Profits skyrocket for Volvo

Swedish industrial vehicles company Volvo on Monday reported a sharp increase in its second-quarter earnings, boosted by strong demand for trucks in many regions of the world.

The company saw its net profit skyrocket 39.9 percent to 3.9 billion kronor, up from 2.8 billion kronor for the same period a year earlier.

“The second quarter was our strongest ever,” Volvo chief executive Leif Johansson said in a statement.

The Swedish company’s results were largely boosted by a 15-percent sales increase and by soaring operating income, which jumped 37 percent compared to the second quarter in 2004.

“The greatest improvement was in trucks, which increased operating income by 46 percent, compared with the year-earlier period,” Johansson said.

Volvo, based in Gothenburg, is an engineering company which makes buses, trucks, and other industrial vehicles and components. The company’s former car division is now owned by Ford.

Before taxes, Volvo’s profits jumped 34.3 percent to 5.25 billion kronor, up from 3.9 billion kronor in 2004, and its earnings per share leapt from 6.65 kronor to 9.67 kronor.

Its before-tax earnings did however fall short of analyst forecasts of 5.4 billion kronor, leading its stock to plunge 5.8 percent in morning trading to 333 kronor a share.

Volvo said that total deliveries of trucks increased 17 percent in the second quarter to 58,155 from 49,620 a year before, with deliveries rising sharply around the world except in Europe, where they were unchanged.

In North America deliveries increased by 42 percent year-on-year.

Volvo said demand for its trucks outside Europe had grown 30 percent, and that it expected demand to continue its upward climb.

The company said it stood by its previous forecast that the European truck market would grow between zero and five percent this year.

“In North America, we raise expectations on the total market to a growth of about 20 percent, compared with 15 to 20 percent previously,” the company said.

Volvo said that sales by its Volvo Aero division were down in the second quarter, despite increased airline traffic. Yet the company’s order bookings were five percent higher than during the same period of 2004, and the company said that when currency fluctuations were taken into account, net sales had actually risen by 2 percent.

Leif Johansson said that Volvo was heading for an “intensive phase”, with high deliveries and a large number of product launches, particularly in engine manufacturing.

“While this high level of activity poses major challenges and puts our organization under strain, it also offers new opportunities for satisfying our customers,” commented Johansson.

The Local/AFP