Swedish vehicle maker Volvo announced its second-quarter net profit jumped 59% thanks mainly to cost savings and strong sales of new trucks and construction vehicles. The company, however, was cautious about the outlook for the rest of 2003.
The Goteborg-based company posted a net profit of $210 million for the three months ending June 30.
"After great uncertainty in the first quarter concerning the market trend, there are now signs of stabilization," said Volvo Chief Executive Leif Johansson. "Neither the situation in the Middle East nor the outbreak of SARS had any further negative impact on our primary markets, and we are seeing stabilization in several of our operations."
Johansson said the biggest boost came from cost cutting and improved sales in Volvo's truck business, which accounts for about 35% of revenues.
Volvo's share of the heavy truck market in Western Europe improved to 28.3% through May from 27% a year earlier, thanks mainly to high deliveries of Volvo truck brands in the fourth quarter of 2002 and in the first quarter of 2003. Its market shares in North America through June improved to 10% from 7.9%, due mainly to high demand for its Volvo VN truck model.
"While we do see signs of a more stable market trend, we feel it is too soon to change our outlook for the full year," Johansson said in a statement. "We still expect a market of approximately 200,000 heavy trucks in Europe and 170,000 in North America. However, we also expect that the total market is more likely to differ from the forecast on the positive side rather than the negative."
The Construction Equipment business, the second-largest Volvo unit, saw profits decline slightly.
