Nordic Business Report-October 24, 2006-Volvo Group reports strong Q3, but expects sharp fall in North American truck sales in first half of 2007
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The Swedish trucks, engines and components manufacturer Volvo Group issued its third quarter report on Tuesday (24 October), posting an operating profit of SEK3,260m, as compared to SEK4,004m in the third quarter of 2005.
The decline was due to a negative goodwill adjustment of SEK1,712m relating to the US subsidiary Mack Trucks. Excluding this adjustment the operating profit for the third quarter strengthened to SEK4,972m.
The net turnover amounted to SEK54,426m, up from SEK52,532m in the third quarter last year.
Volvo is in the process of phasing out the old engines for Volvo and Mack trucks and in North America this led to large pre-buys of the old engines. As a result Volvo expects "sharply lower" truck demand in North America during the first half of 2007.
"Consequently, we have already begun to prepare for a reduced production capacity in our North American truck plants. We are anticipating that the decline could be as much as 40% during the first half of the year, but due to the uncertainty regarding the second half, we are prepared to increase capacity latter in the year," said Leif Johansson, president and CEO of Volvo Group.
"Order bookings in Europe remain favourable. We believe that the truck market in Europe in 2007 will remain largely at the same level as in 2006," Johansson said.
"For the other business areas, we expect continued favourable demand in both Europe and North America during 2007," Johansson concluded.
AB Volvo manufactures trucks, buses and construction equipment, marine and industrial engines and aerospace components. Volvo has some 82,000 employees in 25 countries. The company is listed on the Nordic Exchange in Stockholm.
One British pound (GBP) is worth approximately 13.70 Swedish kronor (SEK).
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