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Munich - Volvo’s second-quarter operating profit rise 39%, buoyed by resilient European demand for trucks and a production cut in the US to adjust for an expected slowdown, while construction-equipment earnings rebounded from a year-earlier provision.
Earnings adjusted for one-time items rose to 8.54 billion kronor from 6.13 billion kronor a year earlier, the Gothenburg-based manufacturer said on Wednesday in a statement. The profit matched analyst estimates. The company raised industrywide forecasts for trucks in North America and China.
Volvo protected profit by scaling back truck production last year in North America in anticipation of a market contraction. Demand in the US may benefit from President Donald Trump’s proposals to upgrade the nation’s infrastructure.
The company’s heavy-duty vehicle deliveries rose 7% in Europe in the quarter, while advance sales contracts for trucks jumped 22%, propelled by growth in the Americas.
“The rise in Volvo’s order intake on trucks is very positive,” said Hans-Peter Wodniok, an analyst at Fairesearch GmbH & Co. “North America looks to be recovering, albeit from a low base. Profitability is very good after sales of higher-margin heavy duty trucks rose.”
Volvo’s construction-equipment division took in 54% more orders in the second quarter, while its deliveries jumped 49%, with demand in Asia more than doubling. Operating profit tripled to 2.46 billion kronor, partly because of a year-earlier credit provision that wasn’t repeated.
“In construction equipment, Europe looks a little weak” with 3% order growth, “but that’s been more than offset by everywhere else,” Wodniok said.
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