Earnings Watch: Volvo Profit Falls While Daimler Gains
Earnings for two of the world’s biggest truck makers varied greatly in the third quarter, according to figures released on Friday, and both had a dim view of upcoming sales in the North American market.
Mack and Volvo parent company Volvo AB of Sweden (OTC: VLVLY) reported net profit for the quarter ending August 31 fell by 15% from a year ago to 2.59 billion kronor or $290 million, according to MarketWatch.
Net sales fell 6% to 68.76 billion kronor, or $8.07 billion, compared to $8.64 billion compared to the third quarter a year earlier. Both revenue and profit fell short of analysts’ expectations.
The Volvo Group’s adjusted operating income declined to 4.8 billion kronor from 5.1 billion kronor a year earlier, or $568.8 million versus $599.9 million. However the company’s adjusted operating margin improved slightly, hitting 7% compared to 6.9% in the third quarter of last year.
Deliveries in Volvo’s truck business, which makes up about two-thirds of its total sales, were down 13% in all markets except Europe, where activity remained high, according to Martin Lundstedt, president and CEO.
“The downward correction in the North American market continued and there is still a need to take down dealer inventories,” he said. “Production volumes have gradually been adjusted downwards to meet the lower demand and further steps will be taken. Expectations of unit growth in other truck markets are limited and therefore focus will be on the service business and continuous improvements.”
Despite this he noted Volvo’s truck business continued to improve its profitability, and the adjusted operating margin increased to 8.2% despite total net orders falling 7%.
Truck orders in Europe increased by 6%, but in North America order intake declined by 37% compared to the same quarter last year, and deliveries came down by 46% in total.
The decline in both orders and deliveries compared …Read the rest of this story
