Bloomberg News

Volvo Quarterly Profit Misses Estimates as Europe Demand Drops

October 25, 2011

Oct. 25 (Bloomberg) -- Volvo AB, the world’s second-largest truckmaker, reported a smaller-than-expected profit as demand started to decline in Europe and Asia.

Third-quarter net income rose 36 percent to 3.83 billion kronor ($580 million) from 2.85 billion kronor a year earlier, the Gothenburg, Sweden-based company said today in a statement. Profit missed the average estimate of 3.99 billion kronor in a Bloomberg survey of 15 analysts. Revenue rose 15 percent to 73.3 billion kronor.

Volvo forecast today that 2012 industrywide sales will drop 10 percent in Europe and gain 20 percent in North America. Growth in truck orders slowed in the third quarter to 18 percent with demand most sluggish in Europe and Asia.

Chief Executive Officer Olof Persson, Volvo’s former construction equipment chief who started as CEO on Sept. 1, aims for the manufacturer to target operating margins at the top of the heavy-equipment industry as it shifts its focus to profitability from sales growth. Volvo, the maker of Mack trucks in North America and Renault trucks in Europe, on Oct. 4 announced a new finance chief and a reorganization of the heavy- duty vehicle business along geographic regions rather than brands.

Swedish rival Scania AB last week said that third-quarter net income rose 2 percent to 2.34 billion kronor as sales climbed 14 percent to 21.1 billion kronor. Demand started declining toward the end of that quarter in southern Europe and the Middle East, Soedertaelje, Sweden-based Scania said.

Daimler AG, the world’s largest truckmaker, will publish figures on Oct. 27, and MAN SE will report results Nov. 2.

--Editor: Chad Thomas

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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