Fall in demand for trucks drives Volvo profit down 4.7%
Third-quarter net sales drop 6.1 per cent and miss analysts’ estimates
Volvo’s third-quarter operating profit fell following drop in US demand for heavy trucks. Photograph: iStock
Volvo’s third-quarter operating profit fell 4.7 per cent as a downturn in demand for heavy trucks in the United States outweighed a programme to reduce costs.
Earnings before interest and taxes and excluding some items decreased to 4.85 billion kronor (€501 million) from 5.09 billion kronor a year earlier, the manufacturer, based in Gothenburg in Sweden, said on Friday.
Net sales dropped 6.1 per cent to 68.8 billion kronor and missed the 69.5 billion-krona average of 12 analyst estimates.
An industry-wide drop in truck orders in North America, where Volvo owns the Mack brand, prompted the Swedish company to cut production and lower full-year sales expectations for the region.
The downturn follows a jump in demand last year and has led other truck makers, including global market leader Daimler, to cut forecasts for 2016.
Deliveries are likely to decline in both North America and Europe in 2017, according to analysts at SEB Equities. Volvo is completing a reorganisation targeted at reducing annual spending this year by 10 billion kronor from 2012 levels. – (Bloomberg)