STOCKHOLM, Sweden (AP) _ Volvo AB's profit dropped 14 per cent in
the second quarter, the truckmaker said Wednesday, as it was hurt by
higher costs and tough market conditions in North America after new
U.S. emission regulations took effect.
For the three months ended June 30, the world's second-largest
truck maker said it earned four billion kronor (US$603 million) down
from 4.67 billion kronor in the same quarter in 2006.
Sales rose to 71.45 billion kronor ($10.8 billion) from 68
billion kronor a year earlier, helped mainly by recently acquired
companies such as Ingersoll Rand's road machinery unit.
Volvo said Nissan Diesel had experienced ``a tough start'' in the
group, however, with truck deliveries falling to 10,011 units in the
quarter, from 15,546 trucks in the 2006 period.
The company blamed the decline on lower market demand in Japan.
Nissan Diesel's introduction of new, but more expensive,
environmentally friendly engines also affected sales, it said.
Chief executive Leif Johansson said in a statement that for the
company's trucks unit, the trend is very strong in Europe but
``significantly weaker'' in North America. European order bookings
rose 68 per cent, he said.
The difficult quarter in North America was expected, he said, as
a result of the transition to new trucks with new generation
Heavy truck demand in the U.S. has mainly weakened due to a lower
need for renewal after many companies invested in new trucks before
the new emission rules came into effect in January.
Despite the challenges in North America and with the integration
of Nissan Diesel, Johansson maintained that Volvo's underlying
profitability was strong.
Sydbank analyst Jacob Pedersen said that despite the drawback
with lower-than-expected income and revenues in Nissan Diesel, the
market had reacted ``rather harshly'' to the report.
``If Nissan Diesel is deducted (from the result), the report
would have been somewhat better-than-expected,'' he said. ``Overall
it is pretty much in line.''
Goteborg-based Volvo, has 83,000 employees. It sold its car
division to U.S.-based Ford Motor Co. in 1999.