STOCKHOLM, April 24 (Reuters) - Truckmaker Volvo Group reported a bigger drop than expected in first-quarter operating profit on Thursday but increased the market outlook forecast for Europe truck
Truckmaker Volvo lifts European market forecast, North American orders surge
Volvo Group Reports Strong First-Quarter Performance
By Marie Mannes
Quarterly Results and Market Trends
STOCKHOLM, April 24 (Reuters) - Truckmaker Volvo Group reported a sharp rise in first-quarter truck orders on Friday, driven by strong demand in Europe and the Americas, and raised its annual forecast for European heavy truck registrations.
After a prolonged downturn, U.S. market conditions showed signs of improvement in the quarter, with North American order intake jumping 78%. European demand continued to grow steadily.
CEO Statement on Regional Demand
"Demand in Europe continued to grow gradually, while order intake increased significantly in both North and South America... Given the recent increase in orders in North America, production there will be in better balance from May," CEO Martin Lundstedt said in a statement.
Analyst Reactions and Share Performance
Handelsbanken analyst Hampus Engellau said the strong U.S. order intake meant operating leverage should improve in the second half of the year.
Volvo shares rose 2.5% at the market open.
Financial Performance
Operating Profit and Earnings
Operating profit fell 20% year on year to 10.7 billion Swedish crowns ($1.2 billion) in the quarter, below analysts' average forecast of 11.4 billion in an LSEG poll. However, adjusted earnings of 12.2 billion crowns were ahead of expectations, according to Bernstein and Handelsbanken.
Order Intake and Market Forecasts
Global and Regional Truck Orders
Global truck order intake rose 14% to 62,755 vehicles.
Updated Market Forecasts
Volvo raised its forecast for Europe's heavy truck market this year to 310,000 vehicles, from 305,000 forecast in January.
It kept its outlook for North American heavy truck sales at 265,000 vehicles.
Volvo is widely seen as conservative in its forecasts. Bernstein analysts said attention was likely to focus on why Volvo did not raise its North American market outlook.
Additional Factors
Supply Chain and External Risks
The group also said the conflict in the Middle East had not caused any major disruption to its supply chain.
($1 = 9.2673 Swedish crowns)
(Reporting by Marie Mannes. Editing by Terje Solsvik and Mark Potter)
