Volvo Posts Profit In Q1 On Higher Demand In Mature Markets
4/25/2014 2:44 AM ET
Swedish automaker AB Volvo (VOLVY.PK) reported Friday a profit in its first quarter, compared to last year's loss, benefited by higher sales and improved price realization, despite adverse currency impacts. The Sales were driven by demand growth in mature markets in North America, Europe and Japan, as well as China.
President and CEO Olof Persson said, "The measures we are implementing to increase the Group's profitability are running according to plan and starts to have a positive impact on our gross margin and costs, but there is still more work to do in terms of cost reductions and this is the Group's main focus for 2014."
For the first quarter, income attributable to equity holders of the parent company was 1.08 billion Swedish kronor (about $164 million), compared with a loss of 304 million kronor last year. Earnings per share were 0.53 krona, compared with a loss of 0.15 krona a year ago.
Operating income was 2.27 billion kroner, higher than prior year's 482 million kroner. Operating margin was 3.5 percent, versus 0.8 percent a year ago. The latest quarterly results included restructuring charges of 318 million kroner, compared with last year's 14 million kroner.
Adjusted operating income, which excluded items, totaled 2.59 billion kronor, compared to 496 million kroner a year ago. Adjusted operating margin was 3.9 percent, as against 0.9 percent last year. Currency exchange rates had an adverse impact of 1.10 billion kronor on operating income.
Quarterly net sales reached 65.65 billion kronor, 13 percent increase from last year's 58.34 billion kronor. Adjusted for currency movements and acquired and divested units, sales went up 15 percent.
Volvo noted that the demand for its products continued its gradual improvement in the mature economies in North America, Western Europe and Japan. Meanwhile, the emerging economies in South America and Asia saw weaker demand.
In the quarter, North American sales climbed 28 percent, and that of Western Europe grew 10 percent. Asian sales also increased 11 percent, while sales in South America remained flat with last year.
Segment-wise, sales in trucks increased 18 percent and construction equipment sales grew 10 percent. Meanwhile, sales of buses dropped 3 percent and Volvo Penta sales dropped 2 percent.
Looking ahead, the company said it expects a gradual improvement in Europe over the course of the year and maintains its forecast for the European heavy duty truck market. In North America, the company plans for a slight increase in the production level towards summer.
In Stockholm, Volvo shares gained 1.50 kroner or 1.47 percent on Thursday and settled at 103.40 kroner.
by RTT Staff Writer
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