Volvo Group (STO: VOLV-B) reported a large increase in its first-quarter profit, but truck orders decreased sharply, led by a 77 percent drop in North America.
Net sales increased by 20 percent to SEK 107.2 billion (the Swedish Krona equals US$0.11), and adjusted operating income rose by 11.8 percent to SEK 12.7 billion during the first three months of 2019, Volvo reported on April 24.
“Both our vehicle and service business grew at a good pace. The increased sales volumes together with an improvement in our operational performance contributed to a rise in profitability,” Volvo Group CEO Martin Lundstedt said in a statement.
Volvo took 45,884 truck orders during the quarter worldwide, compared to 71,965 worldwide in the first quarter of 2018 – a 36 percent drop. In North America, dominated by the U.S. market, Volvo booked 5,469 orders compared to 23,405 in 2018, a 77 percent decline.
The Swedish truck manufacturer attributed the sharp decline in North America to order books being nearly full but also reported a “gradual increase” in dealer inventories. Truck sales, meanwhile, increased by 22 percent to SEK 68.2 billion, contributing SEK 8.2 billion to profits, a 69 percent increase.
“If anything, we feel somewhat an upward pressure when it comes to the market in North America,” Lundstedt said during a presentation with analysts.
Volvo was largely positive on the North American market. The company noted in its earnings summary, “freight volumes have remained good and contractual freight rates have increased while spot rates have declined, albeit from high levels.”
Volvo delivered 58,594 trucks during the first quarter, a 14 percent increase over 2018. That included 17,205 to North America, a 42 percent increase.
Declines in truck orders were not confined to North America. Declines occurred in all of Volvo’s markets. Its largest market, Europe, declined by 17 percent.