Volvo's Net Income Doubles in Second Quarter
Volvo in the year-earlier period reported net income of 2.54 billion krona. Sales rose 17% to 84.8 billion krona. Per-share amounts were 2.53 krona in the second quarter and 1.22 the year before.
The truck unit of the company that also manufactures construction equipment and buses accounted for 80% of the second-quarter profit. A statement from the company said the results also were helped by an ongoing restructuring to reduce costs.
“The second quarter followed the trend from the fourth quarter of 2014 and the beginning of the year,” the statement said. “The Group’s products are well received by the market, and the activities in the efficiency programs are progressing according to plan and contribute to yet another quarter of earnings improvements.”
The report also included details on second-quarter orders, which kept pace with last year at Volvo Trucks and fell by half for the Mack nameplate.
Sales of Volvo Trucks in the United States in the first half rose 24%, slightly topping the industry rate of growth. Mack sales rose 15% in the same period.
“During the first six months of 2015, the strong U.S. economy and increased demand for transport had a positive impact on demand for long haulage trucks, while demand for trucks involved in the energy sector and in construction had a slower development,” Volvo’s report said.
A gain of 2.1 billion krona from the sale of its stake in Eicher Motors Ltd., based in Gurgaon, India, was recorded, and currency factors also helped the results.
The results also showed improvement in the operating margin for the truck unit, which rose to 7.7% from 7.5%
A report from David Leiker, a Robert W. Baird analyst, said the results were better than expectations because of "significant improvement" in the truck and construction equipment businesses. Those improvements included a doubling of profit in the truck unit, excluding interest and taxes.
The company’s earnings report also said the new truck market in North America is expected to peak this year with total sales of 310,000 units.
