European Truck Makers Daimler, Volvo Report Lower First-Quarter Net Income
European truck makers Daimler AG and Volvo Group reported lower net income for the first quarter amid a softer North American market.
Net income at Daimler, including cars and light trucks as well as heavy trucks, fell 33% to $1.27 billion. Volvo net income declined 11% to $445.2 million.
Daimler said truck orders for the quarter in the Nafta region fell to 29,000 from 52,000 a year earlier.
Revenue from Daimler Trucks fell to $7.45 billion, down 2% compared with a year earlier.
The decrease in truck unit sales was driven primarily by declines in Latin America, Indonesia and Turkey, Daimler said. Sales of 40,400 trucks in the Nafta region were at the prior-year level of 40,800.
However, earnings before interest and taxes at the unit rose 9% to $469 million, and return on sales increased to 6.3% return on sales. That compared with $429 million and a 5.6% return a year earlier.
Daimler’s companywide revenue rose slightly to $31.8 billion.
The company said it set a record for unit sales in a first quarter with 683,900 cars and commercial vehicles sold, up 7% from a year earlier. Mercedes-Benz also set a record for this period with sales of 496,800 vehicles, an 8% gain year-over-year.
“Daimler is on a successful path. Our growth in unit sales clearly shows that we are following the right strategy and have the right products in the market. The model offensive is continuing at the same speed,” Chairman Dieter Zetsche said in a statement.
Earnings per share were $1.14, down from $1.66.
Daimler said increased unit sales in Europe and the realization of efficiency improvements had a positive impact on earnings.
At Volvo, North American orders slumped 54% to 8,892. The deliveries in the region totaled 10,740, a drop of 33%.
North American orders for the Volvo nameplate fell 58% to 4,687, and 48% for the Mack brand to 4,117. Deliveries in the region were 41% lower at 5,797 for Volvo and 21% less for Mack.
Volvo Trucks’ return on sales worldwide was 7.8%, down from 12.1%.
“Truck markets are following the trend we have seen since last year,” CEO Martin Lundsted tsaid, with worldwide truck deliveries down 5% and orders off 12%. “Demand in North America is slowing from high levels. The European market is performing strongly, and order intake increased by 23%.”
Revenue for the Gothenburg, Sweden-based company fell 4% to $8.42 billion. Worldwide, the truck unit accounted for two-thirds of revenue, with the balance from construction, bus, marine and financial units. North American revenue was 29% of total truck revenue in the first quarter, compared with 33% in the 2015 period.
Volvo’s earnings announcement said, “The correction in the North American market, particularly in the longhaul segment, continued,” leading the company to shave an additional 10,000 units off its 2016 forecast that now stands 16% below last year.
Earnings per share were 22 cents, down from 27 cents.
