Volvo Profits Down 28%

Sweden's Volvo Group blamed the weak North American truck market for a 28% drop in its second quarter profit and warned of declining truck demand in Europe.

The company’s net income for the quarter was 1.36 billion kronor ($127 million), compared to 1.89 billion kronor a year ago. Its sales for all divisions totaled 47 billion kronor ($4.4 billion), compared to 30.9 billion kronor in second quarter 2000.
With the addition of Mack and Renault, Volvo's revenue from worldwide truck sales totaled 30.1 billion kronor ($2.8 billion) for the second quarter, roughly double the revenue from Volvo truck sales a year ago. Sales in North America totaled approximately 9 billion kronor ($839 million), including Volvo and Mack.
Unit volume, including all three nameplates, was 82,084 trucks worldwide. That compares to a total of 95,050 Volvo, Mack and Renault trucks sold in second quarter 2000. The combined unit sales in North America was 19,898, down 30% from a year ago. However, the Volvo and Mack combined market share increased from 21% to 24.7%.
While the North American market continued to deteriorate during the second quarter, the company said there are indications that it is beginning to stabilize. The recent interest rate cuts and a reduction in diesel prices have alleviated some pressure on truck customers, especially owner-operators. New and used truck inventories are being reduced, but inventory levels aren’t expected to reach normal levels any time this year.
New truck deliveries in Europe were down 2%, with a 10% increase in Eastern Europe. Volvo said heavy truck demand in Western Europe peaked during 2000 but is clearly softening in 2001. There is severe price competition in the German and U.K. markets. The Nordic region is experiencing some slowdowns, but the markets in southern Europe continue to be strong. Markets in the rest of the world “remain stable and continue to grow,” the company said.