Truck maker Volvo posted a surprise fall in third-quarter pretax earnings today and cut its outlook for truck markets on both sides of the Atlantic as the financial crisis weighed.
Pretax earnings fell to 2.90 billion Swedish crowns (€296 million) from 4.57 billion a year earlier to come in short of the mean forecast of 4.64 billion seen in a Reuters poll of analysts as well as the lowest estimate of 3.70 billion.
Volvo's order bookings of its trucks fell 55 per cent in the quarter from a year ago as it cleaned its books in Europe of cancelled orders.
This meant that it in total, the net order intake in Europe amounted to only 115 trucks compared with 41,970 in the same quarter of 2007.
"It was a weaker-than-expected result, but it is the cancellations that really catch the eye," said an analyst who asked not to be identified.
"The downturn in the economy has been significantly exacerbated by the global financial crisis," the company said.
"The important European market has declined significantly, while North America and Japan continue to show weak demand.
"In addition, we are seeing indications that the economic climate is weakening in the other parts of the world. Because the deceleration has been so rapid, we haven't been able to reduce our costs at the same pace," it added.
Volvo, which makes heavy-duty trucks under brand names such as Renault and Mack, as well as its own name, lowered its forecast of truck markets this year, saying it now expected the European market to grow 0-5 per cent while the North American market contracted around 10 per cent from already low levels.
It had previously seen the European truck market expanding about 10 percent this year and a flat North American market.
The company said it was difficult to forecast market demand in the European truck market next year, but said it was preparing its operations to meet "a significant decline". It added that a recovery in the North American market from current low levels was difficult to predict.
Reuters