s Russian business in line
with its larger rivals MTS and Vimpelcom, which
trade at multiples of 4.7 and 4.6 times, even though it has
superior growth prospects.

Tele2′s Russian business has been in play since it lost out
in a licensing auction for next-generation 4G services. A
management change at Rostelecom means the
state-controlled operator may lose interest in a mobile
alliance.

Analysts at Barclays were also downbeat on the VTB deal.

“This values the asset broadly in line with the big three
(Russian) operators, but below our expectations which had
reflected its superior growth profile,” they said in a note to
clients.

Tele2 investor relations head Lars Torstensson told Reuters
on Wednesday that analysts had put an average value of around 24
billion Swedish crowns ($3.68 billion) on Tele2′s Russian unit,
just above the actual sale price of 23 billion crowns.

Lars Söderfjell, an analyst at Alandsbanken in Stockholm
said he had a value of 22-25 billion crowns.

FULLY LOADED

Fridman is flush with cash after recently closing a deal
alongside three other tycoons to sell their one-half stake in
TNK-BP, Russia’s third-largest oil firm, to state oil major
Rosneft for $28 billion.

His Alfa Group, of which A1 is a part, received $14 billion
and has said that it plans to reinvest the proceeds into
telecoms and oil projects.

The tycoon, worth $16.5 billion according to Forbes
magazine, owns a stake in Vimpelcom and only last year made $5
billion from the sale of his stake in MegaFon
, Russia’s other ‘Big Three’ operator.

In a statement, A1 said it had made approaches last year to
Tele2 and Kinnevik but that its offers had been rebuffed by
Tele2′s advisers, investment bank Morgan Stanley. VTB is being
advised by its investment banking arm VTB Capital.

The company, market leader in precision measurement
technology used in fields from microchip making to surveying dam
construction, is now worth more than Swedish world number two
white goods maker Electrolux after taking its
business so far from its roots as to be unrecognisable.

When Ola Rollen stepped through the doors at Hexagon as CEO
in 2000, leaving a job as head of a division at engineer Sandvik
, he entered a company with lots of businesses but no
business idea and scarcely any growth prospects.

Founded in 1975, Hexagon was then a sprawling conglomerate
with its fingers in everything from tuna fish imports to vehicle
hydraulics and, as financier Melker Schorling told Rollen at a
meeting in downtown Stockholm in 1999, it was basically garbage.

Schorling had bought a controlling stake in the company the
year before, aiming to build something from the ground up.
Rollen, who first made a name for himself as a young CEO of
metals firm Kanthal, had attracted his attention.

“He said: It can’t get much worse. Build what you want,”
Rollen, now a trim and youthful 47, told Reuters from the
company’s Stockholm office of Scandinavian wood design, with
large windows overlooking the capital.

Rollen had to think of ways to realign a company so diverse
it came as a surprise when he found it ran day-care centres.

“We set up a number of criteria – that we would be world
leading, that we would have large R&D content and little
invested fixed assets – it should be easy to move the operations
if there were shocks in the global economy,” he said.

PATH TO LEADERSHIP

Focusing the business on telecommunications gear or vehicle
components were among the options he was considering when he
recalled U.S. measurement technology firm Brown & Sharpe, which
had once sought to recruit him – an offer he turned down.

While Hexagon had no previous business in the field, the
firm offered a possible path toward leadership in a fragmented
market being reshaped by innovation in fields like lasers.

To free up resources, Hexagon began selling off assets in
less promising sectors, starting with its food business that
under previous management thinking was a buffer for the cyclical
engineering business but which was barely profitable.

Brown & Sharpe was fortuitously in receivership at the time
and though it was as big as Hexagon, Rollen bought it, taking
the first step down a road that would see the firm acquire more
than 100 companies and shed virtually all its original business.

“Very often I find company executives just have really poor
imagination,” Rollen said. “Just because you run a paper mill
doesn’t mean you have to keep on trudging on the same spot.”

Hexagon’s four biggest deals – Brown & Sharpe, Swiss Leica
Geosystems, Canadian NovAtel and U.S. Intergraph – cost nearly
$4 billion and group sales have more than quadrupled since 1999
to 2.38 billion euros ($3.08 billion).

