Volvo Group Posts 26-Percent Sales Increase in Q108

For the three months ended March 31, Stockholm, Sweden-based Volvo Group posted a 26-percent sales increase to SEK 76.7 billion (about U.S. $12.7 billion) from SEK 61.0 billion (U.S. $10.1 billion) a year ago. In the first quarter, operating income rose 22 percent to SEK 6.5 billion (U.S. $1.1 billion) from SEK 5.3 billion (U.S. $879.9 million) in the year-ago period.

Income for the period rose 12 percent to SEK 4.2 billion (U.S. $697.3 million) from SEK 3.8 billion in the year-ago first quarter. Basic and diluted earnings per share rose to SEK 2.07 (U.S. $0.34) from SEK 1.85.

During the first quarter of 2008, Volvo’s rate of growth was very high and operating income was the group’s highest to date for a single quarter. With net sales of SEK 77 billion, the underlying growth was 16 percent, excluding currency effects and acquired companies. Sales continue to increase in Europe and South America as well as in the Middle East and most of Asia. According to the company, increased presence in growth markets in Eastern Europe and Asia, among others, more than offset the weaker trend in North America. Asia is now the group’s second-largest market.

Construction Equipment improved its profitability compared with the weak second half of 2007. Internal measures taken last year to remove bottlenecks in production are beginning to have an impact, the company says.

“Overall, we have strong order backlogs in Europe and despite a reduced order intake our truck operations continue to secure orders at a pace that is surprisingly high, taking into account the long delivery times and uncertainty about how much the weak business climate in North America and concerns on the financial markets will impact the real economy,” said Leif Johansson, president and CEO.

“With regard to North America, the market is weak, which places pressure on operations, and hard work will be required in many areas to achieve satisfactory profitability. Our assessment is that the weak North American market for trucks will remain and that the total market will be at about the same level as in 2007.

“In many other areas of the world, prospects look better. With our global platform, we are present on growing markets around the world, and in the important European market we expect that growth will continue in the long term, driven by economic integration with growing trade, rising levels of prosperity in the eastern parts and investment in infrastructure” Johansson said.

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