...Strong Business Profile: The ratings are supported by AB Volvo's geographic and business diversification as a full-line truck maker, its leading market positions in major markets and growing exposure to high-growth emerging markets. The group's services business (23% of sales) provides fairly stable income and mitigates the inherent volatility of its end-markets. Mixed Current Trading: Current trading is supported by strong truck demand in North America and a slower recovery in Europe supporting order intake increases of 16% yoy in 2014, although South America has performed more weakly than expected. We expect near- to medium- term challenges for Volvo's construction equipment division, where orders are down 33%, from the sharp decline in construction and mining activity in China and other Asian markets. Limited Financial Headroom: Credit metrics were weak for the ratings at end-2014. Fitch expects financial headroom to gradually improve over the next 18-24 months, with funds from operations...