In the same period its operating margin has risen to 20.6
percent from below 5 percent, underpinning a rise in market
capitalisation to 60 billion crowns ($9.28 billion) from just
under 2 billion crowns. By comparison, the wider Swedish market
index has gained 14 percent in that time.

Schorling owns Hexagon shares totalling 26.7 percent of
capital and 47.7 percent of votes in the company, whose biggest
owners also include H&M founder Stefan Persson.

A RARE BIRD

Its rapid rise and acquisition-fuelled transformation makes
Hexagon a rare bird among Sweden’s top 20 listed companies by
market value, most of which are businesses a century or more
old, which critics say shows a lack of dynamism in Sweden.

But the growth has not come without risks, highlighted when
its heavy debt burden was seen as too risky in the financial
crisis following the 2008 collapse of Lehman Brothers, when
Hexagon only narrowly avoided breaching its loan covenants.

“If you are poor and are going to build something big, then
you have to take risks,” said Rollen, who owns 2 million, or 0.6
percent, of Hexagon shares, according to the firm’s website.

Since then, Hexagon has lowered its net debt to earnings
before interest, tax, depreciation and amortisation ratio to its
target of 2.5 to attain investment grade on any notes it issues,
down from about five after Intergraph was acquired in 2010.

That still leaves it well above the Swedish engineering
companies against which it is measured, despite now generating
more than half its sales from software. Atlas Copco’s
net debt to EBITDA ratio is 0.4.

“The worry about the debt levels has been the Achilles heel
that has sent the share down in the past,” said Nordea equity
strategist Mattias Eriksson, whose bank has a hold
recommendation on the stock.

“Now they have room to make acquisitions again … That is
more or less what people have been waiting for really – that
they dream up something new and exciting.”

Rollen said four or five potential big acquisitions were
always on the radar of the group, which is now headquartered in
London, and its goal of reaching sales of 3.5 billion euros and
a 25 percent margin in 2015 would alone require 300-400 million
euros of acquisitions.

“We can deliver on this plan while keeping our debt in
absolute numbers roughly where it is and still make acquisitions
and pay dividends and reach our targets,” he said.

LET ME ENTERTAIN YOU

Rollen, who in his youth played the guitar in a rock band
that cut a record deal with ABBA manager Stikkan Anderson, has a
knack for showmanship.

Nowhere was this more evident than when he took the stage
before thousands of customers in an Orlando, Florida, ballroom
in June 2011 to Robbie William’s raucous “Let Me Entertain You”
to deliver a keynote that smacked more of show business than
corporate presentation.

His high profile has some wondering how the company would
fare without him. When he sold 1.7 million shares in mid-2011 to
pay personal debts, the sale set off a 40-percent slide in the
share price, though it has since recovered.

“The company certainly doesn’t stand and fall with him,”
said Bjorn Enarson, analyst at Nordik bank Danske, which also
has a hold recommendation on the stock.

“But the valuation may include some hopes he will figure out
another exciting thing that turns into a new major shift for the
company. And that hope might expire if he disappeared.”

Rollen says the prospect of leaving is not on his mind.

“It is still fun,” he said, and cited a remark made by
one-time board member Carl-Henric Svanberg, now chairman of
British oil and gas group BP.

“He said at a board meeting that the graveyard is full of
irreplaceable people. One day I will resign and it will work out
fine finding a successor.”

Chief Executive Jan Carlson said Autoliv was keen to expand
into this new technology that includes sensors and radar but
that there were few companies willing to sell.

“This is a growth area and many see opportunities and growth
and therefore they don’t sell,” he said in an interview. “There
are always discussions back and forth, but there is nothing
obvious.”

So-called “active” car safety technology as opposed to
“passive” seatbelts and airbags is widely considered to be the
future in this business.

Various new products being developed mainly by small
specialist companies can help to prevent accidents. It is a
priority for car makers such as Autoliv’s domestic customer
Volvo Car Corp.

