Truck maker Volvo has reported a fall in full year income despite a rise in sales and income growth in the fourth quarter.
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The world’s second largest truck maker said that net sales for the full year increased by 10% to SEK285.4bn. Sales in the fourth quarter were up 25% to SEK84.6bn.
In the fourth quarter, operating income rose 12% to SEK 5,775m. Operating income for the full year rose 9% to SEK 22,231m. However, full year income declined 8% to SEK15,028m. In the fourth quarter, income for the period rose 11% to SEK4,094m.
In the fourth quarter, diluted earnings per share rose to SEK 2.00 from SEK1.83 a year before. But they fell for the full year to SEK 7.37 compared to SEK8.03 the year before.
Leif Johansson, the company’s president and CEO, said: “The Volvo Group concluded an intense 2007 with a fourth quarter in which sales and operating income reached record levels.
“Following the acquisitions of Nissan Diesel, Lingong and Ingersoll Rand’s road development division, we now have a significant industrial structure in Asia, with a presence in Japan, China and, when the expected cooperation with Eicher Motors is in operation, also in India. These are rapidly growing markets and we want to be part of that growth.”
Johansson went on to say that fourth quarter operating margin had been negatively affected by developments in North America, integration expenses, which initially yield lower profitability in acquired companies, and a provision for engine-related warranty expenses in North America.
He went on: “Following the acquisition of Nissan Diesel, Asia has grown to become our second largest truck market and we have continued high expectations about development there.
“In Asia, truck deliveries tripled in the fourth quarter. In North America, we introduced a new generation of engines during the year that comply with the world’s most stringent emission legislation, and simultaneously implemented adaptations in the industrial system. Combined with weak demand, these measures affected profitability.”
Meanwhile in Europe, the company said it was estimating that the truck market in Europe will grow by 5-10% compared with 2007, with the industry’s delivery capacity as the limiting factor.
“The North American truck market is difficult to assess, but we estimate that it will be on about the same level as in 2007,” the CEO said.
Johansson concluded: “We have entered 2008 with strong order books, a very strong product program and with an overall good demand in our main markets outside North America. The focus is now on ensuring our delivery capacity with a competitive cost base and on increasing productivity.”
