Bloomberg News

Volvo Quarterly Earnings Miss Estimates on Slower European Sales

February 03, 2012

Feb. 3 (Bloomberg) -- Volvo AB, the world’s second-largest truckmaker, reported fourth-quarter operating profit that missed analysts’ estimates because of slowing growth in western Europe.

Earnings before interest and taxes rose to 6.96 billion kronor ($1.03 billion) from 5.52 billion kronor a year earlier, Gothenburg, Sweden-based Volvo said today in a statement. Profit was less than the 7.25 billion-krona average of 15 analyst estimates compiled by Bloomberg. Revenue rose 18 percent to 86.5 billion kronor, and the operating margin was 8 percent of sales.

“Demand for trucks in Europe declined during the autumn but seemed to stabilize on a somewhat lower level toward the end of the year,” Chief Executive Officer Olof Persson said in the statement.

Persson, who became CEO on Sept. 1 after running Volvo’s construction-equipment business for almost three years, is targeting operating margins at the top of the heavy-equipment industry, shifting focus to profitability from sales growth. Volvo is scaling back manufacturing at its Renault Trucks unit in France in response to an expected decline in European demand.

Volvo, which also makes Mack Trucks in North America, reiterated a forecast from October that industrywide sales in 2012 will drop 10 percent in Europe and gain 20 percent in North America. New orders for trucks fell 7 percent in the quarter, led by a 24 percent drop in Europe.

Swedish competitor Scania AB, which is cutting production in Europe and Latin America, reported fourth-quarter net income of 2.13 billion kronor on Feb. 1, missing analysts’ estimates as sales growth slowed. Stuttgart, Germany-based Daimler AG, the world’s largest truckmaker, will publish figures on Feb. 9, and Munich-based MAN SE is scheduled to report results Feb. 14.

--Editors: Tom Lavell, 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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