Swedish truckmaker Volvo AB (NASDAQ: VOLV) narrowed its losses for its fiscal first quarter, escaping pressure from a U.S slowdown.
The company posted a 6 percent drop for its quarter ending March 31, to $3.76 billion Swedish kronor ($551 million), with sales down 3 percent to 61 billion kronor. Earnings per share fell to 1.85 kronor per share from 1.96 kronor the year before. The results beat expectations of 3.37 billion kronor ($494 billion), according to a median estimate of analysts surveyed by Bloomberg.
Volvo, the world's second largest truckmaker, and owner of the Renault and Mack brands, said that sales of heavy trucks over 16 tons declined by 22 percent in the U.S market. The company was able to offset the losses by cutting 1000 U.S jobs, narrowing losses above analysts estimates.
Despite the difficulties in the US, Trucks improved its profitability and reported a strong margin of 9.5 percent â€“ the highest margin so far for the truck operation, said president and CEO Leif Johansson, in a letter to investors.
Volvo also said it was also realigning production in connection with the cuts and a move to new environmentally friendly engines.
These disturbances continue to affect us also in the second quarter, resulting in lower production volumes, Johansson added.
Increased sales in the booming eastern European and Russian markets also helped offset the sales losses in the United States.
First- quarter truck division revenue in Europe rose 11 percent to 25 billion kronor. Sales in eastern Europe more than doubled to 3,618 vehicles.
Overall, revenue fell 3 percent to 61 billion kronor and operating profit, fell 2 percent to 5.33 billion kronor. The company maintained 8.7 percent operating margin.
American Depositary Shares of Volvo AB rose $1.77, or 9.82 percent, to $19.80 in mid-morning trading on the Nasdaq Stock market.