Truck maker Volvo has posted a smaller-than-expected drop in quarterly pre-tax profit and reckons key markets would be at the top end of its forecasts this year, though North America would weaken in 2007.
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Volvo’s third-quarter pre-tax earnings fell to 3.14bn crowns ($US428m) from 4.02bn a year ago, but topped the mean forecast of 2.96bn in a Reuters poll of 17 analysts.
Earnings were hit by a 1.7bn crown write-down of goodwill, which was included in analysts’ estimates, the news agency noted.
Revenues rose to 57.43bn crowns from 52.25bn a year ago, above the mean forecast of 56.58bn in the poll.
Reuters said that truck markets on both sides of the Atlantic are seen peaking this year, with demand supercharged by customers accelerating purchases of older, but cheaper, trucks ahead of stricter environmental rules implemented in Europe this month and set to come into effect in the United States at the turn of the year.
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By GlobalDataAnalysts reportedly predict a slide in truck sales next year as the spending spree tails off, especially in North America. Volvo confirmed this picture.
“We are anticipating that the decline could be as much as 40% during the first half of the year,” the firm said, according to Reuters.
Chief executive Leif Johansson reportedly told a news conference this was a “worst-case scenario”, though a planned cut in production capacity would hit both temporary and full-time employees.
“I think some will feel that this 40-percent decline is a bit negative,” an analyst told Reuters. “Market estimates have ranged from a drop of 20 to 40% for the full year.”
Johansson reportedly said he expected the North American market to come back during the second half of next year and that the firm was prepared to raise production capacity again if needed.
The firm also said order intake for its trucks, sold under the Volvo, Renault and Mack brands, fell 22% year-on-year in the quarter, mainly due to a 58% plunge in North America.
