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Volvo Q1 earnings outstrip expectations

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11:31 CEST+02:00
(AFP) Swedish industrial vehicles company Volvo on Monday reported a sharp increase in its first-quarter earnings, boosted by strong demand for trucks in many regions of the world.

The company posted a net profit of 3.2 billion kronor (455 million dollars) in the first three months of 2005, against 2.4 billion kronor for the same period a year earlier.

Demand for all of Volvo's trucks increased during the quarter in North America, where sales jumped 36 percent compared with a year earlier, Volvo said.

"The economic growth in the US is strong. We are seeing signs of the need to renew truck fleets and continue to expect that the North American market for heavy trucks will grow by 15-20 percent this year," Volvo chief executive Leif Johansson said in a statement.

Sales in South America increased by 43 percent, while last quarter's high demand in Europe flattened out some, showing only four percent growth in sales during the period.

"We continue to assess that growth in the European market will be in the range of 0-5 percent," Johansson said.

In Asia, Volvo's sales rose by 13 percent, but the company claimed that restrictive measures taken by Chinese authorities had slowed growth in that country.

After financial items, Volvo reported profit of 4.6 billion kronor for the quarter, a 53 percent increase from a year earlier and well above analysts' estimates of 3.9 billion kronor.

The company posted an earnings per share of 7.93 kronor for the first quarter, up from 5.75 kronor for the same period a year earlier.

Total truck deliveries rose by 11 percent during the quarter to 64,621, according to Volvo, which said that order bookings were higher in all markets except Europe in the period.

The company also said its first-quarter operating profit rose by 93 percent to 4.5 billion kronor from 2.4 billion kronor a year ago, and that its operating margin jumped to 8.7 percent from 5.1 percent in the same period in 2004.

"The income improvement is the effect of higher margins and increased volumes in all business areas," the company said.

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