Truck maker AB Volvo reported higher-than-expected first quarter profits on Monday but said demand for heavy trucks in two key markets would fall this year, according to Reuters.
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Volvo reported a pre-tax profit of 757 million crowns ($US91.45 million), topping the consensus of 550 million crowns from a Reuters poll of 15 analysts due to demand for new products and cost cutting. It reported a 618 million-crown loss for the year-ago period.
According to the news agency, Volvo truck sales were 40.9 billion crowns against expectations of 39.6 billion and 40.4 billion in the first quarter of 2002, or a 10% year-on-year rise adjusted for currency fluctuations.
Volvo told Reuters the turnover growth came thanks to increased truck deliveries and sales of construction equipment.
But it also said the market for heavy trucks in Western Europe, its biggest market, would fall between five and 10% this year and edge slightly lower in its second biggest market, North America, to 172,000 trucks, the news agency noted.
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By GlobalDataSome analysts told Reuters the outlook seemed more negative than that of Volvo Trucks’ fellow Swedish rival Scania, which said last week it expected subdued demand for trucks for the rest of the year.
“The figures are better than expected. Trucks were very good and construction equipment surprised on the upside,” a London-based analyst told Reuters. “But the outlook is cautious. They must have order intake data on the table to lead them to give such an outlook.”
“This was a mixed picture. The outlook for western European was worse than we’d expected – we expect only a slight decline – but Volvo had a super performance in the first quarter especially in trucks with its new models,” Arndt Ellinghorst, analyst at WestLB Panmure, told Reuters.
The truck unit, which generates two thirds of the firm’s sales, improved its operating margin in the January-March period to 1.9% from 1.6% in the last quarter of 2002 and a negative 1.8% the year before and the company said it was ready to cut more costs if necessary, Reuters said.
The news agency said Volvo gained 2% in market share in trucks in Western Europe to 28.9% and inched up in North America to 19.9% from 19.6%, citing strong demand for its new VN truck developed to meet new US emission regulations.
According to Reuters, Volvo said uncertainty linked to the war in Iraq and high order intake in the previous three months cut first quarter orders for trucks by 8% year-on-year overall, mainly as a result of a 21% plunge in orders in Europe. Orders in North America jumped 16% due to the new VN truck.
