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North America Helps Drive Volvo Profit Higher

July 19, 2015

By Evan Lockridge

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The parent to Volvo Trucks North America, Sweden’s Volvo Group (VOLVY), saw its second quarter net income double from a year ago, due in part to increased North American sales.

It reported a profit of 5.2 billion kronor, equivalent to about $600 million. Revenue increased 17% to 84.8 billion kronor, or about $10 billion (which includes sales of buses, construction and marine equipment as well as trucks).

“Our view of the market development for trucks remains largely unchanged,” said Jan Gurander, acting president and CEO. “We are seeing a gradual recovery in Europe and unchanged demand in Asia, apart from the lower level of demand in China. In North America, there is a slowdown from high levels, while there has been a strong decline in the Brazilian market.”

During the quarter, Volvo delivered 55,600 trucks, which is 4% more than in the same period last year, but net orders fell 6% to 49,551 trucks.

“During the first six months of 2015, the strong U.S. economy and increased demand for transport had a positive impact on demand for long-haulage trucks, while demand for trucks involved in the energy sector and in construction had a slower development,” Volvo said in its earning report. “Expectations are that the North American retail market for heavy-duty trucks will peak during 2015 at a level of 310,000 trucks.”

According to Volvo, total North American truck orders dropped 19%, with Volvo Truck orders falling 1% and Mack orders down by 50%.

“The declining order intake for Mack is mainly a result of cancellations of some of the large quantities of dealer orders placed in the fourth quarter of 2014, combined with a softening in demand in some of Mack’s core market segments, for example, energy,” the company said. On June 30, it said, Mack’s order book was about twice the size when compared with the same date a year ago,

Despite the rather upbeat news, according to Reuters, Volvo is having problems reaching targets for cutting costs and it expects little growth in the North American trucking market in the coming years.

More information is available on the Volvo Group website.

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