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Volvo First-Quarter Net Income Exceeds Analyst Estimates

Volvo AB, the world’s second-largest truckmaker, reported first-quarter profit that beat analysts’ estimates as vehicle sales jumped in North America.

Net income fell 1.8 percent to 4.01 billion kronor ($597 million) from 4.09 billion kronor a year earlier, Gothenburg, Sweden-based Volvo said today in a statement. Profit exceeded the 3.53 billion-krona average of 13 analyst estimates compiled by Bloomberg. Revenue rose 10 percent to 78.8 billion kronor.

Chief Executive Officer Olof Persson, who took his post in September after running Volvo’s construction-equipment unit for almost three years, is targeting operating margins at the top of the heavy-equipment industry, shifting focus to profitability from sales growth. Volvo raised its forecast for Europe’s truck market by 4.5 percent and posted a 46 percent surge in deliveries in North America, where it makes Mack Trucks.

“The European market has stabilized a bit for Volvo and with their exposure to North America, where they’re growing like a rocket at the moment, they have a very nice geographical mix that will help them in 2012,” Morten Imsgard, an analyst at Sydbank A/S in Aabenraa, Denmark, with an “overweight” recommendation on Volvo’s stock, said by phone.

Volvo rose as much as 6 percent to 95 kronor, the biggest intraday jump since Nov. 30, and was trading up 2.8 percent at 9:15 a.m. in Stockholm. The stock has gained 22 percent this year, valuing the company at 196 billion kronor.

European Forecast

The manufacturer increased the forecast for European industrywide sales this year to 230,000 trucks from a prediction in February of 220,000 deliveries. That would amount to a 5.1 percent decline from 2011. Volvo, which is among truckmakers predicting a contraction of Europe’s market because of the sovereign-debt crisis, posted a 13 percent first-quarter drop in deliveries in the region to 19,996 vehicles.

The company reiterated a forecast of a 250,000-truck market in North America, a 16 percent gain from 2011. Volvo’s first-quarter sales in the region rose to 12,848 vehicles.

First-quarter earnings before interest and taxes fell 4.3 percent to 6.24 billion kronor. Operating profit beat the 5.59 billion-kronor average of 14 estimates. The operating margin narrowed to 7.9 percent of sales from 9.1 percent, a decline that Volvo attributed to “a changed market mix.”

Scania AB, the Swedish competitor controlled by carmaker Volkswagen AG, reported first-quarter net income of 1.79 billion kronor on April 24, beating analysts’ estimates after it eliminated jobs to prepare for slowing demand and raised some truck prices. Stuttgart, Germany-based Daimler AG, the world’s largest truckmaker, plans to publish figures tomorrow. Munich-based MAN SE is scheduled to report results on May 3.

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