Truck maker Volvo beat expectations with its second-quarter earnings on Wednesday and said market conditions were starting to stabilise, Reuters reported.

Volvo reportedly said pre-tax profits rose to 2.04 billion crowns ($US250 million) from 1.31 billion in the same period last year, compared with a mean forecast of 1.76 billion in a Reuters poll.

According to Reuters, Volvo pointed to cost cutting and new products at its core trucks division which includes Renault, Volvo and Mack, combined with reviving demand in the United States, its second-biggest market.

Volvo said it was too soon to change its previous full-year guidance and said it saw heavy truck sales in North America, slipping to about 170,000 units in 2003 and also stuck to an earlier forecast that demand in Europe, its biggest market, would fall five to 10% this year to about 200,000 units, Reuters said.

Reuters added that Volvo's bus unit continued to weigh on the group's results, with a second-quarter operating loss of €89 million down from a €51 million profit a year ago due to weak demand in all markets and stiff price competition.

Group sales dropped about 10% from a year ago to 44.6 billion crowns compared with an expected 47 billion, hit by the weakening US dollar, Reuters said.

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