Truck Maker Volvo Rebounds In 4Q

Swedish truck maker posted a profit for the fourth quarter, bouncing back thanks to a jump in sales as well as success in keeping costs down.

STOCKHOLM (AP) -- Swedish truck maker AB Volvo on Friday posted a profit for the fourth quarter, bouncing back thanks to a jump in sales on all its markets as well as success in keeping costs down.

Still, the earnings missed analyst expectations somewhat, mainly on the back of higher raw material prices and unfavorable exchange rates.

The Goteborg-headquartered company reported a net profit of 3.2 billion kronor ($500 million) in the quarter, compared with a previous loss of almost 2 billion kronor in the same three months a year ago.

CEO Leif Johansson, who is leaving his post in the second half of the year, said his company had ended 2010 strongly, attributing the success to increased sales and "a conscious effort to maintain our costs on a low level."

For the full year 2010, Volvo recorded a net profit of around 10.9 billion kronor, from 2009 year's loss of 14.7 billion kronor.

Sales soared for the group in the quarter, reaching 73.4 billion kronor, up sharply from 59.8 billion kronor a year earlier.

Johansson said Volvo is seeing a continued gradual improvement in Europe as well as a healthy recovery in North America. He also said Brazil, China and India are showing strong growth, while Japan is staying somewhat weak.

Johansson said Volvo's largest unit, Trucks, is seeing great demand improvements, which in turn has resulted in a ramped-up production rate in most of its plants.

For 2011, Volvo expects the market for heavy-duty trucks in both Europe and North America to reach 220,000 vehicles in each of the two regions.

For Japan, however, it only expects "a slight improvement," it said, with demand staying fairly low.

Sydbank analyst Morten Imsgard said the report was a mixed bag, with some dissapointments on the short-term side of the operations, but with promising signs for the future.

"They missed out a bit on the sales number," he said, pointing particularly to the truck unit.

"But in terms of the future, there are very positive signs. They seem to gain market share on all markets, especially in North America," he said. "These are very strong signals of what Volvo will be able to deliver in the coming quarters."

Volvo has around 90,000 full-time staff and also makes buses, engines and construction equipment. It sold its car division to U.S.-based Ford Motor Co. in 1999, which in turn sold it to China's Geely Holding Group last year.

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