Swedish truck maker AB Volvo said Thursday that higher costs contributed to a 2 percent drop in profits in the first quarter even though a buoyant performance in North America helped it record its strongest-ever sales for the period.
The sales performance impressed investors and the company's share price spiked 5 percent to 94.10 kronor ($13.97) in early market trading on the Stockholm stock exchange.
The Goteborg-headquartered group recorded a net profit of 4.01 billion kronor ($595 million) for the first three months of the year, down slightly from the 4.08 billion kronor earned in the same period a year earlier. Costs, and especially those linked to research and development, dragged the bottom-line figure down compared with last year.
However, revenues jumped 10 percent to 78.84 billion kronor however _ the highest Volvo has ever recorded during a first quarter. They were boosted primarily by sales in the company's key truck unit in North America. The trend in Europe stayed more or less unchanged from the previous year after a fall in demand in the fourth quarter, it said.
CEO Olof Persson said his company "showed its strength in being a global operation, when setbacks in some of our important markets were offset by positive developments in other markets."
He also said that Volvo will keep investing in growth markets "by developing new products and further strengthening the sales and service networks."
Volvo appeared a bit more optimistic about the European outlook as it revealed plans to ramp up production and raised its forecast for the heavy-duty truck market. It now expects an order intake of 230,000 trucks in 2012.
The forecast for North America remained unchanged, while production will be reduced in South America in May and June as the market switches over, and adapts to stricter emission requirements.
"We anticipate the demand will rise again in the second half of the year," Persson said, noting the full-year forecast for Brazil therefore remains unchanged.
The outlook for Japan was also kept unchanged.