STOCKHOLM (AP) — Swedish truck and bus maker AB Volvo on Wednesday said sliding sales, weak foreign exchange rates and costs related to the rollout of new products resulted in net profit falling by more than half in the second quarter.
The company said net profit for April-June period was 2 billion Swedish kronor ($309 million), compared to 4.9 billion kronor last year. Total sales dropped by 12 percent to 72.7 billion kronor from 82.9 billion in 2012. Compared with the first quarter this year, sales increased by 25 percent.
The result was better than analysts had expected and the Volvo share rose by 3.7 percent to 96.7 kronor on the Stockholm stock exchange.
Volvo CEO Olof Persson said global demand for trucks was "relatively stable" except in Brazil where demand "continued to develop strongly" and India where the market is "considerably tougher."
Sales by Volvo's truck division dropped by 8 percent while its sales of construction equipment fell by 19 percent and bus sales were down 20 percent.
International demand for construction equipment remained weak, although "the decline in the key Chinese market slowed and demand stabilized at a lower level," Persson said.
He said the bus market remained tough, with "significant pressure on prices."
In the second quarter, Volvo introduced an all-new product range for its Renault Trucks brand, as well as a number of new Volvo trucks and the rollout of new products will continue in the third quarter.
"In the short-term, this impacts profitability since costs will continue to be high at the same time as we have the usual vacation shutdowns in the third quarter. However, once the new truck generations are out in the markets they will contribute to ensuring the group's organic growth and competitiveness going forward," Persson said.