Volvo Upbeat Despite Japan Impact Warning

Swedish truck maker Volvo Group reported strong first quarter earnings on Wednesday, although the firm warned that the Japan disaster could impact its second quarter.

From January to March, the net profit of the Volvo Group – which consists of Volvo Trucks, Renault Trucks and Mack – more than doubled compared to the same period last year, to 4.1 billion kronor ($674 million).

Analysts surveyed by Dow Jones Newswires had expected a net profit of 3.4 billion kronor.

The earnings were pushed up by a strong sales, which jumped 22 percent to 72 billion, beating analyst forecasts of 71 billion.

“We note that our mature markets are recovering, with continuing sharp sales increasing and favorable profitability in our operations in the emerging markets of Brazil, China and India,” chief executive Leif Johansson said.

On a year-to-year basis, demand for trucks jumped 40 percent.

“In Europe, demand for new trucks is developing well, with positive trends for used trucks,” Johansson said.

The company raised its estimated sales for both Europe and North America to between 230,000 and 240,000 vehicles for each region this year, up from a previous forecast of 220,000.

Johansson explained the US market was driven both by a need to replace ageing trucks with newer, fuel efficient ones, and by “a positive trend in the US economy and corresponding higher freight volumes.”

He added investments in South America and Asia were paying off, “with record sales and highly favorable profitability in such countries as India and Brazil”.

The company said it expected second-quarter earnings to be negatively affected by the aftermath of the Japan earthquake and tsunami.

Production in Japan at UD Trucks, another Volvo brand, was interrupted on March 11th and started up again “at a limited level” on March 28th, Johansson said.

“We have a number of suppliers in Japan that are having difficulties in restarting their production, which means that we anticipate considerable disturbances to the production at UD Trucks during the second quarter,” he explained.

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