Higher costs and ongoing difficult market conditions in North America contributed to a 14% drop in Volvo AB’s second-quarter net profit, the bus and truck maker said.
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Income from the Nissan Diesel unit, acquired earlier this year and integrated into accounts for the first time in the second quarter disappointed investors and sent the share price down over 8%, the Associated Press (AP) reported.
Volvo earned 4bn kronor (EUR436m; $US603m) in the second quarter, down from 4.67bn kronor in Q2 2006, the news agency said.
Sales rose to 71.45bn kronor from 68bn kronor a year ago boosted mainly by recently acquired companies including Nissan Diesel and Ingersoll Rand’s road machinery unit, the company told the news agency.
Volvo reportedly said Nissan Diesel had experienced “a tough start” in the group, however, with truck deliveries falling to 10,011 units in the quarter, from 15,546 trucks in the same three months in 2006.
Volvo blamed the decline on lower sales to Nissan Motors due to a temporary gap in the product portfolio, as well as lower market demand in Japan, while Nissan Diesel’s introduction of new, but more expensive, environmentally friendly engines also affected sales, Volvo said, according to AP.
Pretax profit fell to 5.97bn kronor in the second quarter, down from 6.46bn kronor in the same three months last year, falling short of analyst expectations of 6.21bn kronor, the Associated Press added.
