Auto Maker Volvo’s Profit Skids
STOCKHOLM, Sweden (AP) _ Truck and bus maker Volvo’s profit slumped 65 percent in the third quarter despite a 4.5 percent increase in net sales. It said weak truck sales in North America were offset by sales gains in other markets.
Volvo said Wednesday it earned 369 million kronor ($38 million), for the three months ended Sept. 30, down from 1.1 billion kronor in the same period last year.
Sales rose to 30.1 billion kronor ($3.1 billion) for the quarter from 28.8 billion kronor last year.
Net income for the first nine months of the year fell 88 percent to 3.5 billion kronor ($363 million) from 30.56 billion kronor last year which included a gain of 26.7 billion kronor from the sale of the company’s car division to U.S.-based Ford Motor Co.
Net sales for the first nine months this year were 94.1 billion kronor ($9.7 billion), up from 89.8 billion kronor last year.
The truck unit’s net sales in the first three quarters slipped to 44.5 billion kronor ($4.6 billion) from 44.9 billion kronor a year ago.
The heavy vehicles group, based in the southwestern city of Goteborg, cited sharp growth in Europe, Asia and South America but said a drop in truck sales in North America pulled down its overall results.
``Volvo Trucks’ continued to report unsatisfying earnings, mainly caused by the sharp decline in the North American market,″ chief executive Leif Johansson said in a statement. ``We are well prepared for further adjustments of the business and we are avoiding inventory build-ups.″
Johansson also said a reorganization plan started in July for the truck unit was beginning to show results and noted that sales in Asia doubled in the third quarter.
The company also posted strong sales growth in its construction equipment business, where third-quarter sales rose 17 percent to 4.8 billion kronor ($495 million).
Volvo said it expected demand for heavy trucks in Europe and Asia to remain high, while demand in North America was likely to decline more than 20 percent for the full year.
Volvo also said it plans to get approval from U.S. regulators and complete its acquisition of French automaker Renault’s VI/Mack truck unit by the end of the year. It received approval from European Union competition authorities last month.