ZCZC
BCN-23
SWEDEN-AUTOMOBILE-EARNINGS-VOLVO
Volvo lorry sales keep on truckin’ in US
STOCKHOLM, Oct 20, 2018 (BSS/AFP) – With the US economy continuing to fire
on all pistons sales by Swedish lorry maker Volvo Group rose by nearly a
third in North America in the latest quarter.
With overall sales up by a fifth, Volvo Group’s net profit leapt by 38.6
percent to 7.46 billion kronor (720 million euros, $825 million).
It also managed to increases its adjusted operating margin to 11.1
percent, beating the average of 10.4 percent expected by analysts surveyed by
the SME Direkt agency.
“Although this is the best third quarter ever for the Group, it does not
mean that we have reached our full potential,” chief executive Martin
Lundstedt said in a statement.
“There is more to do to improve profitability and drive cash flow,” he
added.
Overall, sales of trucks rose by 23 percent in monetary terms, while those
of heavy construction equipment rose by 24 percent, increases which investors
may interpret as a signal the transportation and construction sectors are
strong.
“The high activity level in the North American economy translates into a
strong freight environment with high transport volumes and good freight
rates,” said Lundstedt.
“This leads to customers both renewing and expanding their fleets, a
development which is expected to continue into 2019,” he added,
However, the company did acknowledge the strong sales in North America
were stretching its supply chain.
For 2019, the firm expects stable overall demand, although truck sales are
expected to slide by 5 percent in Europe.
On Tuesday, Volvo Group disclosed it had discovered a problem in the
emissions control systems for trucks and busses that are primarily sold in
Europe and North America, which caused its share price to tumble.
The premature wearing out of a component could cause engines to exceed
emissions limits for harmful nitrogen oxides, the company said.
“A full analysis of the issue is not completed and it is not possible to
assess the financial impact at this stage; however, the cost could be
material,” it said in a statement.
The firm generates more than two-thirds of its sales in Europe and North
America, selling trucks under the Volvo, Mack, and Renault Trucks brands.
Its shares were down 2.7 percent in morning trading on the Stockholm stock
exchange, which was up down 0.9 percent overall.
BSS/AFP/HR/1021