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Volvo stock responds to positive report

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Volvo stock responds to positive report
09:36 CEST+02:00
Swedish truck maker Volvo AB topped the list of winners as the Stockholm stock exchange opened for business on Friday after reporting positive interim figures.

The OMXS Stockholm Stock Exchange index had climbed one percent to 330.0 by 9.30am, which was a somewhat stronger trend compared with the leading European stock exchanges.

Volvo reported a surprise profit of 2.2 billion kronor ($304 million) for the first quarter, with analysts having forecast a new loss for the bus and truck giant. Volvo stock had shot up almost 10 percent by 9.30am.

"It is a very good report," said Hampus Engellau at Handelsbanken to news agency TT.

"It shows improvements in all areas, generated by cost savings, a solid pricing structure and indicating that production capacity has been increased, with a closer adjustment to demand," he continued.

"It is clearly better than expected. We had forecast some improved margins, but not by this much."

Volvo sales climbed to 58.62 billion kronor in comparison with 56.12 in the corresponding period of 2010.

Analysts had expected pre-tax losses of around 420 million kronor and sales of 55.76 billion, according to a Reuters poll.

All of the firm's business areas reported profitability during the quarter, CEO Leif Johansson wrote in the report. Credit losses declined but remained relatively high, while a continued global recovery is expected to result in continued improvements.

Demand for trucks continued to climb across the board and orders climbed by 15 percent in comparison with the final quarter of 2009, with a gradual improvement in European markets. In North American markets demand for new trucks remained weak, while demand for used trucks had increased.

"We expect demand for new trucks in North America to improve during the second quarter and the gradual improvements we have seen in Europe to continue," Johansson wrote in the report.

Volvo AB has therefore retained its prior forecast that the truck market will this year experience total growth of around 10 percent in Europe and 20-30 percent in North America.

Volvo was joined by Haldex, a manufacturer of automotive components, high on the stock market winners list after turning loss into profit in the first quarter. Shares rose 7.5 percent to 67.50 kronor.

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