US Court Orders Volvo To Pay Penalties In Engine Emission Case - Quick Facts

(RTTNews) - Volvo Group (VOLVY.PK) announced that the U.S. Court of Appeals for the District of Columbia Circuit has ruled that the company should pay penalties and interest of approximately SEK 508 million following a dispute with the U.S. Environmental Protection Agency regarding emission compliance of diesel engines.

The Court of Appeals affirmed a District Court's ruling that model year 2005 Volvo Penta engines violated the provisions of a Consent Decree. In 2012, the District Court issued a judgment ordering Volvo to pay penalties and interest for engines which company claims were not part of the decree. Volvo had filed an appeal on several grounds.

Volvo stated that it will now review the Court of Appeals' ruling in detail, and consider whether to appeal or not.

The company expects this ruling to have a negative impact on its operating income of approximately SEK 440 million in the third quarter of 2014 in the segment Group functions and other.

Volvo noted that it had previously accounted for approximately SEK 68 million as a provision and approximately SEK 422 million as a contingent liability.