U.S. News

Volvo First-Quarter Profit Beats Expectations

By Reuters

Sweden's Volvo posted a smaller-than-expected fall in first-quarter pretax profit on Friday, weathering a U.S. slowdown, and raised its outlook for its key European truck market.

Pretax earnings at the world's second-largest truck maker edged down to 5.41 billion Swedish crowns ($796 million) from 5.47 billion a year ago to come in well above the average forecast of 4.66 billion in a Reuters poll of 13 analysts.

Following years of strong demand Volvo and its peers are experiencing a sharp fall in demand for heavy-duty trucks in the United States -- a hangover from a buying spree ahead of new tougher clean-air rules enforced at the turn of the year.

"Despite the difficulties in the U.S., Trucks improved its profitability and reported a strong margin of 9.5%, the highest margin so far for the truck operation," the firm said.

Revenues at the firm, which sells trucks, buses, construction equipment and a broad range of engines, dipped to 61.04 billion crowns from 62.74 billion a year ago but beat the poll's average forecast of 57.21 billion.

Volvo said order bookings in North America, its second biggest market after Europe, tumbled 80% year-on-year in the first quarter.

In total, bookings of its trucks, which it sells under the Mack and Renault brands as well as its own name, fell 26% as orders dipped 4% in Europe and 10% in Asia.

The firm said it was raising it outlook for the European heavy-duty truck market to around 330,000 units this year.

Volvo said demand in North America was "expected to remain low over the near term," adding that the "point at which demand will rebound is difficult to predict."