Volvo Group First-Quarter Earnings, Sales Rise
Volvo AB posted first-quarter gains in earnings and profitability, most of which was generated by its construction equipment division, as the larger truck division was fairly static compared with the same time in 2016.
While construction equipment profits surged 374%, in part due to a stronger global mining industry, the truck unit encountered a varied market. The Gothenburg, Sweden-based corporation said Asia is expanding in terms of truck sales, Europe is stable and North America still falling, although net orders for new North American trucks are rising.
Corporate-wide, Volvo earned the equivalent of $539.9 million, or 26.1 cents a share, on global revenue of $8.67 billion. In the 2016 first quarter, the company had net income of $447.9 million, or 21.9 cents, on sales of $8.48 billion.
At the global truck division, including North American brands Volvo and Mack, operating profit rose 31%, as measured in Swedish kronor, to the equivalent of $550.4 million from $442.2 million during the first three months of last year.
Quarterly sales moved to $5.55 billion from $5.68 billion. The strengthening U.S. dollar turned the krona-denominated increase into a dollar decrease.
Worldwide deliveries of new Volvo Group trucks dipped 5% for the quarter to 43,927 vehicles. Pricing improved, though, and the smaller number of vehicles sold turned into a revenue increase of 0.15%, year-over-year.
The big source of quarterly improvement at the truck division came from maintenance, technology and other services, which rose by 11%.
“After the downward correction in the long-haulage segment in 2016, the North American market seems to be bottoming out. We see positive signs of increased order activity,” Volvo CEO Martin Lundstedt said in the company’s April 25 report. He also mentioned the introduction of the company’s new North American regional-haul tractor.
Quarterly deliveries fell most severely in North America, by 34%, to 7,065 from 10,740. The best geographies for the group’s truck deliveries were Asia, up 8% and Africa/Oceania, up 7%.
Among net new-truck orders, four areas had year-over-year growth of 20% or more: Asia, up 31%; South America, up 29%; and Africa/Oceania, up 21%. North American growth was 27%, to 11,334 from 8,982 in the 2016 quarter.
Bloomberg News reported that Volvo has canceled planned North American stop days, which will operate without the planned changes during the second quarter because of the stronger demand. The wire service said Lundstedt told this to stock analysts.
Volvo Trucks North America spokesman Brandon Borgna offered confirmation.
“We had originally planned to take some downtime at our New River Valley [Va.] assembly plant but have canceled those plans as a result of strengthened order support,” he said.
"Mack’s Lehigh Valley Operations in Macungie [Pa.] did not have any planned stop days scheduled." said Mack spokesmen Christopher Heffner.
