Truck maker Volvo profits rise 12 pct on higher sales

Volvo boosted its forecast for the European market for heavy trucks, saying it will grow by 10 percent this year, but maintained its estimate that the North American market would stay flat compared with 2007.

The world's No. 2 truck maker said net profit for the January to March period was 4.21 billion kronor ($708 million), up from 3.76 billion kronor in the first quarter of 2007.

Sales climbed 26 percent to 76.7 billion kronor ($12.9 billion) from 61 billion kronor a year ago.

Volvo shares rose 6 percent to 92.75 kronor ($15.60) in midday trading in Stockholm.

"Our increased presence in growth markets in Eastern Europe and Asia, among others, more than well offset the weaker trend in North America," Volvo Chief Executive Leif Johansson said.

Asian sales rose sharply in the first quarter mainly due to last year's 7.5 billion kronor ($1.1 billion) takeover of Japan's Nissan Diesel.

Volvo, which sold its car division to U.S.-based Ford Motor Co. in 1999, also owns the Renault truck brand in Europe and Mack Trucks in the U.S.

Demand for heavy trucks in North America dropped 34 percent in part because of the "the weak U.S. economy with lower freight volumes, high fuel prices and a drop-off in the housing construction sector," Volvo said.

The company also took a 250 million kronor ($42 million) hit from a strike in February at a plant in Virginia, where Volvo has announced previously that it will lay off 1,100 employees in the second quarter.