“We’re looking a lot at the sensor field. But we’re also
looking at electronic stability control and chassis systems,”
said Carlson, referring to technology that allows a car to
independently avoid a collision.

The company has money to spend, with net cash of $361
million at the year-end. But analysts have raised the question
of whether some of this could be handed back to shareholders.

“So far, the board has prioritised raising the dividend and
building a strong balance sheet so we can make acquisitions when
they come,” Carlson said.

The company has 3.2 million shares remaining of a share
buyback mandate that it has not used since September 2008 when
the financial crisis made keeping a strong balance sheet key.

Autoliv has been able to weather the downturn in Europe
since then because of the global spread of its business.

But the firm has felt the impact of a steep drop in car
sales in Europe due to a squeeze on consumer spending that has
led to big losses for the car industry.

In January, Autoliv said sales in the first quarter of 2013
were likely to fall four percent due to weakness in Europe.

Autoliv generates nearly 30 percent of its sales in Europe,
where the impact of the euro zone debt crisis has exposed the
overcapacity in the region’s auto industry.

“There are few positive signs in terms of coming to grips
with the situation (industry overcapacity),” Carlson said. “I
respect that it is difficult, but if the demand is not there
that doesn’t help. You have got to handle the problem anyway.”

He said the North American and Chinese markets remained
healthier than those in Europe.

“That means one part of the world is suffering a big fall
while another is seeing a pretty big rise,” Carlson said. “It is
a matter of pressing the accelerator and the brake at the same
time.”

Carlson said Autoliv was sticking to its financial guidance
which estimates a four percent fall in sales and an operating
margin of about 8 percent in the first quarter. For the full
year, the company expects sales growth of 2-4 percent at a
margin of about 9 percent.

The announcement ends months of speculation about the future of ST-Ericsson, which has been hit by a big drop in orders from top customer Nokia as the phone maker lost market share to Apple and Samsung.

ST-Ericsson has also struggled to compete with more nimble chip makers in Asia, which outsource most production to be able to react quickly to demand changes, as well as the trend among some phone makers like Samsung to make their own chips.

Sweden’s Ericsson, which makes telecom network gear, and Franco-Italian chip maker STMicro, had sought a buyer for ST-Ericsson but found no takers. JP Morgan advised the companies on options for ST-Ericsson, which has not made a profit since it was formed in 2008.

“All possible scenarios were considered but the option announced today was always a real possibility,” STMicro chief executive Carlo Bozotti told a conference call on Monday.

He added that STMicro had committed to keep making products for ST-Ericsson customers as long as they needed them.

Under the plan, Ericsson will keep around 1,800 employees of ST-Ericsson’s total workforce of 4,450 total. Those jobs will mostly be in Sweden, Germany, India and China.

It will also keep a product line of thin 4G “multimode” modem chips, but said it was too early to say when that would break even.

STMicro will keep other existing ST-Ericsson products, as well as certain assembly and test facilities. It will take some 950 employees, mostly in France and Italy.

The rest of ST-Ericsson will be shut down, hitting some 1,600 employees globally. Around 500-700 of those jobs will go in Europe, including 400-600 positions in Sweden and 50-80 in Germany. No factories will be closed, STMicro said.

STMicro said it expected $350 million-$450 million in cash costs from the shutdowns and restructuring, which is lower than the $500 million it predicted at the end-January.

Ericsson said it had made a provision of 3.3 billion Swedish crowns ($515.7 million) in 2012 to pay for the moves.

At 0922 GMT, STMicro shares were up 2.8 percent at 6.05 euros, while Ericsson’s were down 1.35 percent to 84.25 Swedish crowns.

Ericsson estimated the LTE chip product line would generate operating losses of approximately 500 million crowns in the fourth quarter of its financial year, largely on research and development costs.

Ericsson Chief Executive Hans Vestberg said it aimed to make the LTE thin multimode chips business a top three global player.

“We obviously have the ambition of making this profitable … and with a slimmer organization I believe we have a much greater chance of getting there,” said Vesterberg.

($1 = 1.0000 US dollars)

(Editing by Anthony Barker and Mark Potter)