Softening U.S. Truck Market Hurts Volvo Profits

Sweden’s AB Volvo blamed a 2.8% drop in its second quarter net income on reduced demand for trucks in North America but said its truck division should return to profitability next year with cutbacks in North America and integration of Renault’s truck division.

The company’s net income for the quarter was 1.89 billion kronor ($207.9 million), down from 1.94 billion kronor a year ago. Sales were 33.5 billion kronor versus 33.9 billion kronor the same period last year. Sales for the first half of 2000 were 64 billion kronor ($7 billion), up 5% from the first half of 1999. Net income was 3.15 billion kronor ($347.5 million), down from 29.49 billion kronor last year, which included a 47 billion kronor capital gain on the sale of Volvo’s car division to Ford. Truck sales were 17.78 billion kronor ($1.73 billion) in the second quarter versus 16.53 billion kronor last year.
Volvo finalized its agreement to buy Renault’s RVI truck division and U.S. subsidiary Mack Trucks this week. If approved by European and U.S competition authorities, the Renault truck division should be integrated into Volvo’s truck operations starting early next year.